<PAGE>
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1998
Commission file number 0-24285
THE RICEX COMPANY
68-0412200
Incorporated in Delaware IRS Employer Identification No.
1241 Hawk's Flight Court, El Dorado Hills, CA 95762
Registrant's Telephone No. (916) 933-3000
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. Yes X No
--- ---
Number of shares of common stock outstanding as of November 12, 1998: 19,805,500
<PAGE>
The RiceX Company
Form 10-Q for the Quarter Ended September 30, 1998
Index
Part I. Financial Information
<TABLE>
<CAPTION>
Item 1. Financial Statements PAGE
----
<S> <C> <C>
a) Balance Sheets at September 30, 1998 and
December 31, 1997 3
b) Statements of Operations for the quarter and
nine month periods ended September 30, 1998
and 1997 4
c) Statements of Cash Flow for the quarter and
nine month periods ended September 30, 1998
and 1997 5
d) Notes to financial statements 6 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibit 27, Financial data schedule
b) The Company filed a Form 8-K on September 10, 1998
reporting an event under Item 9 of Form 8-K.
Signatures 14
</TABLE>
2
<PAGE>
THE RICEX COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
(UNAUDITED) (AUDITED)
---------------- -----------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 934,336 $ 863,127
Trade accounts receivable 364,823 578,613
Inventories 780,363 526,977
Deposits and other current assets 69,272 11,652
---------------- -----------------
Total current assets 2,148,794 1,980,369
Property and equipment, net 3,899,566 4,449,813
Note receivable 68,565 245,908
Deferred debt issuance costs 50,297 135,909
Patents and trademarks 163,905 45,665
---------------- -----------------
$ 6,331,127 $ 6,857,664
---------------- -----------------
---------------- -----------------
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Current portion of long-term debt $ 1,299,821 $ 1,252,570
Accounts payable and accrued liabilities 1,453,032 1,206,165
---------------- -----------------
Total current liabilities 2,752,853 2,458,735
Long-term debt, net of current portion 6,622,211 6,552,818
---------------- -----------------
Total liabilities 9,375,064 9,011,553
---------------- -----------------
Redeemable common stock, par value $.001 per
share, 310,000 shares outstanding redeemable
at $5.00 per share in November 1998 1,550,000 1,550,000
---------------- -----------------
Shareholders' equity (deficit):
Common stock, par value $.001 per share,
50,000,000 shares authorized, 19,495,500
and 20,215,500 issued and outstanding at
September 30, 1998 and December 31, 1997 19,495 20,215
Additional paid-in capital 15,269,588 17,713,049
Accumulated deficit (18,744,473) (15,469,373)
Unearned stock option compensation (1,138,547) (1,967,780)
Notes receivable from shareholders -- (4,000,000)
---------------- -----------------
Total shareholders' equity (deficit) (4,593,937) (3,703,889)
Commitments
---------------- -----------------
$ 6,331,127 $ 6,857,664
---------------- -----------------
---------------- -----------------
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
3
<PAGE>
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
------------------------------------ ------------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue:
Sales $ 613,125 $ 715,430 $ 2,025,435 $ 2,237,629
Royalties and other 81,842 126,212 207,100 333,543
---------------- ---------------- ---------------- ----------------
694,967 841,642 2,232,535 2,571,172
Cost of sales 499,362 617,765 1,554,825 1,703,550
---------------- ---------------- ---------------- ----------------
195,605 223,877 677,710 867,622
Research and development expenses 202,854 157,830 768,288 443,345
Selling, general and administrative
expenses 668,684 662,658 1,781,150 1,457,243
Stock option compensation to
employees 275,591 902,737 829,233 1,726,281
Shareholder loan costs and
related rescission (318,931) 73,600 (171,733) 98,133
Professional fees 229,595 672,769 424,691 1,214,294
---------------- ---------------- ---------------- ----------------
Loss from operations (862,188) (2,245,717) (2,953,919) (4,071,674)
Other income (expense):
Interest and other income 1,753 31,721 10,183 73,983
Interest expense (112,591) (106,608) (330,764) (422,217)
Beneficial conversion feature and
option issued in connection
with debt -- -- -- (1,325,000)
---------------- ---------------- ---------------- ----------------
