form424b5.htm
Filed
pursuant to Rule 424(b)(5)
Registration
Number 333-148929
PROSPECTUS
SUPPLEMENT
(TO
PROSPECTUS DATED APRIL 8, 2008)
NutraCea
22,222,223
Shares
Warrants
for 6,666,664 Shares
See
“Risk Factors” beginning on page S-3 of this prospectus supplement for
information you should consider before buying our securities.
We are
offering and selling up to 22,222,223 shares of our common stock, warrants to
purchase up to 6,666,664 shares of our common stock and up to 6,666,664
additional shares of our common stock issuable upon exercise of the offered
warrants with this prospectus supplement. We are offering the shares and
warrants in units consisting of one share of common stock together with a
warrant to purchase 0.3 of one share of common stock; the warrants will have an
exercise price of $1.20 per share of common stock. Units will not be issued or
certificated. The shares of common stock and warrants are immediately
separable and will be issued separately.
We have retained Rodman &
Renshaw, LLC, as our exclusive placement agent to use its reasonable best
efforts to solicit offers to purchase our securities in this
offering. In addition to the placement agent’s fee below, we have
also agreed to issue the placement agent warrants to purchase up to an aggregate
of 1,333,333 shares of our common stock at an exercise price of $1.20 per
share.
Our
common stock is quoted on the Over-the-Counter (“OTC”) Bulletin Board under the
symbol “NTRZ.OB”. On April 24, 2008, the last sale price of our
common stock on the OTC Bulletin Board was $1.13 per share.
You
should carefully read this prospectus supplement and the accompanying base
prospectus before you invest in our securities.
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Per
Unit
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Total
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Public
offering price
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$ |
0.90 |
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$ |
20,000,000 |
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Placement
agent’s fees
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$ |
0.05 |
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$ |
1,200,000 |
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Proceeds,
before expenses, to NutraCea
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$ |
0.85 |
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$ |
18,800,000 |
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The placement agent is not purchasing or
selling any securities pursuant to this prospectus supplement or the
accompanying prospectus. We expect that delivery of the securities being offered
pursuant to this prospectus supplement will be made to purchasers on or about April
29,
2008.
This
offering is being made only to “Qualified Institutional Buyers” (defined in Rule
144A under the Securities Act of 1933) located in one of the following states:
California, Colorado, Connecticut, Florida, Georgia, Illinois, Maryland,
Massachusetts, Minnesota, New Jersey, New York, North Carolina, Pennsylvania,
Texas or Wisconsin. Purchasers from each of these states may also be required to
satisfy certain investor qualification requirements, as set forth in the
purchase agreement for this offering.
Neither the
Securities and Exchange Commission nor any state securities commission has
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
This
prospectus supplement is dated April 24, 2008
Prospectus
Supplement
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Page
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S-1
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S-2
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S-3
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S-4
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S-4
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S-5
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S-7
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S-8
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S-8
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Base
Prospectus
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Page
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In this prospectus
supplement and the accompanying prospectus, unless otherwise indicated, the
terms NutraCea, “we,” “us,” “our,”
and similar terms refer to NutraCea and its
subsidiaries on a consolidated basis.
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first
part is this prospectus supplement, which describes the terms of the offering of
common stock and warrants and also adds to and updates information contained in
the accompanying prospectus and the documents incorporated by reference into
this prospectus supplement and the accompanying prospectus. The second part is
the accompanying prospectus, which provides more general information. To the
extent there is a conflict between information contained in this prospectus
supplement, on the one hand, and information contained in the accompanying
prospectus or any document incorporated by reference, the information in this
prospectus supplement shall control.
You should rely only on the information
contained in this prospectus supplement, the accompanying prospectus and the
documents incorporated herein and therein by reference. We have not authorized
anyone to provide you with information that is different. We are offering to
sell, and seeking offers to buy, shares of common stock and warrants only in
jurisdictions where offers and sales are permitted. The information contained,
or incorporated by reference, in this prospectus supplement and the accompanying
prospectus is accurate only as of the respective dates thereof, regardless of
the time of delivery of this prospectus supplement and the accompanying
prospectus, or of any sale of the common stock or warrants. It is important for
you to read and consider all information contained in this prospectus supplement
and the accompanying prospectus, including the documents we have referred you to
in the section entitled “Where You Can Find More Information” in this prospectus
supplement, before making your investment
decision.
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Shares
of common stock being offered by us
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22,222,223
shares, and up to an additional 6,666,664 shares to be issued on exercise
of the warrants.
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Warrants
to purchase shares of common stock
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Warrants
to purchase 6,666,664 shares, with an exercise price of $1.20 per share.
The warrants are immediately exercisable and will remain exercisable for
five years from the date of the closing of the sale of the securities in
this offering.
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Price
per unit (consisting of one share of common stock together with a warrant
to purchase 0.3 of one share of common stock)
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$0.90
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Manner
of offering
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Best
efforts offering directly by the Company with a placement
agent. The offering will be limited to “Qualified Institutional
Buyers” that meet certain additional qualification
requirements. See “Plan of Distribution.”
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Use
of proceeds
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The
net proceeds from this offering will be added to our general funds and
used for research and development, working capital and general corporate
purposes. See “Use of Proceeds.”
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OTC
Bulletin Board Symbol
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“NTRZ.OB”
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Risk
Factors
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See
“Risk Factors” beginning on page S-3 of this prospectus supplement that
you should consider before making a decision to invest in our
securities.
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Before
you invest in our securities, you should become aware of various risks,
including those described below and beginning on page 5 of the accompanying base
prospectus. You should carefully consider these risk factors, together with all
of the other information included in this prospectus supplement and the
accompanying base prospectus, including the documents incorporated by reference
in this prospectus supplement and the accompanying base prospectus, before you
decide whether to purchase the securities. The risks set forth below may not be
exhaustive.
Our
business, operating results, financial performance, and share price may be
materially adversely affected by a number of factors, including but not limited
to the following risk factors, any one of which could cause actual results to
vary materially from anticipated results or from those expressed in any
forward-looking statements. You should also consider the additional information
set forth in our SEC reports on Forms 10-K, 10-Q and 8-K and in the other
documents considered a part of this prospectus supplement. See “Where You Can
Find More Information.”
Risks
Related To This Offering
Our
use of the offering proceeds may not yield a favorable return on your
investment.
We
currently anticipate using the net proceeds from this offering to fund:
(i) research and development activities; (ii) other working capital
needs; and (iii) general corporate expenditures. In addition, we may use a
portion of the net proceeds to acquire businesses, products or technologies that
are complementary to our current or future business and product lines. Our
management has broad discretion over how these proceeds are used and could spend
the proceeds in ways with which you may not agree. Pending the use of the
proceeds in this offering, we will invest them. However, the proceeds may not be
invested in a manner that yields a favorable or any return.
If
our stock price does not increase, the warrants being offered may not have any
value.
The
warrants being sold as part of this offering have an exercise price of $1.20 per
share and will only be exercisable for a period of five years from the date of
issuance. In the event our common stock price does not exceed the exercise price
of the warrants during the period in which the warrants are exercisable, the
warrants may not have any value.
