RiceBran Technologies has signed an agreement with Alothon Group, its minority co-investor in Nutra, that terminated Alothon's roll-up rights, a process that would have let Alothon to exchange its equity position in Nutra for an equivalent value of RiceBran Technologies common stock.
Eliminating Alothon's rollup rights will allow RiceBran Technologies to reclassify approximately $9.6 million of derivative warrant liability to shareholders' equity effective March 31, 2017.
RiceBran Technologies believes it will resolve its shareholders' equity deficiency issue when it reports 2017 first quarter results. RBT reported shareholders' equity of$(632,000) as of December 31, 2016.
"We believe this agreement and the resulting reclassification of the derivative warrant liability to shareholders' equity will greatly enhance our financial position and will place our shareholders' equity at the end of the 2017 first quarter well above NASDAQ's requirement for minimum shareholders' equity of $2.5 million," noted Robert Smith, PhD, CEO of RiceBran Technologies.
"Over the past nine months we have worked to reduce costs, focus operations, and improve our balance sheet. This agreement is an important part of positioning RiceBran Technologies to focus on creating shareholder value by pursuing long-term opportunities to expand our core ingredients business that will improve our margins and EBITDA and generate positive returns on capital."
RiceBran Technologies also needs to regain compliance with Nasdaq's $1 minimum bid price requirement. This can be resolved by having the bid reach or exceed $1per share for ten consecutive trading days.
If this appears unlikely, RiceBran Technologies is committed to taking actions that would allow it to regain compliance, including, if necessary, completing a reverse split of its common stock to increase its share price above the $1 minimum bid price. RiceBran Technologies has until September 6, 2017 to comply with this requirement.