Loss before provision for income taxes (973,026) (2,320,604) (3,274,500) (5,744,908)
Provision for income taxes (200) (200) (600) (600)
---------------- ---------------- ---------------- ----------------
Net loss $ (973,226) $ (2,320,804) $ (3,275,100) $ (5,745,508)
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Basic earnings per share:
Net loss per share $ (0.05) $ (0.11) $ (0.16) $ (0.30)
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Weighted-average shares outstanding 20,494,236 20,437,883 20,515,079 19,178,421
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
STATEMENTS OF CASH FLOW
(unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
---------------------------------- ----------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (973,226) $ (2,320,804) $ (3,275,100) $ (5,745,508)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 178,663 130,125 536,096 390,375
Shares, warrants and options issued
for compensation and services 276,411 1,418,982 830,053 2,242,526
Accretion of debt discounts 59,092 66,828 177,274 174,698
Beneficial conversion feature -- -- -- 1,325,000
Net change in operating assets
and liabilities:
Trade accounts receivable (28,247) (35,765) 213,790 (288,030)
Inventories (169,564) (94,626) (253,389) (318,643)
Deposits and other current assets 86,065 (28,112) (57,620) 29,547
Deferred debt issuance costs 29,891 17,728 85,614 195,074
Accounts payable and accrued
liabilities (260,549) 33,520 246,867 189,393
--------------- ---------------- ---------------- ---------------
Net cash used in operating activities (801,464) (812,124) (1,496,415) (1,805,568)
Cash flows from investing activities:
Purchases of property and equipment, net 44,678 (175,634) (8,751) (570,641)
Payments for trademarks and patents -- (45,665) -- (345,665)
Collection on note receivable 27,299 8,592 82,003 34,592
--------------- ---------------- ---------------- ---------------
Net cash used in investing activities 71,977 (212,707) 73,252 (881,714)
Cash flows from financing activities:
Proceeds from issuance of common stock 1,555,000 7,050 1,555,000 57,050
Proceeds from issuance of long-term debt -- 500,000 -- 2,500,000
Principal payments on long-term debt (5,025) (4,443) (30,576) (22,533)
Payments of long-term debt to shareholders -- (39,000) (30,052) (62,000)
--------------- ---------------- ---------------- ---------------
Net cash (used in) provided by
financing activities 1,549,975 463,607 1,494,372 2,472,517
Net increase (decrease) in cash and
cash equivalents 820,488 (561,224) 71,209 (214,765)
Cash and cash equivalents, beginning of period 113,848 2,334,759 863,127 1,988,300
--------------- ---------------- ---------------- ---------------
Cash and cash equivalents, end of period $ 934,336 $ 1,773,535 $ 934,336 $ 1,773,535
--------------- ---------------- ---------------- ---------------
--------------- ---------------- ---------------- ---------------
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
The RiceX Company
Notes to Financial Statements
1. Description of Business and Significant Accounting Policies
The RiceX Company (the Company or RiceX) is an agribusiness food
technology company, which has developed a proprietary process to stabilize rice
bran. The Company is headquartered in El Dorado Hills, California and has
stabilization equipment located at two rice mills in Northern California. The
Company purchases raw rice bran from these mills and mill employees, under
Company supervision, operate the Company equipment to stabilize rice bran. The
Company pays a processing fee to the mills for this service. Under an agreement
with one of the mills, that mill may use the Company's equipment to stabilize
rice bran for its customers and the mill pays a royalty fee to the Company.
The Company has a wholly-owned subsidiary, Food Extrusion Montana, Inc.
(FoodEx Montana). FoodEx Montana is engaged in the business of custom
manufacturing grain-based products for food ingredient companies at its
production facility in Dillon, Montana. The facility has specialized processing
equipment and techniques for the treatment of grain products to cook, convert,
isolate, dry and package finished food ingredients used in the formulation of
health food and consumer food finished products. The soluble form of the
Company's rice bran products is produced at the Montana facility.
