Arcadia Biosciences (RKDA) widens loss amid PIPE charges and write-downs
Arcadia Biosciences, Inc. reported Q2 2026 product revenues of $1.4 million, essentially flat versus Q2 2025, all from Zola coconut water. For the first six months of 2026, revenues were $2.5 million, down modestly from the prior-year period.
The company generated a Q2 2026 net loss attributable to common stockholders of $6.3 million and a year‑to‑date loss of $10.7 million, driven by a $5.4 million valuation loss on the June 2026 PIPE financing, a $2.9 million loss on the January 2026 inducement offer, unrealized losses on AFII shares, and issuance and offering costs. Selling, general and administrative expenses declined sharply year over year, reflecting lower M&A and employee costs.
At June 30, 2026, cash and cash equivalents were $4.2 million, total assets $5.9 million, and stockholders’ equity $0.6 million, with $3.6 million of warrant and option liabilities. Management states that existing cash will not meet anticipated needs for at least 12 months, raising substantial doubt about the ability to continue as a going concern absent additional financing or asset sales.
Positive
- None.
Negative
- Substantial doubt about going concern: with $4.2 million in cash at June 30, 2026 and continued losses, management does not believe liquidity is sufficient for the next 12 months.
- Net loss sharply higher: Q2 2026 net loss was $6.3 million and year‑to‑date loss $10.7 million, up from $1.9 million in the first half of 2025.
- Equity nearly depleted: stockholders’ equity fell to $0.6 million from $4.1 million at year‑end 2025, reflecting losses and fair value charges.
- Investment written down: the AFII common stock investment, previously $4.3 million, was reduced to a reported fair value of $0, generating substantial unrealized losses.
- Costly financing: the June 2026 PIPE produced a $5.4 million valuation loss plus $0.7 million in issuance costs, significantly burdening earnings despite only $4.0 million in gross proceeds.
Filing Explained
The completed June financing could expand Arcadia’s share count substantially beyond current common shares if its outstanding instruments are exercised.
Arcadia Biosciences records that its June 2026 private placement closed with
The package included 3,883,496 immediately exercisable pre-funded warrants at
These instruments are rights to acquire shares rather than shares already issued; the June 30 tables report no exercises of the June 2026 instruments. The company reported 2,409,211 common shares outstanding as of
The resale registration statement for shares issuable upon exercise became effective on
Key Figures
Key Terms
going concern financial
valuation loss on June 2026 PIPE financial
preferred investment options financial
credit loss financial
contingent consideration financial
Level 3 financial
Earnings Snapshot
FAQ
How did Arcadia Biosciences (RKDA) perform financially in Q2 2026?
What is the liquidity position of Arcadia Biosciences (RKDA) as of June 30, 2026?
What happened with Arcadia Biosciences’ (RKDA) investment in AFII shares?
How did the June 2026 PIPE financing affect Arcadia Biosciences (RKDA)?
What is driving Arcadia Biosciences’ (RKDA) going concern disclosure?
How did operating expenses change for Arcadia Biosciences (RKDA) in Q2 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
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For the transition period from to
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(Former name, former address, and former fiscal year, if changed since the last report)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 6, 2026, the registrant had
Arcadia Biosciences, Inc.
FORM 10-Q FOR THE QUARTER ENDED June 30, 2026
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Risk Factors |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Exhibits |
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SIGNATURES |
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Arcadia Biosciences, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
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June 30, 2026 |
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December 31, 2025 |
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Assets |
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Current assets: |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Total assets |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
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Other current liabilities |
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Total current liabilities |
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Common stock warrant and option liabilities |
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Total liabilities |
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Commitments and contingencies (Note 13) |
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Stockholders’ equity: |
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Common stock, $ |
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Accumulated deficit |
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Total stockholders' equity |
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Total liabilities and stockholders’ equity |
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$ |
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See accompanying notes to the unaudited condensed consolidated financial statements.
1
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share data)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues: |
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Product |
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Total revenues |
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Operating expenses (income): |
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Cost of revenues |
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Research and development |
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Gain on sale of intangible assets |
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Change in fair value of contingent consideration |
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Selling, general and administrative |
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Total operating expenses |
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(Loss) Income from continuing operations |
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Interest income |
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Credit loss |
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Other (loss) income, net |
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Loss on January 2026 Inducement Offer |
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Valuation loss on June 2026 PIPE |
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Change in fair value of common stock warrant and option liabilities |
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Issuance and offering costs |
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Net loss attributable to common stockholders |
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Net loss per share attributable to common stockholders: |
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Basic |
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Diluted |
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Weighted-average number of shares used in per share |
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Basic |
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Diluted |
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See accompanying notes to the unaudited condensed consolidated financial statements.
2
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at December 31, 2025 |
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Issuance of shares related to common stock warrants and preferred investment options exercise |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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Balance at March 31, 2026 |
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$ |
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$ |
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$ |
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$ |
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Issuance of June 2026 Pre-Funded Warrants |
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— |
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— |
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— |
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Issuance of shares related to common stock warrants and preferred investment options exercise |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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Balance at June 30, 2026 |
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$ |
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$ |
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$ |
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$ |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at December 31, 2024 |
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$ |
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$ |
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Issuance of shares related to employee stock purchase plan |
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— |
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Stock-based compensation |
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Net income |
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— |
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Balance at March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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Stock-based compensation |
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— |
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— |
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Net loss |
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— |
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— |
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Balance at June 30, 2025 |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to the unaudited condensed consolidated financial statements.
3
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
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Six Months Ended June 30, |
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2026 |
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2025 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to cash used in operating activities: |
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Change in fair value of common stock warrant and option liabilities |
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Change in fair value of contingent consideration |
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Issuance and offering costs |
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Valuation loss on June 2026 PIPE |
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Loss on January 2026 Inducement Offer |
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Depreciation |
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Lease amortization |
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Amortization of note receivable |
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Gain on sale of intangible assets |
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Gain on receipt of Above Food Ingredients, Inc. common stock |
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Unrealized loss subsequent to receipt of Above Food Ingredients, Inc. common stock |
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Stock-based compensation |
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Credit loss |
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Changes in operating assets and liabilities: |
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Accounts receivable and other receivables |
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Inventories |
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Prepaid expenses and other current assets |
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Other noncurrent assets |
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Accounts payable and accrued expenses |
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Amounts due to related parties |
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Other current liabilities |
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Operating lease liabilities |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from sale of intangible assets |
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Net cash provided by investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from June 2026 PIPE |
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Payments of offering costs relating to June 2026 PIPE |
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Proceeds from January 2026 Inducement Offer |
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Payments of offering costs relating to January 2026 Inducement Offer |
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Proceeds from ESPP purchases |
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Net cash provided by financing activities |
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Net increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents — beginning of period |
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Cash and cash equivalents — end of period |
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$ |
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$ |
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NONCASH INVESTING AND FINANCING ACTIVITIES: |
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Accrued legal fees included in offering costs related to June 2026 PIPE |
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$ |
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$ |
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Preferred investment options issued to placement agent and included in offering costs related to June 2026 PIPE |
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$ |
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$ |
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Preferred investment options issued to placement agent and included in offering costs related to January 2026 Inducement Offer |
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$ |
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$ |
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Warrant and option modifications included in Loss on January 2026 Inducement Offer |
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$ |
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$ |
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Fair value of Above Food Ingredients, Inc. common stock received |
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$ |
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$ |
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See accompanying notes to the unaudited condensed consolidated financial statements.
4
Arcadia Biosciences, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business and Basis of Presentation
Organization
Arcadia Biosciences, Inc. (the "Company," "Arcadia" or "management"), was incorporated in
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. 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. Previously, Arcadia developed products primarily in wheat, which it commercialized through the sales of food products, trait licensing and royalty agreements.