Holders
of our warrants who exercise their warrants for common stock will incur
immediate dilution on exercise.
If you
exercise your warrants for shares of common stock, you will experience immediate
dilution because the per share exercise price of your warrant is higher than the
net tangible book value per share of the outstanding common stock immediately
after this offering. In addition, you will experience dilution when we issue
additional shares of common stock that we are permitted or required to issue
under options, warrants, our stock option plan, other employee or director
compensation plans and strategic ventures and acquisitions.
Holders
of our warrants will have no rights as a common shareholder until they acquire
our common stock.
Until you
acquire shares of our common stock upon exercise of the warrants, you will have
no rights with respect to our common stock for the shares underlying the
warrants, including rights to respond to tender offers and rights to receive any
dividends or distributions on our common stock. Upon the exercise of the
warrant, you will receive any dividends or distributions that have been made on
our common stock since the date the warrant was issued, however, you will be
entitled to vote or otherwise exercise your rights as a shareholder only as to
matters for which the record date occurs after the conversion
date.
This
prospectus supplement and the accompanying base prospectus, including the
documents that we incorporate by reference, contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the Securities Exchange
Act of 1934, as amended, or the Exchange Act. Any statements about our
expectations, beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking. These
statements are often, but are not always, made through the use of words or
phrases such as “anticipates,” “estimates,” “plans,” “projects,” “continuing,”
“ongoing,” “expects,” “management believes,” “we believe,” “we intend” and
similar words or phrases. Accordingly, these statements involve estimates,
assumptions and uncertainties which could cause actual results to differ
materially from those expressed in them. Any forward-looking statements are
qualified in their entirety by reference to the factors discussed throughout
this prospectus supplement and accompanying base prospectus, and in particular
those factors listed under the sections entitled “Risk Factors.”
Because
the factors referred to in the preceding paragraph could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements we make, you should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made, and we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict which factors will arise. In addition, we cannot
assess the impact of each factor on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
We estimate that the net proceeds to us
from the sale of the securities offered by this prospectus supplement and the
accompanying prospectus
will be $18.75 million, after deducting the
placement agent’s fees and estimated offering expenses and assuming that we sell
the maximum number of units offered hereby. In addition, if all of the warrants
offered by this prospectus supplement are exercised in full for cash (excluding
the warrants issued to the placement agent), we will receive an additional
$8.0 million. There can be no assurance
we will sell any or all of the securities offered hereby. Because there is no
minimum offering amount required as a condition to closing this offering, we may
sell less than all of the securities offered hereby, which may significantly
reduce the amount of proceeds received by us.
We intend to use the net proceeds
from the sale of the
securities offered by this
prospectus supplement and the accompanying prospectus for research and
development, working capital and general corporate purposes. A portion of the proceeds may be used
to acquire or invest in complementary businesses, technologies, services or
products, although we have no current commitments for any such acquisition or
investment.
Until we use the net proceeds of this
offering, we intend to invest the funds in short-term, interest bearing
investments.
The warrants represent the right to
purchase up to a total of 6,666,664 shares of common stock at an initial
exercise price of $1.20 per share. Each warrant may be exercised at any time and
from time to time on or after April 24, 2008 and through and including April 24, 2013.
Exercise. Holders of the warrants may exercise
their warrants to purchase shares of our common stock on or before the
expiration date by delivering (i) an exercise notice, appropriately
completed and duly signed, and (ii) if such holder is not utilizing the
cashless exercise provisions, payment of the exercise price for the number of
shares with respect to which the warrant is being exercised. Warrants may be
exercised in whole or in part, but only for full shares of common stock, and any
portion of a warrant not exercised prior to the expiration date shall be and
become void and of no value. We provide certain rescission and buy-in rights to
a holder if we fail to deliver the shares of common stock underlying the
warrants by the fifth
trading day after the date on which delivery of such stock certificate is
required by the warrant. With respect to the rescission rights, the holder has
the right to rescind the exercise. The buy-in rights apply if after such fifth
trading day the holder purchases (in an open market transaction or otherwise)
shares of our common stock to deliver in satisfaction of a sale by the holder of the warrant shares
that the holder anticipated receiving from us upon exercise of the warrant. In
this event, we will:
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pay cash to the holder in an
amount equal to the excess (if any) of the buy-in price over the product
of (A) such number of shares of common stock, times (B) the
price at which the sell order giving rise to holder’s purchase obligation
was executed; and
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at the election of holder, either
(A) reinstate the portion of the warrant as to such number of shares
of common stock, or (B) deliver to holder a certificate or
certificates representing such number of shares of common
stock.
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In addition, the warrant holders are
entitled to a “cashless exercise” option if, at any time of exercise, there is
no effective registration statement registering, or no current prospectus
available for, the issuance of the shares of common stock underlying the
warrants and such shares
may then be sold in accordance with Rule 144 under the Securities Act of
1933. This option entitles
the warrant holder to elect to receive fewer shares of common stock without
paying the cash exercise price. The number of shares to be issued would be
determined by a formula based on the total number of shares with respect to
which the warrant is being exercised, the volume weighted average of the prices
per share of our common stock on the trading date immediately prior to the date
of exercise and the applicable exercise price of the
warrants.
The shares of common stock issuable on
exercise of the warrants will be, when issued in accordance with the warrants,
duly and validly authorized, issued and fully paid and non-assessable. We will
authorize and reserve at least that number of shares of common stock equal to
the number of shares of common stock issuable upon exercise of all outstanding
warrants.
Fundamental
Transaction. If, at any
time while the warrant is outstanding, we (1) consolidate or merge with or
into another corporation, (2) sell all or substantially all of our assets
or (3) are subject to or complete a tender or exchange offer pursuant to
which holders of our common stock are permitted to tender or exchange their
shares for other securities, cash or property, (4) effect any
reclassification of our common stock or any compulsory share exchange pursuant
to which our common stock is converted into or exchanged for other securities,
cash or property, each, a Fundamental Transaction, then the holder shall have
the right thereafter to receive, upon exercise of the warrant, the same amount
and kind of securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of the number of
warrant shares then issuable upon exercise of the warrant, or Alternate
Consideration. Any successor to us, surviving entity or the corporation
purchasing or otherwise acquiring such assets shall assume the obligation to
deliver to the holder such Alternate Consideration as the Holder may be entitled
to purchase, and the other obligations under the
warrant.
In the event of certain Fundamental
Transactions, the holders of the warrants will be entitled to receive, in lieu
of our common stock and at the holders’ option, cash in an amount equal to the
value of the remaining unexercised portion of the warrant on the date of the
transaction determined using a Black-Scholes option pricing model with an expected volatility equal
to the 100 day historical price volatility obtained from Bloomberg L.P. as
of the trading day immediately prior to the public announcement of the
transaction.