There have been no changes in the Company's significant accounting
policies as set forth in the Company's audited financial statements for the year
ended December 31, 1997, which were included in the Company's Form 10-SB. These
unaudited financial statements as of September 30, 1998 for the three and nine
month periods ended September 30, 1998 and 1997 have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
results of operations for the nine months ended September 30, 1998 are not
necessarily indicative of the results expected for the full year.
2. Inventories
Inventories are stated at the lower of cost or market determined on
first-in, first-out (FIFO) basis. At September 30, 1998, inventories consisted
of $606,004 in finished goods and $174,359 in packaging supplies. At December
31, 1997, inventories consisted of $341,607 in finished goods and $185,370 in
packaging supplies.
6
<PAGE>
3. Long-term Debt
Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
(UNAUDITED) (AUDITED)
------------- ------------
<S> <C> <C>
Notes payable to related parties:
Note payable to shareholder, face
amount of $1,750,000 secured by
certain equipment, stated interest
rate of 5%, imputed interest rate
of 13%, due November 1999 $1,618,534 $1,534,187
Notes payable to shareholders,
unsecured, non-interest bearing,
to be repaid at the discretion
of the Company -- 30,086
Notes payable other:
Note payable secured by six rice
extruders, non-interest bearing
due October 1999 5,000,000 5,000,000
Notes payable, secured by equip-
ment at FoodEx, Montana, non-
interest bearing, imputed interest
rate of 13%, due November 1998 1,278,834 1,186,008
Other notes payable 24,664 55,107
---------- ----------
7,922,032 7,805,388
Less current portion 1,299,821 1,252,570
---------- ----------
$6,622,211 $6,552,818
---------- ----------
---------- ----------
</TABLE>
4. Shareholders' Equity (Deficit)
On September 10, 1998, the Company issued and sold 1,000,000 shares of
its common stock to a Swiss corporation for $1,500,000. The shares were issued
without registration under the Securities Act in reliance upon Regulation S of
the Act. Net proceeds to the Company after fees, commissions and other expenses
were $1,275,000. Also in connection with the transaction, the investor and an
investment advisor received warrants to purchase up to 1,000,000 and 75,000
shares, respectively of the Company's common stock. The warrants are exercisable
at an exercise price of $1.50 per share during the first year from the date of
issuance and at an exercise price of $1.8125 per share thereafter, subject to
adjustment in certain events. The warrants expire two years from the date of
issuance.
7
<PAGE>
On September 10, 1998, the Company and an executive officer rescinded a
$4,000,000 note receivable from the executive officer and the associated
purchase of 2,000,000 shares of the Company's common stock. The executive
officer had acquired the shares through the exercise of a stock option, which
was reinstated in connection with the rescission of the note receivable. The
note receivable had been outstanding since May 1997 and bore interest at 8% per
year. The Company had agreed to reimburse the executive officer for the interest
on the note plus the income tax effect of the interest. The interest income and
the associated accruals for the reimbursements were reversed in connection with
the rescission.
5. Net Loss per Share
Basic net loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding during all periods
presented. Options and warrants are excluded from the basic net loss per share
calculation because they are currently anti-dilutive.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion of the Company's financial condition and
results of operations includes certain forward-looking statements. When used in
this report, the words "expects," "intends," "believes," "plans" and
"anticipates and other terms are intended to identify forward-looking statements
that relate to the Company's future performance. Such statements involve risks
and uncertainties and the Company's actual results may differ materially from
the results described here. Factors that might cause such a difference include,
but are not limited to, those discussed in the "Factors Affecting Operating
Results" section of the Company's Form 10-SB.
Quarters ended September 30, 1998 and 1997
Revenue for the quarter ended September 30, 1998 was $694,967, a
$146,675, or 17% decline from the prior year when revenue totaled $841,642.
