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California
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0-32565
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87-0673375
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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5090
N. 40th Street, Suite 400
Phoenix,
AZ
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85018
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(Address
of Principal Executive Offices)
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(Zip
Code)
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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·
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The
Company recorded revenue of $1.6 million in the fourth quarter of 2006
from the December 2006 sale of Dr. Vetz Pet Flex product to an infomercial
customer. The Company recorded an $800,000 reserve for this
receivable in the second quarter of 2007. In the third quarter
of 2007 the customer returned the product and the Company recorded a sales
return of $1.6 million and reversed the reserve it had recorded in the
second quarter of 2007. The Company has now determined
that it will reverse this sale in 2006 instead of in 2007 because (i) the
Company does not have adequate evidence to conclude that the receivable
relating to this sale was collectable in the quarter it was recognized and
(ii) the Company did not have sufficient experience in the infomercial
market to adequately understand the distribution channel, the fluctuating
nature of sales into this channel or the potential for product
return. The effect of the reversal will be to (1) reduce total
revenue by $1.6M in 2006, (2) reduce cost of sales by $268K in 2006, (3)
reduce net income by $1.4M in 2006 and (4) increase net income by $1.4M in
2007.
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·
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In
June 2007 the Company granted to Pacific Holdings Advisors Limited
(“PAHL”) perpetual and exclusive license and distribution rights (the
“License”) for the production and sale of stabilized rice bran and
stabilized rice bran derivative products in certain countries in Southeast
Asia. PAHL agreed to pay the Company a $5 million one-time
license fee (“Licence Fee”), which was due and payable on the fifth
anniversary of the commencement of stabilized rice bran production at a
facility established by PAHL or a joint venture of PAHL and the
Company. The Company recorded this $5 million License Fee in
the second quarter of 2007. Contemporaneous with the grant of
the License, the Company and PAHL jointly formed Grain Enhancements, LLC
(“GE”). Pursuant to GE’s limited liability company agreement,
PAHL sublicensed its rights under the License to
GE.
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·
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On
March 2008, Medan, LLC, a wholly-owned subsidiary of the Company,
purchased (“First Purchase”) from Fortune Finance Overseas LTD (“FFOL”)
for $8.175 million 9,700 outstanding shares of capital stock of PT
Panganmas Int Nusantara, an Indonesian company (“PIN”). In June
2008, Medan purchased directly from PIN 3,050 additional shares of PIN
capital stock for $2.5 million. Following these purchases,
Medan and FFOL own 51% and 49%, respectively, of PIN’s outstanding capital
stock. The capital contributions that the Company made to Medan
funded the purchase of the PIN
shares.
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·
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In
March 2008, PAHL paid to the Company $5 million for its License Fee
described above. A principal shareholder of FFOL is also a
principal shareholder of PAHL, and the Company’s receipt of payment for
the License Fee was made at the same time the Company decided to make the
First Purchase of the PIN shares. Based in part upon the
related ownership of FFOL and PAHL, the timing of the payments, the
sub-license of PAHL’s rights under the License to GE and the Company’s
current determination of the value of the PIN shares, the Company now
believes the First Purchase of the PIN shares and the payment of the
License Fee should be viewed as a combined event with related parties,
causing the Company to account for the First Purchase of the PIN shares as
a payment of $3.175 million instead of $8.175
million.
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Three
months
ended
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Three
months
ended
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Three
months
ended
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||||||||||||||||||
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12/31/06
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12/31/07
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03/31/08
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06/30/08
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9/30/08
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Total
revenue as reported
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$ | 18,090,000 | $ | 22,161,000 | $ | 5,111,000 | $ | 10,314,000 | $ | 11,201,000 | ||||||||||
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Decrease/Increase
in total revenue
- $1.6
million sale
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(1,551,000 | ) | 1,551,000 | |||||||||||||||||
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Decrease
in total revenue
- $2.6
million sale
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(2,601,000 | ) | ||||||||||||||||||
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Decrease
in license revenue
- $5.0 million
sale
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(5,000,000 | ) | ||||||||||||||||||
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Decrease
in total revenue
- $2.0 million
sale
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(1,920,000 | ) | ||||||||||||||||||
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Increase
in total revenue
- $2.0 million
sale
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699,000 | 702,000 | 414,000 | |||||||||||||||||
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Total
revenue as restated
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16,539,000 | 14,191,000 | 5,810,000 | 11,016,000 | 11,615,000 | |||||||||||||||
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Cost
of goods sold as reported
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9,130,000 | 9,898,000 | 4,794,000 | 7,277,000 | 8,704,000 | |||||||||||||||
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Decrease/Increase
in cost of goods sold
- $1.6
million sale
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(268,000 | ) | 268,000 | |||||||||||||||||
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Decrease
in cost of goods sold
- $2.6
million sale
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(557,000 | ) | ||||||||||||||||||
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Increase
in cost of goods sold
- $2.6 million
sale inventory write-off
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557,000 | |||||||||||||||||||
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Decrease
in cost of goods sold
- $2.0 million
sale
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(1,283,000 | ) | ||||||||||||||||||
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Increase
in cost of goods sold
- $2.0 million
sale
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467,000 | 470,000 | 277,000 | |||||||||||||||||
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Cost
of goods sold as restated
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8,862,000 | 8,883,000 | 5,261,000 | 7,747,000 | 8,981,000 | |||||||||||||||
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Gross
profit as reported
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8,960,000 | 12,263,000 | 317,000 | 3,037,000 | 2,497,000 | |||||||||||||||
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Gross
profit as restated
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7,677,000 | 5,308,000 | 549,000 | 3,269,000 | 2,634,000 | |||||||||||||||
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Operating
expenses as reported
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7,913,000 | 27,393,000 | 7,400,000 | 7,734,000 | 7,053,000 | |||||||||||||||
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Decrease
in bad debt expense
- $2.6
million sale
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(1,601,000 | ) | ||||||||||||||||||
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Operating
expenses as restated
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7,913,000 | 25,792,000 | 7,400,000 | 7,734,000 | 7,053,000 | |||||||||||||||
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Other
Income (expense) as reported/restated
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538,000 | 3,239,000 | 368,000 | (1,184,000 | ) | 245,000 | ||||||||||||||
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Net
income (loss) before income tax as reported
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$ | 1,585,000 | $ | (11,891,000 | ) | $ | (6,715,000 | ) | $ | (5,881,000 | ) | $ | (4,311,000 | ) | ||||||
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Net
income (loss) before income tax as restated
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$ | 302,000 | $ | (17,245,000 | ) | $ | (6,483,000 | ) | $ | (5,649,000 | ) | $ | (4,174,000 | ) | ||||||
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NUTRACEA
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Date:
April 23, 2009
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By:
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/s/
Olga Hernandez-Longan
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Olga
Hernandez-Longan
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Chief
Financial Officer
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(Duly
Authorized Officer)
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