Subsequent Rights
Offerings. If, at any time
while the warrant is outstanding, we issue rights, options or warrants to all
holders of our common stock entitling them to purchase our common stock at a
price per share less than the volume weighted average price on the date of the
issuance of such rights, options or warrants, then the exercise price will
adjust pursuant to a volume weighted average price based
ratio.
Pro Rata
Distributions. If, at any
time while the warrant is outstanding, we distribute evidences of our
indebtedness or assets or rights or warrants to purchase any security other than
our common stock to all holders of our common stock, then the exercise price
will adjust pursuant to a volume weighted average price based
ratio.
Delivery of
Certificates. Upon the
holder’s exercise of a warrant, we will promptly, but in no event later than
three trading days after the exercise date, issue and deliver, or cause to be
issued and delivered, a certificate for the shares of common stock issuable upon
exercise of the warrant. In addition, we will, if the holder provides the
necessary information to us, issue and deliver the shares electronically through
The Depository Trust Corporation through its Deposit Withdrawal Agent
Commission System or another established clearing corporation performing similar
functions.
Certain
Adjustments. The exercise
price and the number of shares of common stock purchasable upon the exercise of
the warrants are subject to adjustment upon the occurrence of specific events,
including stock dividends, stock splits, combinations and reclassifications of
our common stock. In addition, the exercise price of the warrants will be
adjusted in the event that we offer securities after their issuance for
consideration per share less than or equal to $0.90 per share, which
adjustment price generally will be subject to adjustment as the exercise price
is subject to adjustment.
Notice of Corporate
Action. We will provide
notice to holders of the warrants to provide such holders with a practical
opportunity to exercise their warrants and hold common stock in order to
participate in or vote on the following corporate
events:
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if we shall take a record of the
holders of our common stock for the purpose of entitling them to receive a
dividend or other distribution, or any right to subscribe for or purchase
any evidence of our indebtedness, any shares of stock of any class or any
other securities or property, or to receive any other
right;
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any capital reorganization of our
company, any reclassification or recapitalization of our capital stock or
any consolidation or merger with, or any sale, transfer or other
disposition of all or substantially all of our property, assets or
business to, another
corporation; or
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a voluntary or involuntary
dissolution, liquidation or winding up of our
company.
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Limitations on
Exercise. The number of
warrant shares that may be acquired by the holder upon any exercise of the
warrant shall be limited to the extent necessary to insure that, following such
exercise (or other issuance), the total number of shares of common stock then
beneficially owned by such holder and its affiliates and any other persons whose
beneficial ownership of common stock would be aggregated with the holder’s for
purposes of Section 13(d) of the Exchange Act, does not exceed 4.99% of the
total number of issued and outstanding shares of common stock (including for
such purpose the shares of common stock issuable upon such exercise), or
Beneficial Ownership Limitation. The holder may elect to change the Beneficial
Ownership Limitation from 4.99% to 9.9% of the total number of issued and
outstanding shares of common stock (including for such purpose the shares of
common stock issuable upon such exercise) upon 61 days’ prior written
notice.
Additional
Provisions. The above
summary of certain terms and provisions of the warrants is qualified in its
entirety by reference to the detailed provisions of the warrants, the form of
which will be filed as an exhibit to a current report on Form 8-K that will
be incorporated herein by reference. We are not required to issue fractional
shares upon the exercise of the warrants. No holders of the warrants will
possess any rights as a stockholder under those warrants until the holder
exercises those warrants. The warrants may be transferred independent of the
common stock they were issued with, on a form of assignment, subject to all
applicable laws.
We are offering shares of common stock
and warrants through the placement agent. Subject to the terms and conditions
contained in the placement agent agreement, dated April 24, 2008, Rodman &
Renshaw, LLC has agreed to act as placement agent for the sale of shares of our
common stock and warrants to purchase shares of our common stock offered in this
prospectus supplement. The placement agent is not purchasing or selling any
shares or warrants offered by this prospectus supplement and the accompanying
prospectus, but has agreed to use reasonable ‘‘best efforts’’ to arrange for the
sale of all of the shares and warrants offered by this prospectus supplement and
the accompanying prospectus.
The placement agent has arranged for the
sale to one or more purchasers of the shares of common stock and warrants
offered pursuant to this prospectus supplement and the accompanying prospectus
through direct purchase agreements between the purchasers and us. In exchange
for these placement agent services, we have agreed to pay the placement agent
immediately upon the closing of the placement (i) a cash fee equal to 6% of the
proceeds of this offering (excluding any proceeds from the exercise of the
warrants) and (ii) additional compensation in the form of warrants to purchase
that number of shares equal to 6% of the shares of common stock placed in the
offering on the same terms and conditions as the warrants offered pursuant to
this prospectus supplement and accompanying prospectus. If all the units offered
hereby are sold at the closing, the placement agent will receive $1,200,000 in
cash related to the sale of the shares and warrants offered by this prospectus
supplement and the accompanying prospectus. In addition, we will also reimburse
the placement agent for legal and out of pocket expenses incurred
by it.
From time to time, we may issue up to
6,666,664 shares of our
common stock (subject to adjustment) upon exercise of the warrants. These shares
may be sold by the holders thereof from time to time. The warrants are not
listed on any exchange or active trading market.
We currently anticipate that the sale of
up to 22,222,223 shares of
our common stock and warrants up to 6,666,664 warrants will be completed on or about
April 29, 2008. We estimate the total expenses of this offering which will be
payable by us, excluding the fees payable to the placement agent, will be
approximately $50,000.
We have agreed to indemnify the
placement agent and purchasers against liabilities under the Securities
Act.
The placement agent agreement with
Rodman & Renshaw, LLC will be included as an exhibit to a Current Report on
Form 8-K that we will file the SEC and that will be incorporated by reference
into the registration statement of which this prospectus supplement forms a
part.
In order to facilitate the offering
of the securities, the placement agent may engage in transactions that
stabilize, maintain or otherwise affect the market price of our securities. Any
of these activities may maintain the market price of our securities at a level
above that which might otherwise prevail in the open market. The placement agent
is not required to engage in these activities and if commenced, may end any of
these activities at any time. Neither we nor the placement agent make any
representation or prediction as to the effect that these transactions may have
on the market price of our securities. These transactions may occur on The OTC
Bulletin Board or otherwise. Any such transactions will be conducted in
compliance with Regulation M under the Securities Exchange Act of
1934.
We will
only offer and sell the units to certain institutional buyers. These
institutional buyers must be “qualified institutional buyers” (QIBs) within the
meaning of Rule 144A under the Securities Act of 1933 and must be located in one
of the states identified below and may also be required to satisfy certain
state-specific investor qualifications, which will be provided to prospective
purchasers by the placement agent and will be set forth in the form of purchase
agreement. The offering will be limited to QIBs in the following
states:
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· California
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· Illinois
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· New
York
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· Colorado
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· Maryland
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· North
Carolina
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· Connecticut
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· Massachusetts
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· Pennsylvania
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· Florida
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· Minnesota
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· Texas
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· Georgia
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· New
Jersey
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· Wisconsin
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Weintraub
Genshlea Chediak Law Corporation will pass upon legal matters in connection with
the validity of the securities offered hereby for us.