Product sales, which constituted 88% of total revenue were down $102,305, or 14%
from the year earlier period. Royalties and other sales constituted 12% of total
revenue for the quarter and showed a decline of $44,370, or 35% due to a drop in
custom food processing sales at the Company's FoodEx Montana facility. The
decline in product sales is attributable to a $223,000 decline in sales to the
Company's largest customer. This decline was partially offset by an increase of
$120,695, or 24% in sales to other existing and new customers.
8
<PAGE>
The gross margin was 28% for the quarter ended September 30, 1998
compared to 31% for the same period a year ago. Gross margins on the
Company's various products vary widely and the gross margin is impacted from
period to period by sales mix and utilization of production capacity. There
were more sales of Ricelin, the product with the highest gross margin last
year than this year. The Company expects that gross margins will improve as
sales volumes increase.
Research and development expenditures increased from $157,830 for the
quarter ended September 30, 1997 to $202,854 for the current quarter. The
increase relates primarily to new product development costs, particularly rice
bran oil and Max `E', a variation on stabilized rice bran.
Selling, general and administrative expenses were $668,684 for the
quarter ended September 30, 1998 and $662,658 for the year earlier period.
Stock option compensation expense is a non-cash charge relating to the
one-time issuance in 1997 of favorably priced stock options to employees and
directors to attract these executives to the Company. The charge represents the
difference between the exercise price and the trading value on the date of
grant. The difference is recognized over the vesting period of each grant, which
generally ranges from two to three year, except for the directors' grants, which
vested immediately.
Shareholder loan costs and related rescission relates to the rescission
in September 1998 of a $4,000,000 note receivable from an executive officer and
the associated purchase of 2,000,000 shares of the Company's common stock. The
executive officer had acquired the shares through the exercise of a stock
option, which was reinstated in connection with the rescission of the note
receivable. The note receivable had been outstanding since May 1997 and bore
interest at 8% per year. The Company had agreed to reimburse the executive
officer for the interest on the note plus the income tax effect of the interest.
The interest income and the associated accruals for the reimbursements were
reversed in connection with the rescission in the quarter ended September 30,
1998 for a net credit to income of $318,931. In the quarter ended September 30,
1997 there was a net charge of $73,600 relating to the loan and related costs.
Professional fees declined to $229,595 for the quarter ended September
30, 1998 from $672,769 for the prior year's quarter. The prior year amounts
include expenditures for litigation that was successfully concluded in the third
quarter of 1997.
The Company's net loss for the quarter ended September 30, 1998 totaled
$973,226, or $.05 per share, compared to $2,320,804, or $.11 per share a year
ago. As discussed above, this decline in loss was primarily due to the decline
in
9
<PAGE>
stock option charges and professional fees and the reversal of costs
associated with a shareholder loan that was rescinded during the quarter.
Nine months ended September 30, 1998 and 1997
Revenue for the nine months ended September 30, 1998 totaled
$2,232,535, down $338,637, or 13% from a year ago when revenue was $2,571,172.
Product sales, which constituted 91% of total revenue for the period were down
$212,194, or 9% from the year before. Royalties and other sales constituted 9%
of total revenue for the period and showed a decline of $126,443, or 38% due to
a drop in custom food processing sales at the Company's FoodEx Montana facility.
The decline in product sales is attributable to a $665,000 decline in sales to
the Company's largest customer. This decline was partially offset by an increase
of $326,363, or 29% in sales to other existing and new customers.
The gross margin was 30% for the nine months ended September 30,
1998 compared to 34% a year ago. Gross margins on the Company's various
products vary widely and the gross margin is impacted from period to period
by sales mix and utilization of production capacity. There were more sales of
Ricelin, the product with the highest gross margin last year than this year.
The Company expects that gross margins will improve as sales volumes increase.
Research and development expenditures increased from $443,345 for the
nine months ended September 30, 1997 to $768,288 for the current nine months.
The increase resulted from the addition of a Vice President of Science and
Technology in the third quarter of 1997 to accelerate the Company's research and
product development efforts and the associated costs of those efforts.