On May 26, 2025, Arcadia entered into a License Termination and Patent Non-Assert Agreement (the "Bioseed Agreement") with Bioseed Research India, a division of DCM Shriram Limited ("Bioseed"). Pursuant to the Bioseed Agreement, the parties agreed to terminate a license agreement previously entered into by Arcadia and Bioseed in 2012, Arcadia agreed to not assert its rights under a patent held by Arcadia regarding certain products commercialized or that may be commercialized by Bioseed, and Bioseed agreed that if as a result of any such commercialization by Bioseed any amounts become payable to a third party pursuant to an agreement previously entered into between Arcadia and the third party, Bioseed will pay such amounts to the third party. As a result, the related $
On March 28, 2025, Arcadia entered into an agreement with Bioceres Crop Solutions Corp. ("BIOX") pursuant to which BIOX agreed to transfer to the Company all rights and materials relating to certain soy traits that were included in licenses granted by the Company to BIOX in the November 2020 sale of Verdeca. In addition, BIOX agreed to pay a total of $
On December 4, 2024, Arcadia, Roosevelt Resources LP (“Roosevelt” or the “Partnership”) and Elliott Roosevelt, Jr. and David A. Roosevelt, in their capacities as representatives of the limited partners of the Partnership entered into a Securities Exchange Agreement (as it may be amended from time to time, the “Exchange Agreement”) providing for the combination of the two companies in an all-stock transaction. 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 Arcadia agreed to issue shares of its common stock to the limited partners and to the sole member of the general partner of Roosevelt (together, the “Limited Partners”) in exchange for all of the limited partnership and other equity interests of Roosevelt (the “Exchange”). The Exchange Agreement, as amended, provided that upon completion of the Exchange, the Limited Partners and the Arcadia stockholders prior to the closing were to own
On May 16, 2024, Arcadia sold the GoodWheat™ brand to Above Food Corp. ("Above Food") for net consideration of $
5
In August 2019, the Company entered into a joint venture agreement with Legacy Ventures Hawaii, LLC (“Legacy,” see Note 7) to grow, extract, and sell hemp products. 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.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and are in the form prescribed by the SEC in instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the periods indicated. All material intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and Arcadia Wellness.
The information included in these condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 26, 2026.
Liquidity, Capital Resources, and Going Concern
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. Since inception, the Company has financed its operations primarily through equity and debt financings. As of June 30, 2026, the Company had an accumulated deficit of $
With cash and cash equivalents of $
The Company may seek to raise additional funds through debt or equity financings or sales of assets. The sale of additional equity would result in dilution, and could result in material dilution, to the Company’s stockholders. The incurrence of debt would result in debt service obligations, and the instruments governing such debt could provide for additional operating and financing covenants that would restrict operations. In addition, the Company may seek to raise additional funds through the sale of shares of Above Food Ingredients, Inc. ("AFII") that are held by the Company, at such times as those shares may be sold. See Note 6. If the Company is unable to secure adequate additional funding on terms acceptable to the Company, the Company may be forced to reduce spending, extend payment terms with suppliers, liquidate assets, or initiate dissolution and liquidation or bankruptcy proceedings. Any of these actions could materially harm the Company's business, results of operations and financial condition.
2. Recent Accounting Pronouncements
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, require 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 its financial statements and disclosures.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments — Credit Losses (Topic 326) — Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide all entities with a practical expedient and entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company
6
3. Inventory
Inventory costs are tracked on a lot-identified basis and are included as cost of revenues when sold. Inventories are stated at the lower of cost and net realizable value. The Company makes adjustments to inventory when conditions indicate that the net realizable value may be less than cost due to physical deterioration, obsolescence, changes in price levels, or other factors. 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. 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. 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 in which the write-down is recognized and materially affect the Company’s operating results.
Inventories consist of the following (in thousands):
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June 30, 2026 |
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December 31, 2025 |
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Raw materials |
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$ |
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$ |
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Finished goods |
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Inventories |
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$ |
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$ |
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4. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
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June 30, 2026 |
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December 31, 2025 |
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Software and computer equipment |
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$ |
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$ |
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Furniture and fixtures |
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Leasehold improvements |
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Property and equipment, gross |
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Less: accumulated depreciation and amortization |
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( |
) |
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( |
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Property and equipment, net |
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$ |
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$ |
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Depreciation expense was $
5. Investments and Fair Value Instruments
Investments
The Company classified its investments in corporate securities of AFII as short-term investments. The investments were carried at fair value, based on quoted market prices. Realized and unrealized gains and losses are recognized in other loss, net on the consolidated statements of operations and comprehensive loss.
As of June 30, 2026, the fair value of the AFII common stock was $
Fair Value Measurement
The fair value of the investment securities at June 30, 2026 and December 31, 2025 was as follows:
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Fair Value Measurements at June 30, 2026 |
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(Dollars in thousands) |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets at Fair Value |
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Short-term investments: |
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Corporate securities |
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$ |
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$ |
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$ |
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$ |
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Total Assets at Fair Value |
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$ |
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$ |
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$ |
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$ |
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7
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Fair Value Measurements at December 31, 2025 |
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(Dollars in thousands) |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets at Fair Value |
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Short-term investments: |
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Corporate securities |
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$ |
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$ |
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$ |
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$ |
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Total Assets at Fair Value |
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$ |
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$ |
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$ |
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$ |
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The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2026 and 2025. 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. For short-term investments, accounts receivable and other receivables and accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of June 30, 2026 and December 31, 2025 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 Company’s Level 3 liabilities consist of preferred investment options related to the June 2026 Private Placement, January 2026 Inducement Offer, March 2023 Private Placement and August 2022 Registered Direct Offering.
The preferred investment option liabilities were measured and recorded on a recurring basis using the Black-Scholes Model with the following assumptions as of June 30, 2026 and December 31, 2025:
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June 2026 Options - Series A-1 & June 2026 Placement Agent Options |
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June 2026 Options - Series A-2 |
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January 2026 Options & |
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March 2023 Options - Series A & |
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August 2022 Options & August 2022 Placement Agent Options |
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June 30, 2026 |
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December 31, |
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June 30, 2026 |
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December 31, |
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June 30, 2026 |
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December 31, |
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June 30, 2026 |
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December 31, |
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June 30, 2026 |
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December 31, |
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Remaining term (in years) |
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— |
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— |
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— |
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Expected volatility |
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% |
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% |
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% |
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% |
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% |
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% |
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% |
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Risk-free interest rate |
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% |
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% |
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% |
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% |
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% |
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% |
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% |
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Expected dividend yield |
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The significant input used in the fair value measurement of the Company’s Level 3 options liabilities is volatility. A significant increase (decrease) in volatility could result in a significantly higher (lower) fair value measurement.
The following table sets forth the establishment of the Company’s Level 3 assets and liabilities, as well as a summary of the changes in the fair value and other adjustments (in thousands):
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(Dollars in thousands) |
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June 2026 Options - Series A-1 |
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June 2026 Options - Series A-2 |
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June 2026 Placement Agent Options |
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January 2026 Options |
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January 2026 Placement Agent Options |
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March 2023 |
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March 2023 Placement Agent Options |
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August 2022 |
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August 2022 |
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Note Receivable Bifurcated Derivatives |
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Total |
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Balance as of December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Initial recognition |
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Change in fair value - quarterly remeasurement |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
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— |
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( |
) |
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— |
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— |
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— |
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( |
) |
Change in fair value - immediately before modification |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Change in fair value - immediately after modification |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Options exercise |
|
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— |
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— |
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|
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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— |
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|
|
— |
|
|
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( |
) |
Balance as of June 30, 2026 |
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$ |
|
|
$ |
|
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$ |
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$ |
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$ |
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$ |
|
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$ |
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|
$ |
|
|
$ |
|
|
$ |
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|
$ |
|
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8
6. Note Receivable and Embedded Derivatives
On May 16, 2024, the Company sold the GoodWheat brand and related assets to Above Food for net consideration of $
In connection with the transaction, Arcadia received a $
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 intended to and had the ability to hold the Promissory Note to maturity, it was previously classified as held for investment and was reported on the condensed consolidated balance sheets at amortized cost.
The Promissory Note was recorded at a discount of $
On May 1, 2025, Arcadia delivered a notice (the "Notice") to Above Food pursuant to the provisions of the Promissory Note, to require Above Food to cause AFII to issue Parent Shares to Arcadia. Pursuant to the provisions of the Promissory Note regarding the calculation and determination of the number of Parent Shares that are issuable in connection with delivery of a notice, the number of Parent Shares issuable are approximately
The first payment of $
As of the date that these financial statements were issued, substantial doubt exists regarding whether additional Parent Shares may be issued in satisfaction of Above Food's other obligations under the Promissory Note. In light of the above uncertainties, the Company previously recorded a credit loss for the full $
9
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 $
7. Consolidated Joint Venture
In 2019, the Company and Legacy Ventures Hawaii, LLC, a Nevada limited liability company (“Legacy”), formed Archipelago Ventures Hawaii, LLC, a Delaware limited liability company and entered into a Limited Liability Company Operating Agreement (the “Operating Agreement”). The Company and Legacy formed Archipelago to develop, extract and commercialize hemp-derived products from industrial hemp grown in Hawaii.
