DALLAS, TEXAS, US — Arcadia Biosciences, Inc. has turned its focus to becoming cash-flow positive and saw promising financial results in the second quarter ended June 30. Wheat, however, will not be in the company’s plans. Dallas-based Arcadia divested its Good Wheat brand and resistant starch wheat trait in May.

Net income of $1.06 million, or 78¢ per share on the common stock, was up 29% from $823,000, or 61¢ per share, in the previous year’s second quarter. Total revenues of $1.31 million were up 0.7% from $1.30 million.

“The second quarter of 2024 was a significant turning point for Arcadia as we transform the business and chart our path to becoming cash-flow positive,” said T. J. Schaefer, president and chief executive officer, in an Aug. 13 earnings call.

Schaefer, previously chief financial officer, on July 5 took over as CEO for Stan Jacot, who left the company.

Arcadia sold its GoodWheat brand of high-fiber products, including pasta, pancake mixes, single-serve Quikcakes, and macaroni and cheese, to Above Food Corp for net payments of $4 million over the next three years.

Headcount reductions due to the GoodWheat exit will cut salaries and benefits by 50% compared to the beginning of 2024 and will have a greater impact in fiscal 2025, Schaefer said.

“We were also able to successfully negotiate the exit from our facility in Idaho five months early and have generated several hundred thousand dollars through the sale of farm equipment that is no longer needed,” he said. “We estimate the impact of these savings to be approximately $2 million on a full-year basis as we exit 2024, compared to our normalized operating expense run rate of approximately $2 million per quarter, and we will continue to look for opportunities to reduce our expenses further.”

Arcadia still owns Zola coconut water, which achieved a sales gain of 42% and represented about 90% of Arcadia’s total revenues in the second quarter. Zola has several advantages when compared to the GoodWheat brand, Schaefer said.

“One, Zola’s 20-plus year history in the marketplace means it has an established customer base and distribution channels,” he said. “Two, Zola’s placement is typically in the produce section of conventional grocery retailers, which provides several benefits. First, it is less competitive. Second, it aligns the brand with fresh, natural products, enhancing its appeal to health-conscious consumers, and third, the produce section does not normally require the slotting investment that is typical in center store.”

Schaefer added Arcadia’s marketing investment in GoodWheat in 2023 almost matched the company’s gross sales dollar-for-dollar as the company needed to invest in the new brand. Going forward, Arcadia’s marketing investment will be about 5% of net sales.

Arcadia sold its resistant starch wheat trait to Corteva Agriscience for $4 million in a onetime payment. Since 2017, Arcadia and Corteva had collaborated to develop and commercialize resistant starch durum in North America.

“We still do have a few (crop) traits in our library that we are actively working on monetizing as well,” Schaefer said. “(It) still remains to be seen whether that will be in the form of licensing agreements or potentially even an asset sale similar to what we did with our RS durum.”