Selling, general and administrative expenses were $1,781,150 for the
nine months ended September 30, 1998 compared to $1,457,243 for the year earlier
period. The increase in these costs relates to the expansion of the company's
infrastructure, including the addition of executive management and outside
directors to oversee the raising of additional capital, registration of the
Company with the Securities and Exchange Commission, negotiation of strategic
alliances, and the development of foreign market opportunities.
Stock option compensation expense is discussed above.
Shareholder loan costs and related rescission is discussed above. The
interest income and the associated accruals for the reimbursements were reversed
in connection with the rescission in September 1998 resulting in a net credit to
income of $171,733 for the nine months ended September 30, 1998. In the nine
month period ended September 30, 1997 there was a net charge of $98,133 relating
to the loan and related costs.
10
<PAGE>
Professional fees declined to $424,691 for the nine months ended
September 30, 1998 from $1,214,294 for the prior year. The prior year amounts
include the costs of consultants and expenditures for litigation that was
successfully concluded in the third quarter of 1997.
Interest expense declined to $330,762 for the nine months ended
September 30, 1998 from $422,217 a year ago. The 1997 amount includes the
write-off of costs associated with the restructuring of a note. The 1997 period
also included a $1,325,000 non-cash charge relating to a conversion feature
granted to the lender in connection with restructuring.
The Company's net loss for the nine months ended September 30, 1998 was
$3,275,100, or $.16 per share, compared to $5,745,508, or $.30 per share a year
ago. As discussed above, this decline in loss was primarily due to the decline
in stock option charges, beneficial conversion feature and professional fees,
and the reversal of costs associated with a shareholder loan that was rescinded
in September 1998.
Liquidity and Capital Resources
As of the date of this Form 10-QSB, the Company has yet to generate
positive cash flow from its own operations due to the developmental nature of
such operations, substantial ongoing investment in research and development
efforts, and expenditures to build the appropriate infrastructure to support its
expected growth. Consequently, the Company has been substantially dependent on
private placements of its equity securities and debt financing to fund its cash
requirements.
The Company's most recent private placement was closed in September
1998 and involved the issuance of 1,000,000 shares of common stock for proceeds
of $1,500,000 ($1,275,000 after fees, commissions and expenses). In connection
with the private placement, the Company issued warrants to purchase up to
1,000,000 shares and 75,000 shares of the Company's common stock to the investor
and an investment advisor, respectively. The warrants are exercisable at $1.50
per share for the first year after issuance and $1.8125 per share thereafter,
subject to adjustment in certain events. The warrants expire two years after
issuance if not exercised. As of the date hereof, no shares of common stock have
been issued as a result of the exercise of these warrants.
In connection with the September 1998 private placement, the Company
has granted the investor certain registration rights and has agreed to adjust
the number of shares received by the investor in the event that additional
common stock is issued within two years of the private placement at less than
$1.50 per share.
11
<PAGE>
Prior to the September 1998 private placement, the Company's most
recent private placement was closed in May 1996, resulting in the issuance of an
aggregate of 1,400,000 shares of common stock for net proceeds of approximately
$1,000,000. In connection with the private placement, the Company issued
warrants to purchase an aggregate of 600,000 shares of common stock. The
warrants expire in February 1999 and are exercisable at $4.00 per share. As of
the date hereof, no shares of common stock have been issued as a results of the
exercise of these warrants.
During the first quarter of 1996, the Company received a loan of
$1,750,000 from Dominion Resources, Inc. bearing an interest rate of 5% per year
with principal and interest payable in full in November 1999. The loan is
secured by equipment. As additional consideration for the loan, the Company
issued the lender 578,000 shares of its common stock.
During the fourth quarter of 1996, the Company received a loan
commitment in the amount of $5,000,000 from Monsanto Company (Monsanto) pursuant
to a convertible, non-interest bearing promissory note. The note has been fully
advanced as of September 30, 1998. The Monsanto note matures in November 1999.