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.
8. Leases
Operating Leases
As of June 30, 2026, the Company leases office space in Dallas, TX. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these short-term leases on a straight-line basis.
Lease Cost |
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Classification |
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Three |
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Three |
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Six |
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Six |
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Operating lease cost |
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SG&A Expenses |
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$ |
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$ |
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$ |
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$ |
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Short term lease cost |
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SG&A Expenses |
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Sublease income (1) |
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SG&A Expenses |
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( |
) |
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Net lease (income) cost |
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$ |
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$ |
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$ |
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$ |
( |
) |
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9. Financing
June 2026 Private Placement
In June 2026, the Company issued in a private placement offering (the “June 2026 Private Placement") pursuant to a securities purchase agreement (i) pre-funded warrants (the "June 2026 Pre-Funded Warrants") to purchase up to
Under the terms of the Pre-Funded Warrants, Investment Options and Placement Agent Investment Options, a holder (together with its affiliates) may not exercise any portion of the Pre-Funded Warrant, Investment Option or Placement Agent Investment Option (as applicable) to the extent that the holder would beneficially own more than
10
The June 2026 Options and June 2026 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 June 12, 2026, the closing date of the June 2026 Private Placement, with the following assumptions for the Series A-1 Investment Options: volatility of
The estimated fair value of the June 2026 Pre-Funded Warrants was $
The June 2026 Placement Agent Options were issued for services performed by the placement agent as part of the June 2026 Private Placement and were treated as offering costs. The value of the June 2026 Placement Agent Options was $
January 2026 Inducement Offer
In January 2026, the Company entered into inducement offer letter agreements (the “Inducement Letters”) with certain investors (the “Participating Holders”) pursuant to which such Participating Holders agreed to exercise certain outstanding warrants and preferred investment options covering an aggregate of
Pursuant to the Inducement Letters, the Participating Holders agreed to exercise for cash the Existing Warrants and Options at a reduced exercise price of $
The New Options and January 2026 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 with the following assumptions to determine initial fair value: volatility of
The January 2026 Placement Agent Options were issued for services performed by the placement agent as part of the January 2026 Inducement Offer and were treated as offering costs. The value of the January 2026 Placement Agent Options was $
11
10. Warrants and Options
Equity Classified Common Stock Warrants
The Company issued the following warrants to purchase shares of its common stock, which are outstanding as of June 30, 2026 and December 31, 2025, respectively. These warrants are exercisable any time at the option of the holder until their expiration date.
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Issuance Date |
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Term |
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Exercise |
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Outstanding at |
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Issued |
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Exercised |
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Expired |
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Outstanding at |
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June 2026 Pre-Funded Warrants |
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$ |
— |
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— |
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— |
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— |
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December 2022 Service and Performance Warrants (1) |
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$ |
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— |
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October 2022 Service and Performance Warrants (1) |
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$ |
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— |
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January 2021 Placement Agent Warrants |
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$ |
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— |
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December 2020 Warrants (2) |
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$ |
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— |
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( |
) |
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December 2020 Warrants |
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$ |
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— |
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( |
) |
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July 2020 Warrants (2) |
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$ |
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— |
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( |
) |
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July 2020 Placement Agent Warrants |
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$ |
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— |
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( |
) |
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January 2021 Warrants (2) |
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$ |
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— |
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( |
) |
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January 2021 Warrants |
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$ |
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— |
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Total |
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( |
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( |
) |
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(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) These warrants were repriced as part of the March 2023 Private Placement.
12
Liability Classified Preferred Investment Options
The preferred investment options issued in connection with the June 2026 Private Placement, January 2026 Inducement Offer, March 2023 Private Placement and August 2022 Registered Direct Offering 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 condensed consolidated statements of operations and comprehensive loss.
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Issuance Date |
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Term |
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Exercise |
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Outstanding at |
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Issued |
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Exercised |
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Expired |
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Outstanding at |
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June 2026 Options - Series A-1 |
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$ |
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— |
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— |
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— |
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June 2026 Options - Series A-2 |
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$ |
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— |
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— |
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— |
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June 2026 Placement Agent Options |
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|
$ |
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|
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— |
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— |
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— |
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January 2026 Options |
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|
$ |
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January 2026 Placement Agent Options |
|
|
|
$ |
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March 2023 Options - Series A |
|
|
|
$ |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
||||||
March 2023 Placement Agent Options |
|
|
|
$ |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||
August 2022 Options (1) |
|
|
|
$ |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
||||||
August 2022 Placement Agent Options |
|
|
|
$ |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
(1) These options were repriced as part of the March 2023 Private Placement.
11. Stock-Based Compensation and Employee Stock Purchase Program
Stock Incentive Plans
The Company had
In 2006, the Company adopted the 2006 Plan, which provided for the granting of stock options to executives, employees, and other service providers under terms and provisions established by the Board of Directors. The Company granted non-statutory stock options (“NSOs”) under the 2006 Plan until May 2015, when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding and were issued under the 2006 Plan.
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
13
The following is a summary of stock option information and weighted average exercise prices under the Company’s stock incentive plans:
|
|
Shares |
|
|
Weighted- |
|
|
Aggregate |
|
|||
Outstanding — Balance at December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|||
Options forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Options expired |
|
|
( |
) |
|
|
|
|
|
|
||
Outstanding — Balance at June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|||
Vested and expected to vest — June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|||
Exercisable — June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|||
Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock determined by its Board of Directors for each of the respective periods.
As of June 30, 2026, there was $
In determining the fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.
Expected Term—The expected term is the estimated period of time outstanding for stock options granted and was estimated based on a simplified method allowed by the SEC, and defines the term as the average of the contractual term of the options and the weighted-average vesting period for all open employee awards.
Expected Volatility—The historical volatility data was computed using the daily closing prices for the Company’s shares during the equivalent period of the calculated expected term of the stock-based awards.
Risk-Free Interest Rate—The risk-free interest rate is based on the interest rate of U.S. Treasuries of comparable maturities on the date the options were granted.
Expected Dividend—The expected dividend yield is based on the Company’s expectation of future dividend payouts to common stockholders.
There were no option grants during the three and six months ended June 30, 2026 and 2025.
The Company recognized $
Employee Stock Purchase Plan
The Company’s 2015 Employee Stock Purchase Plan (“ESPP”) became effective on May 14, 2015. The ESPP allowed eligible employees to purchase shares of the Company’s common stock at a discount of up to
14
12. Income Taxes
Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items that are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known, or as the tax environment changes.
The interim financial statement provision for income taxes is different from the amounts computed by applying the United States federal statutory income tax rate of
During the three and six months ended June 30, 2026, there were
The Company is currently not under an income tax audit for federal or state purposes.
13. Commitments and Contingencies
Legal Matters
From time to time, the Company may be subject to legal proceedings, actions, claims, suits, or investigations arising from the ordinary course of our business, including actions with respect to intellectual property claims, breach of contract claims, claims relating to our products, labor and employment claims and other matters. Any litigation or other proceedings could divert management time and attention, could involve significant amounts of legal fees and other fees and expenses, or could result in an adverse outcome having a material adverse effect on our financial condition, cash flows or results of operations. Actions, claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty. Except as described below, the Company is not currently involved in any legal proceedings that the Company believes are, individually or in the aggregate, material to the Company's business, results of operations or financial condition. However, regardless of the outcome, litigation can have an adverse impact on us because of associated cost and diversion of management time.
