NutraCea Announces First Quarter 2008 Financial Results

PHOENIX, May 12 /PRNewswire-FirstCall/ -- NutraCea (BULLETIN BOARD: NTRZ) , a world leader in stabilized rice bran (SRB), nutrient research and technology, today announced financial results for its first quarter ended March 31, 2008. Consolidated net revenues rose 155% to $5.1 million for the first quarter of 2008, compared to consolidated net revenues of $2.0 million for the first quarter of 2007. The $3.1 million increase was primarily due to a $860,000 increase in sales of products produced in the United States, an increase of $17,000 in royalty revenues and $2.2 million in sales from the Company's Irgovel subsidiary in Brazil for the period February 19, 2008 through March 31, 2008.

The Company reported a net loss of $(6.8) million, or $(0.05) per share, compared to a net loss of $(247,000), or $0.00 per share for first quarter 2007. The loss was primarily due to a $4.5 million increase in operating expenses and a net decrease in Other Income and Expenses (net) of $1.4 million.

Sales, General and Administrative (SG&A) expenses were $5.2 million, compared to SG&A of $2.3 million for the first quarter of 2007. This increase was primarily due to expanded investment in personnel, infrastructure and sales and marketing activities to meet anticipated future demands. In the quarter we wrote down $390,000 in connection with a doubtful note receivable. The Company's professional fees were $2.0 million compared to $459,000 for the same quarter last year. These expenses were primarily due to consulting and legal fees of approximately $621,000 in connection with marketing and business development, SOX 404 activities, the acquisition of Irgovel and our investment in PT Panganmas Inti Nusantara, an Indonesian Company (PIN), made through our Medan LLC subsidiary. We also incurred a $750,000 broker fee which included the estimated value of an option to be issued related to our investment PIN. Of the $5.2 million in SG&A during the quarter, approximately $1.5 million were non-cash charges.

Brad Edson, president and CEO of NutraCea, commented, "The revenues that we reported for our first quarter were significantly higher year-over-year and slightly lower than we anticipated over Q4 of 2007 as we purposely began to build inventory for product roll outs for new and existing customers that are expected to occur late in our third quarter and build into our fourth quarter. Currently, on a cost basis, we have approximately $2.8 million in domestic inventory, which is a large number for us but necessary in order for the Company to have sufficient quantities of supply to be able to meet anticipated sales demands later this year. We will continue to build our inventory from current levels and are in fact adding further temporary warehousing space to accommodate our inventory needs. When our expected new sales come in during the second half of the year, our inventory will decrease significantly.

"Our production capability will meaningfully increase this quarter and even though we will be adding to inventory during the quarter, we should see our revenue grow from our reported $5.2 million in sales in the first quarter to between $9.0 and $10.0 million in our second quarter."

Mr. Edson added, "We expect to see continued top line growth quarter over quarter for the balance of the year as additional production comes on line, and we later begin to pull down on our inventory. This should be accompanied by continued decreases in operating costs over the next few quarters. Furthermore, the Company anticipates it will be able to contractually secure additional international supply and production agreements for raw bran this calendar year that should increase our ability to satisfy the new and anticipated demand for NutraCea's products for future years."

About NutraCea

NutraCea is a leader in stabilized rice bran nutrient research and dietary supplement development. Through its wholly owned subsidiary RiceX, the company manufactures and distributes products and food ingredients made from rice bran through its proprietary technology and processes. The company has developed intellectual properties to create a range of proprietary product formulations, delivery systems and whole food nutrition products. NutraCea's proprietary technology enables the creation of food and nutrition products from rice bran, normally a wasted by-product of standard rice processing. In addition to its whole foods products, NutraCea develops families of health-promoting "nutraceuticals," including natural arthritis relief and cholesterol-lowering products. More information can be found in the company's filings with the SEC, and at the company's Web site http://www.nutracea.com/.

Forward-Looking Statements

This release contains forward-looking statements, including, but not limited to, statements regarding expected product demand, revenue, inventory levels, production capacity, operating costs and the ability to secure international supply and production agreements, all of which statements are subject to market and other risks. These statements are made based upon current expectations and actual results may differ from those projected, due to a number of risks and uncertainties. The Company does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause results to differ from those set forth in the forward-looking information can be found in the Company's filings with the Securities and Exchange Commission, including the Company's most recent periodic report.

Investor Relations Contact: Marilynn Meek Financial Relations Board [e-mail] AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS March 31, December 31, 2008 2007 (Unaudited) ASSETS Current assets: Cash and cash equivalents $5,816,000 $41,298,000 Restricted cash 5,281,000 758,000 Trade accounts receivable, net of allowance for doubtful accounts of $3,168,000 and $2,999,000, respectively 3,066,000 2,346,000 Inventories 3,831,000 1,808,000 Notes receivable, current portion, net of allowance for doubtful notes receivable of $543,000 and $250,000, respectively 7,145,000 2,936,000 Deposits and other current assets 2,480,000 2,545,000 Total current assets 27,619,000 51,691,000 Restricted cash 1,791,000 1,791,000 Notes receivable, net of current portion 44,000 5,039,000 Property and equipment, net 38,939,000 19,328,000 Investment in joint venture 9,348,000 1,191,000 Patents and trademarks, net of accumulated amortization 5,534,000 5,743,000 Other non-current 50,000 - Goodwill 52,765,000 39,510,000 Total assets $136,090,000 $124,293,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $13,646,000 $7,506,000 Deferred revenue 291,000 90,000 Note payable, current portion 4,424,000 23,00 Total current liabilities 18,361,000 7,619,000 Long-term liabilities: Long-term liabilities 6,278,000 - Notes payable, net of current portion 71,000 77,000 Total liabilities 24,710,000 7,696,000 Commitments and contingencies Shareholders' equity: Common stock, no par value, 350,000,000 shares authorized, 145,525,000 and 144,108,000 shares issued and outstanding 179,237,000 177,813,000 Accumulated deficit (67,968,000) (61,216,000) Foreign currency cumulative translation gain 111,000 - Total shareholders' equity 111,380,000 116,597,000 Total liabilities and shareholders' equity $136,090,000 $124,293,000 NUTRACEA AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Quarters ended March 31, 2008 March 31, 2007 Revenues Net product sales $5,084,000 $1,987,000 Royalty 27,000 10,000 Total revenue 5,111,000 1,997,000 Cost of goods sold 4,279,000 1,113,000 Product warranty cost 515,000 - Total cost of sales 4,794,000 1,113,000 Gross Margin 317,000 884,000 Operating expenses Research and development expenses 264,000 121,000 Selling, general and administrative expenses 5,178,000 2,293,000 Professional fees 1,958,000 459,000 Total operating expenses 7,400,000 2,873,000 Loss from operations (7,083,000) (1,989,000) Other income (expense) Interest and other income 260,000 512,000 Interest expense (120,000) - Other income 245,000 - Equity (loss) in joint venture (17,000) - Gain on settlement - 1,250,000 Net loss before taxes (6,715,000) (227,000) Provision for income taxes (37,000) (20,000) Net loss $(6,752,000) $(247,000) Basic and diluted earnings per share: Basic loss per share $(0.05) $(0.00) Weighted average basic number of shares outstanding 144,779,000 111,959,000