Monsanto has the right to convert the unpaid principal amount into shares of the
Company's common stock. As of the date hereof, Monsanto has advised the Company
that it intends to exercise its conversion right in full upon the close of an
offering of the Company's equity securities meeting certain criteria. Terms and
condition of the conversion are subject to negotiation. Had Monsanto exercised
its conversion right prior to September 30, 1998, long-term liabilities shown on
the Company's September 30, 1998 balance sheet would have been reduced by
$5,000,000, and shareholders' equity (deficit) would have been increased by the
same amount.
Effective January 1997, the Company formed its wholly-owned subsidiary,
FoodEx Montana and acquired the assets that comprise its Dillon, Montana
production facility in exchange for 310,000 shares of the Company's common stock
and the assumption of certain liabilities totaling $1,320,000. The seller has
the option to sell the common shares back to the Company at a price of $5.00 per
share in November 1998. The shares have been reflected in the Company's balance
sheet as redeemable common stock. As of the date hereof, the sellers have
notified the Company of their intent to put their stock back to the Company. In
addition, the unpaid balance of the liabilities assumed in connection with the
acquisition are due in full on November 30, 1998.
As of September 30, 1998, the Company's cash reserves total $934,336
and total current assets were $2,148,794. The Company is not currently operating
at a break-even level in terms of both cash flow and profitability. For the
remainder of 1998 and into 1999, the Company expects to continue to generate
operating losses and will incur additional costs for research and development,
including clinical studies, and professional and legal fees for patent
12
<PAGE>
and trademark applications. The Company will require additional debt
financing or capital to fund its operating losses. It also expects to
continue to expand its sales and marketing efforts to generate revenue. These
efforts could significantly increase demand for the Company's products beyond
the Company's current production capacity. While the Company believes it can
increase its production capacity to meet sales demand, significant additional
capital could be required to meet expansion requirements.
The Company's long-term debt as of September 30, 1998 was $7,922,032.
Of this amount, approximately $1,280,000 relating to the acquisition of the
FoodEx Montana facility is due November 30, 1998. In addition, the owners of the
310,000 shares of common stock issued in connection with the acquisition have
notified the Company of their intent to put the stock back to the Company at
$5.00 per share. The stock put is payable on November 20, 1998. The Company will
need new debt financing, additional capital, or the ability to extend the
repayment period in order to meet the FoodEx Montana obligations.
The Company is taking steps to raise additional equity capital.
However, there can be no assurance that any new capital will be available to the
Company or that adequate funds for the Company's operations, whether from the
Company's revenues, financial markets, collaborative or other arrangements with
corporate partners, or from other sources will be available when needed or on
terms satisfactory to the Company. The failure of the Company to obtain adequate
additional financing may require the Company to delay, curtail or scale back
some or all of its research and development programs, sales and marketing
efforts, manufacturing operations, clinical studies and regulatory activities,
and potentially to seek bankruptcy protection from its creditors or to cease its
operations. Any additional equity financing may involve substantial dilution to
the Company's then-existing shareholders.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 27, Financial data schedule
b) The Company filed a Form 8-K on September 10, 1998 reporting
an event under Item 9 of Form 8-K.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
THE RICEX COMPANY
Date: November 13, 1998 /s/ Allen J. Simon
------------------------
Chief Executive Officer
/s/ Karen D. Berriman
------------------------
Vice President and Chief
Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 934,336
<SECURITIES> 0
<RECEIVABLES> 384,823
<ALLOWANCES> 20,000
<INVENTORY> 780,363
<CURRENT-ASSETS> 2,148,794
<PP&E> 5,352,612
<DEPRECIATION> 1,453,046
<TOTAL-ASSETS> 6,331,127
<CURRENT-LIABILITIES> 2,752,853
<BONDS> 6,622,211
1,550,000
0
<COMMON> 19,495
<OTHER-SE> (4,613,432)
<TOTAL-LIABILITY-AND-EQUITY> 6,331,127
<SALES> 2,025,435
<TOTAL-REVENUES> 2,232,535
<CGS> 1,554,825
<TOTAL-COSTS> 5,186,454
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 320,581
<INCOME-PRETAX> (3,274,500)
<INCOME-TAX> 600
<INCOME-CONTINUING> (3,275,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,275,100)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