WHERE YOU CAN FIND MORE INFORMATION
We file
reports, proxy statements and other information with the Securities and Exchange
Commission, or the SEC, in accordance with the Securities Exchange Act of 1934,
or the Exchange Act. You may read and copy our reports, proxy statements and
other information filed by us at the public reference room of the SEC located at
100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information about the public reference rooms. Our
reports, proxy statements and other information filed with the SEC are available
free of charge to the public over the Internet at the SEC’s website at
http://www.sec.gov.
The SEC
allows us to “incorporate by reference” certain information we file with them,
which means that we can disclose important information by referring you to those
documents. The information incorporated by reference is considered to be a part
of this prospectus supplement, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until our
offering is complete.
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(1)
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Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2007,
filed with the SEC on March 17,
2008.
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(2)
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Our
Current Reports on Form 8-K, filed with the SEC on January 15, 2008,
January 30, 2008, February 7, 2008, February 25, 2008, March 15, 2008 and
March 21, 2008.
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(3)
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The
description of the our common stock contained in our registration
statement on Form 10-SB filed with the SEC on April 19, 2001 under Section
12 of the Exchange Act, including any amendment or report filed for the
purpose of updating such
description.
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You may
request a copy of these filings, at no cost, by writing or telephoning us at the
following address:
NutraCea
5090
North 40th Street,
Fourth Floor
Phoenix,
Arizona 85018
Attention:
Investor Relations
(602)
522-3000
PROSPECTUS
$125,000,000
NutraCea
By
this prospectus, we may offer, from time to time ─
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● Common Stock |
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● Preferred
Stock |
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● Warrants |
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●
Depositary
Shares
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See
“Risk Factors” beginning on page 4 for information you should consider before
buying our securities.
Our
common stock is quoted on the Over-the-Counter (“OTC”) Bulletin Board under the
symbol “NTRZ.OB”. On March 24, 2008, the last sale price of our
common stock on the OTC Bulletin Board was $0.93 per share.
We will
provide specific terms of these securities in supplements to this prospectus.
You should read this prospectus and any supplement carefully before you purchase
any of our securities.
This
prospectus may not be used to offer and sell securities unless accompanied by a
prospectus supplement.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
We may
offer the securities in amounts, at prices and on terms determined at the time
of offering. We may sell the securities directly to you, through agents we
select, or through underwriters and dealers we select. If we use agents,
underwriters or dealers to sell the securities, we will name them and describe
their compensation in a prospectus supplement.
The date
of this prospectus is April 8, 2008.
TABLE
OF CONTENTS
|
|
Page
|
| |
|
|
Summary
|
2
|
|
Ratio
of Earnings to Fixed Charges and Preferred Stock Dividends
|
4
|
|
Risk
Factors
|
5
|
|
Recent
Events
|
11
|
|
Special
Note Regarding Forward-Looking Statements
|
13
|
|
Use
of Proceeds
|
14
|
|
Description
of Common Stock
|
15
|
|
Description
of Preferred Stock
|
15
|
|
Description
of Depositary Shares
|
16
|
|
Description
of Warrants
|
19
|
|
Plan
of Distribution
|
21
|
|
Legal
Matters
|
23
|
|
Experts
|
23
|
|
Where
You Can Find More Information
|
23
|
You
should rely only on information contained or incorporated by reference in this
prospectus. We have not authorized any person to provide you with information
that differs from what is contained or incorporated by reference in this
prospectus. If any person does provide you with information that differs from
what is contained or incorporated by reference in this prospectus, you should
not rely on it. This prospectus is not an offer to sell or the solicitation of
an offer to buy any securities other than the securities to which it relates, or
an offer of solicitation in any jurisdiction where offers or sales are not
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, even though this prospectus may be delivered or
shares may be sold under this prospectus on a later date.
The
following summary is qualified in its entirety by the more detailed information,
including our consolidated financial statements and related notes, included in
this prospectus and incorporated in this prospectus by reference. You should
carefully consider the information set forth in this entire prospectus,
including the “Risk Factors” section, the applicable prospectus supplement for
such securities and the other documents we refer to and incorporate by
reference, including but not limited to the section entitled “Risk Factors” in
our 2007 Annual Report on Form 10-K and in our other filings with the Securities
Exchange Commission. Unless the context otherwise requires, the terms
“NutraCea,” “Company”, “we,” “us” and “our” refer to NutraCea, a California
corporation, and our subsidiaries.
This
prospectus is part of a Registration Statement on Form S-3 that we filed with
the Securities and Exchange Commission using a “shelf” registration process.
Under this shelf process, we may sell any combination of securities described in
this prospectus in one or more offerings, up to a total dollar amount of
$125,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may, along with information that is
incorporated by reference as described under the heading “Where You Can Find
More Information,” also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described below under the heading “Where
You Can Find More Information.”
NutraCea
We are a
developer, formulator and distributor of nutraceutical, health, cosmetic and
nutrition products using stabilized rice bran and specially formulated rice bran
oil. We have also developed dietary products that provide the
benefits of stabilized rice bran and rice bran oil as a nutritional supplement
for humans and animals. Consumer products are marketed under the
TheraFoods® name. Medical supplements are marketed under the
NutraCea® name. Products for veterinary and animal use are marketed
under the NutraGlo® name. Cosmetics are marketed under the
NutraBeautical® name. The RiceX Company, our wholly-owned subsidiary,
manufactures and distributes nutritionally dense foods and food ingredients made
from stabilized rice bran for supply to the global food manufacturing and equine
feed industries.
We
originally incorporated on March 18, 1998 in California as Alliance Consumer
International, Inc. On December 14, 2001, NTI effected a reorganization with the
inactive publicly-held company, Alliance Consumer International, Inc., and the
name was changed to NutraStar Incorporated. As a result of the reorganization
NTI became a wholly-owned subsidiary of NutraStar Incorporated and NutraStar
Incorporated assumed the business of NTI. On October 1, 2003,
NutraStar Incorporated changed our name to NutraCea and the common stock began
trading on the OTC Bulletin Board under the symbol "NTRZ.OB". On
October 4, 2005, we acquired The RiceX Company.
Our
principal executive offices are located at 5090 North 40th Street,
Fourth Floor, Phoenix, AZ 85018. Our telephone number at that address is (602)
522-3000. Our website is located on the internet at www.nutracea.com. The
information contained or incorporated in our website is not part of this
registration statement.
The
Securities We May Offer
We may
offer up to $125,000,000 of common stock, preferred stock, depositary shares and
warrants in one or more offerings and in any combination. A prospectus
supplement, which we will provide each time we offer securities, will describe
the specific amounts, prices and terms of these securities.
We may
sell the securities to or through underwriters, dealers or agents or directly to
purchasers. We, as well as any agents acting on our behalf, reserve the sole
right to accept and to reject in whole or in part any proposed purchase of
securities. Each prospectus supplement will set forth the names of any
underwriters, dealers or agents involved in the sale of securities described in
that prospectus supplement and any applicable fee, commission or discount
arrangements with them.