On
As disclosed above, on December 4, 2024, the Company entered into the Exchange Agreement with Roosevelt providing for a business combination transaction pursuant to the Exchange. The Exchange Agreement was terminated effective December 24, 2025. 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. After the date of filing of the registration statement, the Company received several letters (the "Demand Letters") from counsel to purported stockholders of the Company. Each letter asserted 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 or executive officers of the Company in connection with the transaction. Certain of the Demand Letters included a request for inspection of certain books and records of the
15
Company pursuant to Delaware corporate law. The Company has not received any communications relating to the Demand Letters after the announcement of the termination of the Exchange Agreement. In light of the termination of the Exchange Agreement with Roosevelt, as disclosed above, the Company believes that the matters contained in the Demand Letters should be regarded as having effectively been mooted. However, if any of the Demand Letters continue to be pursued, 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.
The matters described in this section could divert management time and attention from the Company, and could involve significant amounts of legal fees and other fees and expenses. An adverse outcome in any such proceedings could have a material adverse effect on the Company.
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 Anawah’s food and agricultural research company through a non-cash stock purchase. Pursuant to the merger with Anawah, and in accordance with ASC 805 - Business Combinations, the Company incurred a contingent liability not to exceed $
Contracts
The Company has exited all contract research agreements and has no additional funding commitments previously associated with these agreements.
The Company licenses certain technologies via executed agreements (“In-Licensing Agreements”) that were used to develop and advance the Company’s own technologies. These technologies have subsequently been sublicensed to unrelated parties.
The Company could be adversely affected by certain actions by the government as it relates to government contract revenue received in prior years. Government agencies, such as the Defense Contract Audit Agency, routinely audit and investigate government contractors. These agencies review a contractor’s performance under its agreements; cost structure; and compliance with applicable laws, regulations and standards. The agencies also review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. While the Company’s management anticipates no adverse result from an audit, should any costs be found to be improperly allocated to a government agreement, such costs will not be reimbursed, or if already reimbursed, may need to be refunded. If an audit uncovers improper or illegal activities, civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments or fines, and suspension or prohibition from doing business with the government could occur. In addition, serious reputational harm or significant adverse financial effects could occur if allegations of impropriety were made against the Company.
16
14. Segment Reporting
The Company has
Information about the Company’s segment operations is as follows (in thousands):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Product COGS |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other Adjustments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Human capital and technology |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Corporate expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Advertising and marketing |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Outside services |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Depreciation |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Other SG&A |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Credit loss |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Loss on January 2026 Inducement Offer |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Valuation loss on June 2026 PIPE |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Change in fair value of common stock warrant and option liabilities |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Issuance and offering costs |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Other segment items |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net (loss) income from continuing operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other segment items during the three and six months ended June 30, 2026 consist primarily of other (loss) income, net. Other segment items during the three and six months ended June 30, 2025 consist of research and development expenses, gain on sale of intangible assets, change in fair value of contingent consideration, and other (loss) income, net.
15. Net Loss per Share
Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period and excludes any dilutive effects of stock-based awards, warrants and options. Diluted net loss per share attributable to common stockholders is computed giving effect to all potentially dilutive common shares, including common stock issuable upon exercise of stock options and warrants. Dilutive securities are not included in the computation of net loss per share when the impact would be anti-dilutive.
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Options to purchase common stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrants to purchase common stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preferred investment options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
17
16. Subsequent Events
Management has evaluated subsequent events through August 13, 2026, the date that the condensed consolidated financial statements were issued and determined there were no material subsequent events that require recognition or disclosure.
18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
Overview
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. 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. Previously, Arcadia developed products, primarily in wheat, which it commercialized through the sale of food products, trait licensing and royalty agreements.
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. Refer to Note 6 to the condensed consolidated financial statements for further details of the transaction.
On December 4, 2024, Arcadia, Roosevelt Resources LP (“Roosevelt” or the “Partnership”) and Elliott Roosevelt, Jr. and David A. Roosevelt, in their capacities as representatives of the limited partners of the Partnership entered into a Securities Exchange Agreement (as it may be amended from time to time, the “Exchange Agreement”) providing for the combination of the two companies in an all-stock transaction. 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 Arcadia agreed to issue shares of its common stock to the limited partners and to the sole member of the general partner of Roosevelt (together, the “Limited Partners”) in exchange for all of the limited partnership and other equity interests of Roosevelt (the “Exchange”). The Exchange Agreement, as amended, provided that upon completion of the Exchange, the Limited Partners and the Arcadia stockholders prior to the closing were to own 90% and 10%, respectively, of the shares of common stock of Arcadia immediately after the closing. On February 14, 2025, the Company filed a registration statement on Form S-4 with the Securities and Exchange Commission relating to the shares to be issued in the transaction. The registration statement also included a proxy statement/prospectus relating to a meeting of stockholders of the Company to be held to vote on proposals to approve the issuance of shares pursuant to the Exchange Agreement and related proposals. On April 30, 2025, the parties to the Exchange Agreement entered into a First Amendment to Securities Exchange Agreement (the “Amendment”). The Amendment amended certain provisions of the Exchange Agreement, including amending the “Termination Date” provided for in one of the closing conditions described in the Exchange Agreement, which allowed a party to terminate the Exchange Agreement if the closing had not occurred by May 15, 2025, to be August 15, 2025 (the “Termination Provision”). On July 31, 2025, the Company filed with the SEC pre-effective Amendment No. 1 to the registration statement on Form S-4. On December 24, 2025, the Company received a notice from Roosevelt indicating that it was terminating the Exchange Agreement with immediate effect pursuant to the Termination Provision, as the closing of the Exchange had not occurred by the Termination Date specified in the Amendment.
19
On March 28, 2025, Arcadia entered into an agreement with Bioceres Crop Solutions Corp. ("BIOX") pursuant to which BIOX agreed to transfer to the Company all rights and materials relating to certain soy traits that were included in licenses granted by the Company to BIOX in the November 2020 sale of Verdeca. In addition, BIOX agreed to pay a total of $750,000 to the Company. The Company agreed to transfer to BIOX all of the Company's granted patents, pending applications, related materials and documents related to the Company's reduced gluten and oxidative stability patents. In addition, the parties agreed to amend a previous agreement between the parties to eliminate any obligation to pay the Company future product royalties under the agreement.
On May 26, 2025, Arcadia entered into a License Termination and Patent Non-Assert Agreement (the "Bioseed Agreement") with Bioseed Research India, a division of DCM Shriram Limited ("Bioseed"). Pursuant to the Bioseed Agreement, the parties agreed to terminate a license agreement previously entered into by Arcadia and Bioseed in 2012, Arcadia agreed to not assert its rights under a patent held by Arcadia regarding certain products commercialized or that may be commercialized by Bioseed, and Bioseed agreed that if as a result of any such commercialization by Bioseed any amounts become payable to a third party pursuant to an agreement previously entered into between Arcadia and the third party, Bioseed will pay such amounts to the third party.
Tariffs
Commencing in April 2025, the U.S. government announced and imposed a series of reciprocal tariffs on most U.S. trading partners in reliance on the International Economic Emergency Powers Act, or IEEPA. Effective August 7, 2025, the U.S. government implemented a 19% reciprocal tariff rate on goods originating from Thailand, where our coconut water is sourced and processed. In October 2025, the United States and Thailand reached a preliminary framework agreement on reciprocal trade, which maintains a 19% rate while identifying certain product categories that may be eligible for a zero percent reciprocal tariff rate, including 100% pure coconut water, which accounted for approximately 85% of our Zola net sales in 2025.
On February 20, 2026, the U.S. Supreme Court ruled that the use of the IEEPA to impose tariffs was not authorized by Congress, invalidating a significant portion of tariffs announced in April 2025. While the ruling struck down the IEEPA-based tariffs, it does not prevent the administration from imposing tariffs using other legal or statutory authorities. Following the decision, the administration issued a proclamation to impose new duties and announced a 10% global tariff on imports entering the United States (subject to certain exceptions) under Section 122 of the Trade Act of 1974, which provides for tariffs up to 15% for a period of up to 150 days unless extended by Congress. The temporary global tariff on imports under Section 122 of the Trade Act of 1974 expired on July 24, 2026. The administration has indicated its intention to pursue alternative statutory mechanisms to reinstate or impose new tariffs. As a result, substantial uncertainty remains regarding future tariff rates and the countries and products to which such tariffs would apply. We continue to evaluate the potential impact of these tariffs on our cost of goods sold, including opportunities for product classification optimization under applicable Harmonized Tariff Schedule codes. Together with our customs brokers, logistics partners, and importers of record, we began taking steps to seek refunds of duties paid under the invalidated IEEPA tariffs. In July 2026, the Company received $169,000 in refunds related to previously paid IEEPA tariffs.