Common
Stock
We may
offer shares of our common stock, no par value per share, either alone or
underlying other registered securities convertible into our common stock.
Holders of our common stock are entitled to receive dividends declared by our
board of directors out of funds legally available for the payment of dividends,
subject to rights, if any, of preferred shareholders. Currently, we do not pay a
dividend. Each holder of common stock is entitled to one vote per share. The
holders of common stock have no preemptive rights.
Preferred
Stock and Depositary Shares
We may
issue preferred stock in one or more series. Our board of directors or a
committee designated by the board will determine the dividend, voting and
conversion rights and other provisions at the time of sale. Each series of
preferred stock will be more fully described in the particular prospectus
supplement that will accompany this prospectus, including redemption provisions,
rights if we liquidate, dissolve or wind up, voting rights and rights to convert
into common stock. We may also issue fractional shares of preferred stock that
will be represented by depositary shares and depositary receipts. Each
particular series of depositary shares will be more fully described in the
prospectus supplement that will accompany this prospectus.
Warrants
We may
issue warrants for the purchase of common stock or preferred stock. We may issue
warrants independently or together with other securities.
RATIO OF EARNINGS TO FIXED CHARGES
Except
for the year ended December 31, 2006, our earnings are inadequate to cover fixed
charges. The following table sets forth our ratio of earnings to fixed charges,
or the deficiency of earnings available to cover fixed charges, as appropriate,
for the periods presented. The following table is qualified by the more detailed
information and historical financial statements, including the notes to those
financial statements, appearing in the computation table found in Exhibit 12.1
to the registration statement on Form S-3 of which this prospectus forms a part
or incorporated by reference herein. We have not included a ratio of
earnings to combined fixed charges and preferred stock dividends because we do
not have any preferred stock outstanding.
NutraCea
Computation
of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
(in
thousands)
|
|
|
Year
Ended December 31,
|
|
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Ratio
of earnings to fixed charges (1)
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
227 |
|
|
|
N/A |
|
|
Deficiency
of earnings available to cover fixed charges (1)
|
|
$ |
(8,227 |
) |
|
$ |
(23,554 |
) |
|
$ |
(2,976 |
) |
|
|
— |
|
|
$ |
(11,890 |
) |
|
(1)
|
In
each of the periods presented, except for the year ended December 31,
2006, earnings were insufficient to cover fixed
charges.
|
Please
carefully consider the specific factors set forth below as well as the other
information contained in this prospectus before purchasing shares of our common
stock. This prospectus contains forward-looking statements that involve risks
and uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements.
Risks
Related to Our Business
We
have a limited operating history and have generated losses in each quarter of
2007, except the second, and in each quarter before 2006.
We began
operations in February 2000 and incurred losses in each reporting period until
the second fiscal quarter of 2006, and we incurred losses in each quarter of
2007 except the second. Our prospects for financial success are difficult to
forecast because we have a relatively limited operating history. Our prospects
for financial success must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in new, unproven and rapidly
evolving markets. Our business could be subject to any or all of the problems,
expenses, delays and risks inherent in the establishment of a new business
enterprise, including limited capital resources, possible delays in product
development, possible cost overruns due to price and cost increases in raw
product and manufacturing processes, uncertain market acceptance, and inability
to respond effectively to competitive developments and attract, retain and
motivate qualified employees. Therefore, there can be no assurance that our
business or products will be successful, that we will be able to achieve or
maintain profitable operations or that we will not encounter unforeseen
difficulties that may deplete our capital resources more rapidly than
anticipated.
There
are significant market risks associated with our business.
We have
formulated our business plan and strategies based on certain assumptions
regarding the size of the rice bran market, our anticipated share of this market
and the estimated price and acceptance of our products. These assumptions are
based on the best estimates of our management; however there can be no assurance
that our assessments regarding market size, potential market share attainable by
us, the price at which we will be able to sell our products, market acceptance
of our products or a variety of other factors will prove to be correct. Any
future success may depend upon factors including changes in the dietary
supplement industry, governmental regulation, increased levels of competition,
including the entry of additional competitors and increased success by existing
competitors, changes in general economic conditions, increases in operating
costs including costs of production, supplies, personnel, equipment, and reduced
margins caused by competitive pressures.
We
depend on a limited number of customers.
During
2007, we received approximately 59% of product sales revenue from six
customers. During
2006, we received approximately 67% of product sales revenue from five customers
and approximately 48% of our revenue from one customer. A loss of any of these
customers could have a material adverse effect on our revenues and results of
operations.
The
inability of our significant customers to meet their obligations to us may
adversely affect our financial results.
We are
subject to credit risk due to concentration of our trade accounts receivables
and notes receivables. As of December 31, 2007, 6 customers accounted for 28% of
our $2,346,000 trade accounts receivable and 2 debtors accounted for 81% of
$7,975,000 notes receivables reflected on our December 31, 2007 balance sheet.
In addition, we acquired secured promissory notes of Vital Living, Inc. with
aggregate principal amounts of $4,226,000 in connection with our entering into
an asset purchase agreement with Vital Living to acquire Vital Living’s assets.
While we obtain personal guarantees and security interests backing these
obligation when possible, many of these obligations are not guaranteed or
secured. The inability of our significant customers and obligors to meet their
obligations to us, or, in the case of Vital Living, the deterioration of Vital
Living’s financial condition or assets before we are able to consummate our
asset purchase, may adversely affect our financial condition and results of
operations.
We
rely upon a limited number of product offerings.
The
majority of the products that we have sold as of December 31, 2007 have been
based on stabilized rice bran. Although we will market stabilized rice bran as a
dietary supplement, as an active food ingredient for inclusion in our products
and in other companies’ products, and in other ways, a decline in the market
demand for our stabilized rice bran products, as well as the products of other
companies utilizing our stabilized rice bran products, could have a significant
adverse impact on us.
We
are dependent upon our marketing efforts
We are
dependent on our ability to market products to animal food producers, food
manufacturers, mass merchandise and health food retailers, and to other
companies for use in their products. We must increase the level of awareness of
dietary supplements in general and our products in particular. We will be
required to devote substantial management and financial resources to these
marketing and advertising efforts and there can be no assurance that it will be
successful.
We
rely upon an adequate supply of raw rice bran.
All of
our current products depend on our proprietary technology using unstabilized or
raw rice bran, which is a by-product from milling paddy rice to white rice. Our
ability to manufacture stabilized rice bran raw is currently limited to the
production capability of our production equipment at Farmers’ Rice Co-operative,
Archer Daniels Midland, our own plants located next to the Louisiana Rice Mill
in Mermentau, LA, and American Rice, Inc. in Freeport, TX, and our single
value-added products plant in Dillon, Montana. We currently are
capable of producing enough finished products at our facilities to meet current
demand. With the exception of our new rice oil facility in Pelotas, Brazil, our
existing facilities do not allow for dramatic expansion of product demand,
therefore additional production capacity is needed. While be believe
our facilities should meet our production needs for 2008, but we do not
anticipate that they will meet our longer term supply needs. Therefore, we
anticipate building new facilities to meet the forecasted demand for our
products and envision we will be able to execute on this initiative. In the
event we are unable to create additional production capacity to produce more
stabilized rice bran products to fulfill our current and future requirements
this could materially and adversely affect our business, results from
operations, and financial condition.
We are
pursuing other supply sources in the United States and in foreign countries and
anticipate being able to secure alternatives and back-up sources of rice bran,
however, there can be no assurance that we will continue to secure adequate
sources of raw rice bran to meet our requirements to produce stabilized rice
bran products. Since rice bran has a limited shelf life, the supply of rice bran
is affected by the amount of rice planted and harvested each year. If economic
or weather conditions adversely affect the amount of rice planted or harvested,
the cost of rice bran products that we use may increase. We are not generally
able to immediately pass cost increases to our customers and any increase in the
cost of stabilized rice bran products would have an adverse effect on our
results of operations.
We
intend to pursue significant foreign operations and there are inherent risks in
operating abroad.
An
important component of our business strategy is to build rice bran to
stabilization facilities in foreign countries and to market and sell our
products internationally. For example, we recently entered into a joint venture
with an Indonesian company to produce and market our SRB products in Southeast
Asia and purchased a company in Brazil that manufactures rice bran oil. There
are risks in operating stabilization facilities in developing countries because,
among other reasons, we may be unable to attract sufficient qualified personnel,
intellectual property rights may not be enforced as we expect, power may not be
available as contemplated. Should any of these risks occur, we may be unable to
maximize the output from these facilities and our financial results may decrease
from our anticipated levels. The inherent risks of international operations
could materially adversely affect our business, financial condition and results
of operations. The types of risks faced in connection with international
operations and sales include, among others:
|
|
·
|
cultural
differences in the conduct of
business;
|
|
|
·
|
fluctuations
in foreign exchange rates;
|
|
|
·
|
greater
difficulty in accounts receivable collection and longer collection
periods;
|
|
|
·
|
impact
of recessions in economies outside of the United
States;
|
|
|
·
|
reduced
protection for intellectual property rights in some
countries;
|
|
|
·
|
unexpected
changes in regulatory requirements;
|
|
|
·
|
tariffs
and other trade barriers;
|
|
|
·
|
political
conditions in each country;
|
|
|
·
|
management
and operation of an enterprise spread over various
countries;
|
|
|
·
|
the
burden and administrative costs of complying with a wide variety of
foreign laws; and
|
We
have identified material weaknesses in our internal control over financial
reporting, which could impact negatively our ability to report our results of
operations and financial condition accurately and in a timely
manner.
As
required by Section 404 of the Sarbanes-Oxley Act of 2002, management has
conducted an evaluation of the effectiveness of our internal control over
financial reporting at December 31, 2007. We identified two material weaknesses
in our internal control over financial reporting and concluded that, as of
December 31, 2007, we did not maintain effective control over financial
reporting based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. For a detailed description of these material weaknesses,
see “Recent Events” above. Each of our material weaknesses results in reasonable
possibility that a material misstatement of the annual or interim financial
statements that we prepare will not be prevented or detected on a timely basis.
As a result, we must perform additional work to obtain reasonable assurance
regarding the reliability of our financial statements.
If we are
unsuccessful in implementing or following our remediation plan, or fail to
update our internal control over financial reporting as our business evolves or
to integrate acquired businesses into our controls system, we may not be able to
timely or accurately report our financial condition, results of operations or
cash flows or to maintain effective disclosure controls and procedures. If we
are unable to report financial information in a timely and accurate manner or to
maintain effective disclosure controls and procedures, we could be subject to,
among other things, regulatory or enforcement actions by the SEC, securities
litigation and a general loss of investor confidence, any one of which could
adversely affect our business prospects and the market value of our common
stock.
We
face competition.
Competition
in our targeted industries, including nutraceuticals, functional food
ingredients, rice bran oils, animal feed supplements and companion pet food
ingredients is vigorous, with a large number of businesses engaged in the
various industries. Many of our competitors have established reputations for
successfully developing and marketing their products, including products that
incorporate bran from other cereal grains and other alternative ingredients that
are widely recognized as providing similar benefits as rice bran. In addition,
many of our competitors have greater financial, managerial, and technical
resources than us. If we are not successful in competing in these markets, we
may not be able to attain our business objectives.
We
may face difficulties integrating businesses that we acquire.
As part
of our strategy, we expect to review opportunities to buy other businesses or
technologies that would complement its current products, expand the breadth of
its markets or enhance technical capabilities, or that may otherwise offer
growth opportunities. In the event of any future acquisitions, we
could:
|
|
·
|
issue
stock that would dilute current shareholders' percentage
ownership;
|
These
purchases also involve numerous risks, including:
|
|
·
|
problems
combining the purchased operations, technologies or
products;
|
|
|
·
|
diversion
of management's attention from our core
business;
|
|
|
·
|
adverse
effects on existing business relationships with suppliers and
customers;
|
|
|
·
|
risks
associated with entering markets in which we have no or limited prior
experience; and
|
|
|
·
|
potential
loss of key employees of purchased
organizations.
|
We cannot
assure you that we will be able to successfully integrate any businesses,
products, technologies or personnel that we might purchase in the
future.
We
Have Not Yet Achieved Positive Cash Flow
We have
not generated a positive cash flow from operations continuous period to period
since commencing operations and have relied primarily on cash raised from
private offerings of our securities to fund capital investments and
acquisitions. For example, we raised in private placements of equity
approximately $50,000,000 in a February 2007, $17,560,000 in May 2006, and
$8,000,000 in October 2005. While we believe that we have adequate cash reserves
and working capital to fund current operations, our ability to meet long term
business objectives may be dependent upon our ability to raise additional
financing through public or private equity financings, establish increasing cash
flow from operations, enter into collaborative or other arrangements with
corporate sources, or secure other sources of financing to fund long-term
operations. There is no assurance that external funds will be available on terms
acceptable to us in sufficient amount to finance operations until we do reach
sufficient positive cash flow to fund our capital expenditures. In addition, any
issuance of securities to obtain such funds would dilute percentage ownership of
our shareholders. Such dilution could also have an adverse impact on our
earnings per share and reduce the price of our common stock. Incurring
additional debt may involve restrictive covenants and increased interest costs
and demand on future cash flow. Our inability to obtain sufficient financing may
require us to delay, scale back or eliminate some or all of our product
development and marketing programs.
Our
products could fail to meet applicable regulations which could have a material
adverse affect on our financial performance.
The
dietary supplement and cosmetic industries are subject to considerable
government regulation, both as to efficacy as well as labeling and advertising.
There is no assurance that all of our products and marketing strategies will
satisfy all of the applicable regulations of the Dietary Supplement, Health and
Education Act, the Food, Drug and Cosmetic Act, the U.S. Food and Drug
Administration and/or the U.S. Federal Trade Commission. Failure to meet any
applicable regulations would require us to limit the production or marketing of
any non-compliant products or advertising, which could subject us to financial
or other penalties.