Our Products
Zola Coconut Water
Zola Coconut Water joined the Arcadia family of brands in May 2021. Sourced from Thailand, where coconuts are grown, harvested, and packaged at origin, Zola delivers a pure, natural coconut water with a crisp, clean taste that is slightly sweet and refreshingly hydrating. Naturally rich in electrolytes, Non-GMO Project Verified, and only 60 calories per serving, Zola is the superior way to rehydrate, reset, and reenergize. Available in original, original with pulp, espresso, and pineapple flavors, Zola is sold through grocery retailers and foodservice distributors across the U.S.
Agronomic Wheat Traits
As a result of the various agreements and transactions described above, Arcadia no longer retains any effective commercialization rights to its portfolio of wheat patents. Therefore, the Company does not expect to receive any license or royalty fees in the future related to any wheat-based intellectual property rights.
20
Components of Our Statements of Operations Data
Revenues
Product revenues
Product revenues consist primarily of sales of Zola. We recognize revenue from product sales when control of the product is transferred to third-party distributors and retailers, collectively “our customers,” which generally occurs upon delivery. Revenues fluctuate depending on the timing of shipments of product to our customers and are reported net of estimated chargebacks, returns and losses.
Operating Expenses
Cost of revenues
Cost of revenues relates to the sale of Zola products and consists 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. These expenses currently consist primarily of fees paid to product formulation consultants and are expensed as incurred. Additionally, the Company is required from time to time to make certain milestone payments in connection with the development of technologies in-licensed from third parties.
Gain on sale of intangible assets
Gain on sale of intangible assets consists of the gain on sale of our reduced gluten and oxidative stability patent portfolios in 2025.
Change in fair value of contingent consideration
Change in the fair value of contingent consideration is comprised of the gain associated with the reduction of our contingent liability as the result of a decision to abandon, assign or transfer a program that was previously accrued.
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.
Interest income
Interest income consists of interest income on our cash and cash equivalents, investments and note receivable.
Credit loss
Credit loss consists of a reserve established related to the Above Food note receivable.
Other (loss) income, net
Other (loss) income, net consists primarily of unrealized loss recognized subsequent to the receipt of the AFII common stock.
Loss on January 2026 Inducement Offer
Loss on January 2026 Inducement Offer includes the initial fair value of preferred investment options issued in connection with the induced exercise of existing warrants and options at a lower exercise price and the increase in fair value related to the reduction in exercise price of such warrants and options.
21
Valuation loss on June 2026 PIPE
Valuation loss on June 2026 PIPE includes the fair value in excess of gross proceeds.
Change in the estimated fair value of common stock warrant and option liabilities
Change in the estimated fair value of common stock warrant and option liabilities is comprised of the fair value remeasurement of the liabilities associated with our financing transactions.
Issuance and offering costs
Issuance and offering costs include placement agent, legal, advisory, accounting and filing fees related to the January 2026 Inducement Offer and June 2026 Private Placement.
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
|
|
Three Months Ended June 30, |
|
|
$ Change |
|
|
% Change |
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
|
|
|
|
|
||||
|
|
(In thousands except percentage) |
|
|||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
1,443 |
|
|
$ |
1,455 |
|
|
$ |
(12 |
) |
|
|
(1 |
)% |
Total revenues |
|
|
1,443 |
|
|
|
1,455 |
|
|
|
(12 |
) |
|
|
(1 |
)% |
Operating expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues |
|
|
812 |
|
|
|
824 |
|
|
|
(12 |
) |
|
|
(1 |
)% |
Research and development |
|
|
— |
|
|
|
9 |
|
|
|
(9 |
) |
|
|
(100 |
)% |
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(1,000 |
) |
|
|
1,000 |
|
|
|
100 |
% |
Selling, general and administrative |
|
|
1,127 |
|
|
|
2,123 |
|
|
|
(996 |
) |
|
|
(47 |
)% |
Total operating expenses |
|
|
1,939 |
|
|
|
1,956 |
|
|
|
(17 |
) |
|
|
(1 |
)% |
(Loss) Income from continuing operations |
|
|
(496 |
) |
|
|
(501 |
) |
|
|
5 |
|
|
|
(1 |
)% |
Interest income |
|
|
2 |
|
|
|
9 |
|
|
|
(7 |
) |
|
|
(78 |
)% |
Credit loss |
|
|
— |
|
|
|
(4,489 |
) |
|
|
4,489 |
|
|
|
100 |
% |
Other (loss) income, net |
|
|
(2,781 |
) |
|
|
1,071 |
|
|
|
(3,852 |
) |
|
|
(360 |
)% |
Valuation loss on June 2026 PIPE |
|
|
(5,423 |
) |
|
|
— |
|
|
|
(5,423 |
) |
|
|
(100 |
)% |
Change in fair value of common stock warrant and option liabilities |
|
|
3,083 |
|
|
|
(548 |
) |
|
|
3,631 |
|
|
|
(663 |
)% |
Issuance and offering costs |
|
|
(651 |
) |
|
|
— |
|
|
|
(651 |
) |
|
|
(100 |
)% |
Net loss attributable to common stockholders |
|
$ |
(6,266 |
) |
|
$ |
(4,458 |
) |
|
$ |
(1,808 |
) |
|
|
41 |
% |
Revenues
Product revenues, which consisted 100% of revenues from the sale of our Zola products, decreased $12,000, or 1%, during the three months ended June 30, 2026 compared to the same period in 2025. The decrease was primarily driven by lower sales volumes as well as low inventory and longer than expected shipping times during the three months ended June 30, 2026 compared to the same period in 2025.
Cost of revenues
Cost of revenues decreased $12,000, or 1%, during the three months ended June 30, 2026 compared to the same period in 2025, primarily driven by the lower Zola sales volume during the three months ended June 30, 2026.
Research and development
Research and development expenses were $0 and $9,000 during the three months ended June 30, 2026 and 2025, respectively.
22
Change in fair value of contingent consideration
During the three months ended June 30, 2025, the change in the fair value of contingent consideration was due to the gain of $1.0 million associated with the reduction of our contingent liability as the result of a decision to abandon one of two remaining programs with respect to which a contingent liability was previously accrued. See Note 13 to the condensed consolidated financial statements for details. There was no change in fair value of contingent consideration during the same period in 2026.
Selling, general, and administrative
Selling, general, and administrative expenses decreased by $996,000, or 47%, during the three months ended June 30, 2026 compared to the same period in 2025, driven primarily by the absence of M&A expenses and lower employee costs in 2026.
Interest income
Interest income was $2,000 and $9,000 during the three months ended June 30, 2026 and 2025, respectively.
Credit loss
During the three months ended June 30, 2025, the Company recognized credit loss of $4.5 million primarily related to the establishment of a reserve for the remaining $4.0 million principal amount of the Above Food note receivable, plus accrued interest of $421,000. There was no such loss during the same period in 2026.
Other (loss) income, net
During the three months ended June 30, 2026, the Company recognized other loss, net of $2.8 million, primarily driven by an unrealized loss recognized subsequent to the receipt of the AFII common stock. During the same period in 2025, the Company recognized other income, net of $1.1 million, primarily driven by an unrealized gain recognized subsequent to the receipt of the AFII common stock.
Valuation loss on June 2026 PIPE
During the three months ended June 30, 2026, the Company recognized a $5.4 million valuation loss related to the June 2026 PIPE financing transaction. The valuation loss reflects the fair value of financial instruments issued in the financing transaction in excess of gross proceeds. There was no such loss during the same period in 2025.
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 resulted in a gain of $3.1 million and loss of $548,000 during the three months ended June 30, 2026 and 2025, respectively, related to the change in the estimated fair value of the liability classified preferred investment options.
Issuance and offering costs
Issuance and offering costs were $651,000 during the three months ended June 30, 2026 and consist of placement agent, legal, advisory, accounting and filing fees related to the June 2026 PIPE. There were no such costs recognized during the same period in 2025.