Our success depends in part on our
ability to obtain patents, licenses and other intellectual property rights for
our products and technology.
We have
one patent entitled Methods for Treating Joint Inflammation, Pain and Loss of
Mobility, which covers both humans and mammals. In addition, our subsidiary
RiceX has five United States patents and may decide to file corresponding
international applications. RiceX holds patents to the production of Beta Glucan
and to a micro nutrient enriched rice bran oil process. RiceX also holds patents
to a method to treat high cholesterol, to a method to treat diabetes and to a
process for producing Higher Value Fractions from stabilized rice bran. We also
have filed a number of provisional patent applications for our
technology. The process of seeking patent protection may be long and
expensive, and there can be no assurance that patents will be issued, that we
will be able to protect our technology adequately, or that competition will not
be able to develop similar technology.
There
currently are no claims or lawsuits pending or threatened against us or RiceX
regarding possible infringement claims, but there can be no assurance that
infringement claims by third parties, or claims for indemnification resulting
from infringement claims, will not be asserted in the future or that such
assertions, if proven to be accurate, will not have a material adverse affect on
our business, financial condition and results of operations. In the future,
litigation may be necessary to enforce our patents, to protect our trade secrets
or know-how or to defend against claimed infringement of the rights of others
and to determine the scope and validity of the proprietary rights of others. Any
litigation could result in substantial cost and diversion of our efforts, which
could have a material adverse affect on our financial condition and results of
operations. Adverse determinations in any litigation could result in the loss of
our proprietary rights, subjecting us to significant liabilities to third
parties, require us to seek licenses from third parties or prevent us from
manufacturing or selling our systems, any of which could have a material adverse
affect on our financial condition and results of operations. There can be no
assurance that a license under a third party's intellectual property rights will
be available to us on reasonable terms, if at all.
We
are dependent on key employees and consultants.
Our
success depends upon the efforts of our top management team, including the
efforts of Bradley D. Edson, our President and Chief Executive Officer, Todd C.
Crow, our Chief Financial Officer, Leo Gingras, our Chief Operating Officer,
Margie D. Adelman, our Secretary and Senior Vice President and Kody K. Newland,
our Senior Vice President of Sales and Marketing. Although we have written
employment agreements with each of the foregoing individuals other than Ms.
Adelman, there is no assurance that such individuals will not die, become
disabled or resign. In addition, our success is dependent upon our ability to
attract and retain key management persons for positions relating to the
marketing and distribution of our products. There is no assurance that we will
be able to recruit and employ such executives at times and on terms acceptable
to us.
Our
products may require clinical trials to establish efficacy and
safety.
Certain
of our products may require clinical trials to establish our benefit claims or
their safety and efficacy. Such trials can require a significant amount of
resources and there is no assurance that such trials will be favorable to the
claims we make for our products, or that the cumulative authority established by
such trials will be sufficient to support our claims. Moreover, both the
findings and methodology of such trials are subject to challenge by the FDA and
scientific bodies. If the findings of our trials are challenged or found to be
insufficient to support our claims, additional trials may be required before
such products can be marketed.
Risks
Related to Our Stock
Our Stock Price
is Volatile.
The
market price of a share of our common stock has fluctuated significantly in the
past and may continue to fluctuate significantly in the future. The high and low
closing sales prices of a share of our common stock for the following periods
were:
|
|
|
High
|
|
|
Low
|
|
|
Twelve
months ended December 31, 2007
|
|
$ |
5.00 |
|
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
months ended December 31, 2006
|
|
$ |
2.74 |
|
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
months ended December 31, 2005
|
|
$ |
1.81 |
|
|
$ |
0.30 |
|
|
|
·
|
announcements
of new products or product enhancements by us or our
competitors;
|
|
|
·
|
fluctuations
in our quarterly or annual operating
results;
|
|
|
·
|
developments
in our relationships with customers and
suppliers;
|
|
|
·
|
the
loss of services of one or more of our executive officers or other key
employees;
|
|
|
·
|
announcements
of technological innovations or new systems or enhancements used by us or
its competitors;
|
|
|
·
|
developments
in our or our competitors intellectual property
rights;
|
|
|
·
|
adverse
effects to our operating results due to impairment of
goodwill;
|
|
|
·
|
failure
to meet the expectation of securities analysts' or the public;
and
|
|
|
·
|
general
economic and market conditions.
|
We
have significant "equity overhang" which could adversely affect the market price
of our common stock and impair our ability to raise additional capital through
the sale of equity securities.
As of
January 11, 2008, we had approximately 144,398,545 shares of common stock
outstanding. Additionally, as of January 11, 2008, options and warrants to
purchase a total of approximately 43,423,697 shares of our common stock were
outstanding. The possibility that substantial amounts of our outstanding common
stock may be sold by investors or the perception that such sales could occur,
often called "equity overhang," could adversely affect the market price of our
common stock and could impair our ability to raise additional capital through
the sale of equity securities in the future.
Sales
of Our Stock Pursuant to Registration Statements May Hurt Our Stock
Price
We
granted registration rights to the investors in our October 2005, May 2006 and
February 2007 capital stock and warrant financings. As of January 11,
2008, a total of approximately 25,472,894 shares of our common stock remained
eligible for resale pursuant to outstanding registration statements filed for
investors. Sales or potential sales of a significant number of shares
into the public markets may negatively affect our stock price.
The
Exercise of Outstanding Options and Warrants May Dilute Current
Shareholders
As of
January 11, 2008, there were outstanding options and warrants to purchase a
total of 43,423,697 shares of our common stock. Holders of these
options and warrants may exercise them at a time when we would otherwise be able
to obtain additional equity capital on terms more favorable to us. Moreover,
while these options and warrants are outstanding, our ability to obtain
financing on favorable terms may be adversely affected.
We
may need to raise funds through debt or equity financings in the future, which
would dilute the ownership of our existing shareholders and possibly subordinate
certain of their rights to the rights of new investors.
We may
choose to raise additional funds in debt or equity financings if they are
available to us on terms we believe reasonable to increase our working capital,
strengthen our financial position or to make acquisitions. Any sales of
additional equity or convertible debt securities would result in dilution of the
equity interests of our existing shareholders, which could be substantial.
Additionally, if we issue shares of preferred stock or convertible debt to raise
funds, the holders of those securities might be entitled to various preferential
rights over the holders of our common stock, including repayment of their
investment, and possibly additional amounts, before any payments could be made
to holders of our common stock in connection with an acquisition of the company.
Such preferred shares, if authorized, might be granted rights and preferences
that would be senior to, or otherwise adversely affect, the rights and the value
of our common stock. Also, new investors may require that we and certain of our
shareholders enter into voting arrangements that give them additional voting
control or representation on our board of directors.
The
authorization of our preferred stock may have an adverse effect on the rights of
holders of our common stock.