23
Comparison of the Six Months Ended June 30, 2026 and 2025
|
|
Six Months Ended June 30, |
|
|
$ Change |
|
|
% Change |
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
|
|
|
|
|
||||
|
|
(In thousands except percentage) |
|
|||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
2,543 |
|
|
$ |
2,655 |
|
|
$ |
(112 |
) |
|
|
(4 |
)% |
Total revenues |
|
|
2,543 |
|
|
|
2,655 |
|
|
|
(112 |
) |
|
|
(4 |
)% |
Operating expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues |
|
|
1,512 |
|
|
|
1,506 |
|
|
|
6 |
|
|
|
0 |
% |
Research and development |
|
|
— |
|
|
|
9 |
|
|
|
(9 |
) |
|
|
(100 |
)% |
Gain on sale of intangible assets |
|
|
— |
|
|
|
(750 |
) |
|
|
750 |
|
|
|
(100 |
)% |
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(2,000 |
) |
|
|
2,000 |
|
|
|
(100 |
)% |
Selling, general and administrative |
|
|
2,306 |
|
|
|
3,861 |
|
|
|
(1,555 |
) |
|
|
(40 |
)% |
Total operating expenses |
|
|
3,818 |
|
|
|
2,626 |
|
|
|
1,192 |
|
|
|
45 |
% |
(Loss) Income from continuing operations |
|
|
(1,275 |
) |
|
|
29 |
|
|
|
(1,304 |
) |
|
|
(4497 |
)% |
Interest income |
|
|
7 |
|
|
|
216 |
|
|
|
(209 |
) |
|
|
(97 |
)% |
Credit loss |
|
|
— |
|
|
|
(4,489 |
) |
|
|
4,489 |
|
|
|
(100 |
)% |
Other (loss) income, net |
|
|
(4,285 |
) |
|
|
1,071 |
|
|
|
(5,356 |
) |
|
|
(500 |
)% |
Loss on January 2026 Inducement Offer |
|
|
(2,877 |
) |
|
|
— |
|
|
|
(2,877 |
) |
|
|
(100 |
)% |
Valuation loss on June 2026 PIPE |
|
|
(5,423 |
) |
|
|
— |
|
|
|
(5,423 |
) |
|
|
(100 |
)% |
Change in fair value of common stock warrant and option liabilities |
|
|
4,274 |
|
|
|
1,314 |
|
|
|
2,960 |
|
|
|
225 |
% |
Issuance and offering costs |
|
|
(1,072 |
) |
|
|
— |
|
|
|
(1,072 |
) |
|
|
(100 |
)% |
Net loss attributable to common stockholders |
|
$ |
(10,651 |
) |
|
$ |
(1,859 |
) |
|
$ |
(8,792 |
) |
|
|
473 |
% |
Revenues
Product revenues, which consisted 100% of sales of our Zola products, decreased $112,000, or 4%, during the six months ended June 30, 2026 compared to the same period in 2025. The decrease was primarily driven by lower sales volumes as well as low inventory and longer than expected shipping times during the six months ended June 30, 2026 compared to the same period in 2025.
Cost of revenues
Cost of revenues increased $6,000 during the six months ended June 30, 2026 compared to the same period in 2025 primarily driven by tariffs in 2026 that were absent in 2025.
Research and development
Research and development expenses were $0 and $9,000 during the six months ended June 30, 2026 and 2025, respectively.
Gain on sale of intangible assets
During the six months ended June 30, 2025, the Company realized a gain of $750,000 related to the sale of our reduced gluten and oxidative stability patent portfolios. There was no such gain during the same period in 2026.
24
Change in fair value of contingent consideration
During the six months ended June 30, 2025, the change in the fair value of contingent consideration was due to the gain of $2.0 million associated with the reduction of our contingent liability as the result of a decision to abandon one of the two remaining programs and transfer the other to a third party with respect to which a contingent liability was previously accrued. See Note 13 to the condensed consolidated financial statements for details. There was no change in fair value of contingent consideration during the same period in 2026.
Selling, general, and administrative
Selling, general, and administrative expenses decreased by $1.6 million during the six months ended June 30, 2026 compared to the same period in 2025, driven primarily by the absence of M&A expenses and lower employee costs in 2026.
Interest income
During the six months ended June 30, 2026, the Company recognized interest income of $7,000. During the six months ended June 30, 2025, the Company recognized interest income of $216,000, of which $180,000 was related to discount amortization and accrued interest on the promissory note from Above Food.
Credit loss
During the six months ended June 30, 2025, the Company recognized credit loss of $4.5 million primarily related to the establishment of a reserve for the remaining $4.0 million principal amount of the Above Food note receivable, plus accrued interest of $421,000. There was no such loss during the same period in 2026.
Other (loss) income, net
During the six months ended June 30, 2026, the Company recognized other loss, net of $4.3 million, primarily driven by an unrealized loss recognized subsequent to the receipt of the AFII common stock. During the same period in 2025, the Company recognized other income, net of $1.1 million, primarily driven by an unrealized gain recognized subsequent to the receipt of the AFII common stock.
Loss on January 2026 Inducement Offer
Loss on January 2026 Inducement Offer was $2.9 million during the six months ended June 30, 2026 and includes the initial fair value of preferred investment options issued in connection with the induced exercise of existing warrants and options at a lower exercise price and the increase in fair value related to the reduction in exercise price of such warrants and options. There was no such loss during the same period in 2025.
Valuation loss on June 2026 PIPE
During the six months ended June 30, 2026, the Company recognized a $5.4 million valuation loss related to the June 2026 PIPE financing transaction. The valuation loss reflects the fair value of financial instruments issued in the financing transaction in excess of gross proceeds. There was no such loss during the same period in 2025.
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 resulted in a gain of $4.3 million and $1.3 million during the six months ended June 30, 2026 and 2025, respectively, related to the change in the estimated fair value of the liability classified preferred investment options.
Issuance and offering costs
Issuance and offering costs were $1.1 million during the six months ended June 30, 2026 and consist of placement agent, legal, advisory, accounting and filing fees related to the June 2026 PIPE and January 2026 Inducement Offer. There were no such costs during the same period in 2025.
25
Seasonality
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 & Capital Resources
We have funded our operations primarily with the net proceeds from our private and public offerings of our equity securities as well as proceeds from the sale of our products and payments under license agreements. Our principal use of cash is to fund our operations. As of June 30, 2026, we had cash and cash equivalents of $4.2 million. For the six months ended June 30, 2026, the Company had net loss of $10.7 million and net cash used in operations of $1.4 million. For the twelve months ended December 31, 2025, the Company had net loss of $2.3 million and net cash used in operations of $4.7 million.
As discussed in Note 6 to the condensed consolidated financial statements, Above Food did not make the first $2.0 million principal payment plus accrued interest that was due in May 2025 on the promissory note given by Above Food to the Company ("Promissory Note") pursuant to the asset purchase agreement between the Company and Above Food relating to the sale of the GoodWheat brand and related assets to Above Food in May 2024, and substantial doubt exists whether Above Food will make any cash payments with respect to the Promissory Note. Failure to make the first cash principal payment due under the Promissory Note had a material adverse effect on the Company's cash resources and financial position. In addition, although as described in Note 6, approximately 2.7 million shares of Above Food's parent company AFII ("Parent Shares") have been issued to the Company pursuant to a notice previously delivered by the Company, uncertainty exists regarding whether additional Parent Shares will be issued in satisfaction of Above Food's other obligations under the Promissory Note, when any Parent Shares will be able to be freely resold pursuant to Rule 144 or otherwise, or regarding the amount of net proceeds to Arcadia that might result from a sale of any such Parent Shares. On June 1 and June 2, 2026, AFII announced that The Nasdaq Stock Market LLC (“Nasdaq”) determined to delist AFII’s common stock and warrants from Nasdaq due to AFII’s failure to file audited financial statements and the associated Report on Form 20-F by the time period previously provided by Nasdaq, and that its common stock and warrants commenced trading on the Over-the-Counter Market. AFII indicated in a press release that it had submitted an appeal to Nasdaq of the delisting determination in accordance with Nasdaq listing rules.
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 these condensed consolidated financial statements, which raises substantial doubt about the Company’s ability to continue as a going concern, and the audit opinion on our 2025 audited consolidated financial statements includes a going concern explanatory paragraph regarding 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 will require additional funding to fund our business and the marketing and sale of our products and to provide working capital to fund other aspects of our business. We may seek to raise additional funds through debt or equity financings. There are no assurances that required funding will be available at all or will be available in sufficient amounts or on reasonable terms. In addition, as noted elsewhere in this Report under Item 1A, there are no assurances that our common stock will remain listed on the Nasdaq, and any delisting could adversely affect our ability to engage in a debt or equity financing. Any sale of additional equity would result in dilution, and could result in material dilution, to our stockholders. If we sought to raise funds through debt financing transactions, 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. As noted above, Above Food defaulted on its obligations to pay us amounts due under its Promissory Note to the Company, including the first installment of the Promissory Note due May 14, 2025, and substantial doubt exists whether or when Above Food will be able to make any cash payments with respect to the Promissory Note, or whether additional Parent Shares may be issued to us in satisfaction of Above Food's obligations under the Promissory Note. If we are able to sell shares of AFII, the net proceeds from sales of AFII shares may provide a source of funding. However, the AFII shares are restricted securities, there are no assurances regarding whether at a future date we will be able to sell AFII shares or receive any significant proceeds from the sale of such shares. In addition, removal of restrictive legends applicable to the shares requires action by the issuer and its transfer agent in order to remove the legends and facilitate the public resale of the shares pursuant to Rule 144 or otherwise. Moreover, the market price of AFII common stock is very volatile. If from time to time in the future we seek to sell the AFII shares that we hold, there are no assurances regarding the amount of net proceeds to us that might result from such sales.
In addition, we are actively evaluating merger, acquisition or other strategic alternatives and may seek to enter into a merger, acquisition or other strategic transaction. If we are not able to secure adequate additional funding or engage in a merger, acquisition or other strategic transaction, we will be forced to further reduce our spending, extend payment terms with our suppliers, liquidate assets, or initiate dissolution and liquidation or bankruptcy proceedings. Any of these actions would have a material adverse effect on our business, results of operations and financial condition.
26
As noted above, through June 30, 2026, we have incurred substantial losses. In the absence of a merger, acquisition or other strategic transaction, we will be required to obtain additional cash resources 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. No assurance can be given as to the timing or ultimate success of obtaining future funds. 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 if we did not engage in a merger, acquisition or other strategic transaction, we could be required to materially reduce or suspend operations or seek dissolution and liquidation, or bankruptcy protection. In the event of dissolution and liquidation proceedings or bankruptcy proceedings, the creditors of Arcadia would have first claim on the value of the assets of Arcadia which, other than remaining cash, would most likely be liquidated in one or more transactions or a bankruptcy sale, and the common stock of Arcadia likely would have little or no value. Arcadia can give no assurance as to the magnitude of the net proceeds of such a sale and whether such proceeds and available cash would be sufficient to satisfy Arcadia’s obligations to its creditors, let alone to permit any distribution to its equity holders.
Liquidity
The following table summarizes total current assets, current liabilities and working capital for the dates indicated (in thousands):
|
|
As of |
|
|
As of |
|
||
|
|
2026 |
|
|
2025 |
|
||
Current assets |
|
$ |
5,739 |
|
|
$ |
6,356 |
|
Current liabilities |
|
|
1,646 |
|
|
|
2,059 |
|
Working capital surplus |
|
$ |
4,093 |
|
|
$ |
4,297 |
|
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
|
|
Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net cash (used in) provided by: |
|
|
|
|
|
|
||
Operating activities |
|
$ |
(1,418 |
) |
|
$ |
(3,621 |
) |
Investing activities |
|
|
— |
|
|
|
750 |
|
Financing activities |
|
|
5,337 |
|
|
|
5 |
|
Net increase (decrease) in cash |
|
$ |
3,919 |
|
|
$ |
(2,866 |
) |
Cash flows from operating activities
Cash used in operating activities for the six months ended June 30, 2026, was $1.4 million. With respect to our net loss of $10.7 million, non-cash gain of $4.3 million related to the change in fair value of common stock warrant and option liabilities and adjustments in our working capital accounts of $206,000 were offset by issuance and offering costs of $1.1 million, valuation loss on June 2026 PIPE of $5.4 million, loss on January 2026 Inducement Offer of $2.9 million, depreciation of $8,000, unrealized loss on AFII common stock subsequent to receipt of $4.3 million, and stock-based compensation of $29,000.
Cash used in operating activities for the six months ended June 30, 2025, was $3.6 million. With respect to our net loss of $1.9 million, non-cash charges including the change in fair value of common stock warrant and option liabilities of $1.3 million, change in fair value of contingent consideration of $2.0 million, amortization of note receivable discount of $69,000, a gain on sale of intangible assets of $750,000, a gain on the receipt of AFII common stock of $1.1 million, adjustments in our working capital accounts of $1.2 million, and operating lease payments of $129,000 were offset by $28,000 of depreciation, $117,000 of lease amortization, $164,000 of stock-based compensation and $4.5 million of credit loss.
Cash flows from investing activities
There was no cash provided by investing activities for the six months ended June 30, 2026.
Cash provided by investing activities for the six months ended June 30, 2025 consisted of proceeds from the sale of intangible assets of $750,000.
27
Cash flows from financing activities
Cash provided by financing activities for the six months ended June 30, 2026 consisted of gross proceeds from the June 2026 PIPE of $4.0 million, gross proceeds from the January 2026 Inducement Offer of $2.1 million, which was offset by payments of offering costs of $395,000 related to the June 2026 PIPE and $350,000 related to the January 2026 Inducement Offer.
Cash provided by financing activities for the six months ended June 30, 2025 consisted of proceeds from the purchase of ESPP shares of $5,000.
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, which was disposed of in November 2020.
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. 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 critical accounting estimates to be revenue recognition, determination of the provision for income taxes, fair value of preferred investment options, and allowance for credit losses.
28
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Required.
ITEM 4: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, or Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
In connection with our chief executive officer’s and chief financial officer’s review of the disclosure controls and procedures for our Annual Report on Form 10-K for the year ended December 31, 2025, our management concluded that there was a material weakness in our disclosure controls and procedures as described below. Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level, as a result of the material weaknesses in our internal control over financial reporting as described below. Notwithstanding these material weaknesses, management concluded that our consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in conformity with U.S. GAAP.
Material Weaknesses in Internal Control Over Financial Reporting
A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with our evaluations for the year ended December 31, 2025, and for the three and six months ended June 30, 2026, we identified material weaknesses in our internal control over financial reporting related to: (a) insufficient segregation of duties in the financial statement close process; and (b) insufficient information system controls, including access and change management controls. The Company’s employee headcount has been reduced, resulting in insufficient personnel to maintain proper segregation of duties, which impacts the effectiveness of business processes as well as information systems controls.
Remediation Plans and Status
We are committed to maintaining a strong internal control environment and implementing measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated. In this remediation process, which involves designing and implementing controls and processes to address the material weaknesses, management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. As a result of our resource constraints, these risks may continue to persist going forward.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation identified above that occurred during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
29
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. Please refer to Note 13 included in Part I, "Item 1. Notes to Condensed Consolidated Financial Statements" for a discussion of legal proceedings.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), which could materially affect our business, financial condition, liquidity or future results. The risks described in our 2025 Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity or future results. The risk factor set forth below contains changes, which may be material, from the comparable risk factor previously disclosed under the heading Item 1A – “Risk Factors” in the 2025 Form 10-K.
Arcadia’s failure to meet the continued listing requirements of Nasdaq could result in a delisting of its common stock, which could negatively impact the market price and liquidity of its common stock and its ability to access the capital markets.
Our common stock is listed on the Nasdaq Capital Market. If we fail to satisfy the continued listing requirements of The Nasdaq Stock Market LLC (“Nasdaq”), such as the corporate governance, minimum stockholders equity or minimum closing bid price requirements, Nasdaq may take steps to delist our common stock. If we receive a deficiency letter regarding such listing requirements, we would attempt to take actions to regain compliance with applicable listing requirements within any cure periods applicable to such requirements; however, we can provide no assurance that any such action taken by us would allow our common stock to continue to be listed.
On July 22, 2026, the staff of the Securities and Exchange Commission (the “SEC” or the “Commission”), acting pursuant to delegated authority, approved a new listing rule change originally proposed by Nasdaq earlier in 2026 and subsequently amended, requiring listed companies to maintain a minimum Market Value of Listed Securities (“MVLS”), as defined under the Nasdaq listing rules, of at least $5 million. The rule provides, among other things, that a company that fails to have a minimum MVLS of at least $5 million (the “Minimum MVLS”) for a period of 30 consecutive business days will be immediately subject to suspension and delisting, without any cure or compliance period as is typically granted for certain other kinds of compliance deficiencies such as the minimum bid price requirement or minimum stockholders equity requirement. The final rule provides only very limited appeal rights to a Nasdaq Hearings Panel. The Hearings Panel may reverse a delisting decision where it determines that the delisting determination was made in error, and may grant an exception for a period of up to 180 days for the company to demonstrate that it meets all requirements for initial listing; however, the delisting is not stayed or suspended during any appeal process.
Following approval, the rule originally became effective commencing July 23, 2026. However, because the approval was issued by the staff of the SEC under delegated authority rather than by the Commission itself, on July 29, 2026, the SEC notified Nasdaq that the Commission had received notices of intention to petition for review of the delegated action and that, in accordance with the Commission’s rules of practice, the July 22, 2026 approval order was stayed until the Commission orders otherwise. As a result, the new Minimum MVLS rule is not currently in effect as of August 13, 2026, and will remain stayed unless and until the Commission orders otherwise following its review. However, the Commission’s stay is not a determination by the Commission concerning the merits of the rule, and there are no assurances regarding the timing or outcome of the Commission’s review or whether, or when, the new rule will take effect and the first 30 business day measurement period will commence.
Our MVLS as of August 13, 2026, was less than the Minimum MVLS. Accordingly, if the new rules were to become effective in the form proposed by Nasdaq and the MVLS of our common stock does not increase sufficiently (as a result of increases in the trading prices of our common stock and/or an increase in the number of outstanding shares of our common stock that are taken into account in determining MVLS), so that we satisfy the Minimum MVLS listing rule, our common stock would be subject to delisting from the Nasdaq Capital Market.
We are carefully monitoring our MVLS and are actively considering alternatives, actions and transactions to address our MVLS, including without limitation the possibility of a merger, acquisition or other strategic transaction or a financing transaction. However, there are no assurances that we will be able to take actions so as to satisfy the Minimum MVLS requirement of the new rule, if it becomes effective, either at all or on a sustained basis.
30
If our common stock were to be delisted from the Nasdaq Capital Market, such a delisting would have a negative effect on the liquidity of our common stock, would likely decrease the price of our common stock, could result in a loss of confidence by institutional or other investors, employees, business partners or other third parties, result in fewer business development opportunities or opportunities for entering into strategic transactions, impair investors' ability to sell or purchase our Common Stock when they wish to do so, and materially adversely affect our ability to raise capital or pursue financing, strategic or other transactions on acceptable terms, or at all.
If our common stock were to be delisted from the Nasdaq Capital Market, the common stock may be eligible for trading on an over-the-counter market such as the OTCQX Best Market, OTCQB Venture Market or OTCID Basic Market, operated by the OTC Markets Group. The quotation of the common stock on an OTC marketplace, compared to being listed on a national securities exchange such as the Nasdaq Capital Market, may present significant risks to the holders of common stock, including lower availability and efficiency of market price quotations, significantly less liquidity, increased price volatility, increased transaction costs, and the application of state securities laws that could result in restrictions on the sale of our common stock. Stockholders may not be able to sell their shares of common stock on any such substitute marketplace in the quantities, at the times, or at the prices that could potentially be available on a more liquid trading market. If we are not able to obtain a listing on another stock exchange or quotation service for our common stock, it may be extremely difficult or impossible for stockholders to sell their shares of common stock.
In addition, on August 4, 2026, we received a notice from the Nasdaq Listing Qualifications Department of Nasdaq informing us that because the closing bid price of our common stock had been below $1.00 per share for 30 consecutive business days, we no longer complied with the minimum bid price requirement for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The notice had no immediate effect on the listing or the trading of our common stock on The Nasdaq Capital Market. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the notice letter stated that we had an initial compliance period of 180 calendar days, or until February 1, 2027, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days during the 180 calendar day grace period. If at any time before February 1, 2027, the bid price of our common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that we have achieved compliance with the minimum bid price requirement, and the matter would be resolved. The notice letter also disclosed that if we do not regain compliance within the initial compliance period, we may be eligible for an additional 180-day compliance period. To qualify for additional time, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of a plan to cure the deficiency during the second compliance period, including by effecting a reverse stock split if necessary. If the company meets these requirements, Nasdaq would inform us that we have been granted an additional 180 calendar days to regain compliance. However, if it appears to the staff of Nasdaq that we will not be able to cure the deficiency, or if we are otherwise not eligible, the staff would notify us that we will not be granted additional 180 days for compliance and will be subject to delisting at that time In the event of such notification, we may appeal the staff’s determination to delist its securities, but there can be no assurance that any such appeal would be successful. We intend to monitor the closing bid price for our common stock and will consider available strategies in an effort to satisfy the minimum bid price requirement, which may include without limiting seeking stockholder approval to give the board of directors of the Company the authority to effect a reverse stock split in the future.
Also, following the filing of this Quarterly Report on Form 10-Q, we expect to receive a notification letter from Nasdaq indicating that the Company has failed to comply with the minimum stockholders' equity requirement of Nasdaq Listing Rule 5550(b)(1). Nasdaq Listing Rule 5550(b)(1) requires that companies listed on the Nasdaq Capital Market maintain a minimum of $2,500,000 in stockholders' equity for continued listing. If we receive such a notification letter, the letter will not have any immediate effect on the Company’s listing on the Nasdaq Capital Market. We expect that Nasdaq will provide the Company with 45 calendar days to submit a plan to regain compliance with the minimum stockholders’ equity standard. If the Company’s plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the notification letter to regain compliance. If its plan to regain compliance is not accepted, the Company will have the opportunity to appeal that decision to a Hearings Panel. If the Company receives such a letter, the Company intends to promptly evaluate options available to regain compliance and to timely submit a plan to regain compliance with Nasdaq’s minimum stockholders’ equity standard, although there are no assurances that such a plan, if submitted, would be accepted or that, if it is, the Company will be able to regain compliance with the applicable Nasdaq listing requirements.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Information concerning our sales of unregistered securities during the quarter ended June 30, 2026, has previously been reported in Current Reports on Form 8-K that we filed during that quarter.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the quarter ended June 30, 2026, no director or “officer” (as defined in Rule 16a-1(f) under the Exchange Act) of the Company
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ITEM 6. EXHIBITS
The following exhibits are attached hereto or are incorporated herein by reference.
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Incorporated by Reference |
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Exhibit Number |
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Exhibit Description |
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Form |
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File No. |
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Exhibit |
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Filing Date |
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Filed Herewith |
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4.1 |
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Form of Pre-Funded Warrant |
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8-K |
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001-37383 |
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4.1 |
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6/15/2026 |
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4.2 |
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Form of Series A-1 Preferred Investment Option |
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8-K |
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001-37383 |
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4.2 |
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6/15/2026 |
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4.3 |
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Form of Series A-2 Preferred Investment Option |
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8-K |
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001-37383 |
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4.3 |
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6/15/2026 |
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4.4 |
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Form of Placement Agent Preferred Investment Option |
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8-K |
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001-37383 |
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4.4 |
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6/15/2026 |
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10.1 |
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Form of Securities Purchase Agreement |
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8-K
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001-37383 |
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10.1 |
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6/15/2026
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10.2 |
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Form of Registration Rights Agreement |
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8-K |
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001-37383 |
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10.2 |
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6/15/2026 |
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31.1 |
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Principal Executive Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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X |
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31.2 |
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Principal Financial Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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X |
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32.1(1) |
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Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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X |
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32.2(1) |
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Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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X |
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101.INS |
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Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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X |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
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X |
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104.1 |
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Cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in inline XBRL (and contained in Exhibit 101) |
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X |
(1) This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Arcadia Biosciences, Inc. |
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August 13, 2026 |
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By: |
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/s/ THOMAS J. SCHAEFER |
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Thomas J. Schaefer |
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President, Chief Executive Officer and Interim Chief Financial Officer |
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