We may,
without further action or vote by holders of our common stock, designate and
issue shares of our preferred stock. The terms of any series of preferred stock
could adversely affect the rights of holders of our common stock and thereby
reduce the value of our common stock. The designation and issuance of preferred
stock favorable to current management or shareholders could make it more
difficult to gain control of our Board of Directors or remove our current
management and may be used to defeat hostile bids for control which might
provide shareholders with premiums for their shares.
Compliance
with corporate governance and public disclosure regulations may result in
additional expenses.
Changing
laws, regulations and standards relating to corporate governance and public
disclosure, including the Sarbanes-Oxley Act of 2002, and new regulations issued
by the Securities and Exchange Commission, are creating uncertainty for
companies. In order to comply with these laws, we may need to invest substantial
resources to comply with evolving standards, and this investment would result in
increased general and administrative expenses and a diversion of management time
and attention from revenue-generating activities to compliance
activities.
Our
officers and directors have limited liability and have indemnification
rights
Our
Articles of Incorporation and by-laws provide that we may indemnify our officers
and directors against losses sustained or liabilities incurred which arise from
any transaction in that officer’s or director’s respective managerial capacity
unless that officer or director violates a duty of loyalty, did not act in good
faith, engaged in intentional misconduct or knowingly violated the law, approved
an improper dividend, or derived an improper benefit from the
transaction.
Internal Controls and
Procedures. As previously disclosed in our annual report on Form 10-K for
the year ended December 31, 2007, we identified two material weaknesses in our
internal control over financial reporting as of December 31, 2007. Solely based
upon these material weaknesses, our management concluded that as of December 31,
2007 we did not maintain effective internal control over financial reporting
based on the criteria established in Internal Control— Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway
Commission. A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting such that there is a
reasonable possibility that a material misstatement of the annual or interim
financial statements will not be prevented or detected on a timely
basis. The material weakness that we reported related to the
inadequacy of our procedures for (i) hiring third-party financial and valuation
experts and (ii) timely analyzing and reviewing the accounting treatment of
significant and complex transactions. Notwithstanding the existence
of these material weaknesses, we concluded that the consolidated financial
statements contained in our annual report on Form 10-K for 2007 presented
fairly, in all material respects, our consolidated financial condition as of
December 31, 2007 and 2006, and consolidated results of its operations and cash
flows for the years ended December 31, 2007, 2006 and 2005, in conformity with
U.S. generally accepted accounting principles.
We have
actively engaged in the development and implementation of a remediation plan to
address the material weaknesses in internal controls over financial reporting
and oversight thereof as of December 31, 2007.
1.
For the material weakness concerning retention of experts, we have
developed a written policy and procedures that document the processes relating
to retention of expert service providers for assistance with valuations and
significant financial transactions of NutraCea. Included in the process is an
analysis to verify and document the extent of any past relationships with the
service providers and to confirm the lack of apparent conflicts of interest.
Since December 31, 2007, we have revised these procedures as
follows:
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For
transactions or valuations with aggregate amounts ranging from two to five
percent of net equity (“Reporting Threshold”), management will report to
the Board of Directors the retention and qualifications of selected
experts.
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For
transactions or valuations with aggregate values greater than five percent
of net equity (“Approval Threshold”), management will report to the Board
of Directors its recommendation for the retention of experts and seek
approval to retain expert service
providers.
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Our
expert retention policy in effect as of December 31, 2007 (i) did not apply to
the engagement of experts for the purpose of providing valuation and (ii)
maintained a Reporting Threshold of five to ten percent of net equity and an
Approval Threshold of over ten percent of net equity. These
percentage thresholds will be monitored and revised as appropriate.
2. For the material weakness concerning
performing timely, comprehensive review of financial transactions, we have
developed the following remediation plan that will enhance our current policies
and procedures:
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Assess
and evaluate our chief executive officer’s authorization thresholds to
enter into agreements that has been delegated by our board of directors
and make appropriate recommendations. Additionally, we will recommended
that our board of directors expand its documentation requirements and
receive analysis from our chief financial officer and chief operating
officer when reviewing proposed
transactions.
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Continue
to enhance and improve month-end and quarter-end closing procedures by
having reviewers analyze and monitor financial information in a consistent
and thorough manner. We plan to continue to enhance and improve the
documentation and review of required information associated with the
preparation of our quarterly and annual
filings.
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Perform
SAB 104 analysis of significant revenue transactions in excess of $100,000
per customer per quarter, or over $250,000 in any one year to assess if
collectibility is reasonable assured and to ensure proper period revenue
recognition.
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Prepare
accounting memos within twenty days after the end of each quarter
analyzing our allowance for doubtful accounts for all accounts receivable
that exceed ten percent of our total accounts
receivable.
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Prepare
accounting memos to summarize all significant transactions and the
accounting treatment therefore within forty days after the completion of
such transactions.
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We
recognize that continued improvement in our internal controls is necessary and
are committed to continuing our significant investments as necessary to make
these improvements in our internal controls over financial
reporting.
SPECIAL NOTE
REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this
prospectus and in any prospectus supplement we may file constitute
“forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements relate to future events concerning our business and to our future
revenues, operating results, and financial condition. In some cases, you can
identify forward-looking statements by terminology such as “may,” “will,”
“could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,”
“estimate,” “forecast,” “predict,” “propose,” “potential,” or “continue” or the
negative of those terms or other comparable terminology.
Any forward looking statements contained
in this prospectus or any prospectus supplement are only estimates or
predictions of future events based on information currently available to our
management and management’s current beliefs about the potential outcome of
future events. Whether these future events will occur as management anticipates,
whether we will achieve our business objectives, and whether our revenues,
operating results, or financial condition will improve in future periods are
subject to numerous risks. The section of this prospectus captioned “Risk
Factors,” beginning on page 4, provides a summary of various risks that could
cause our actual results or future financial condition to differ materially from
forward-looking statements made in this prospectus. The factors discussed in
this section are not intended to represent a complete list of all the factors
that could adversely affect our business, revenues, operating results, or
financial condition. Other factors that we have not considered may also have an
adverse effect on our business, revenues, operating results, or financial
condition, and the factors we have identified could affect us to a greater
extent than we currently anticipate. Before making any investment in our
securities, we encourage you to carefully read the information contained under
the caption “Risk Factors,” as well the other information contained in this
prospectus and any prospectus supplement we may file.
Unless
otherwise indicated in the prospectus supplement, the net proceeds from the sale
of securities offered by this prospectus will be used for general corporate
purposes and working capital requirements. We may also use a portion of the net
proceeds to fund possible investments in and acquisitions of complementary
businesses, partnerships, minority investments, products or technologies.
Currently, there are no commitments or agreements regarding such acquisitions or
investments that are material. Pending their ultimate use, we intend to invest
the net proceeds in direct obligations of the U.S. Treasury, including treasury
bills, notes and bonds, federal agency securities, corporate securities,
including commercial paper and corporate debt instruments, short-term tax exempt
securities, auction rate preferred stocks or bonds, and money market funds, all
with maturities that generally do not exceed 12 months from the date of
settlement.
DESCRIPTION OF COMMON STOCK
We are
authorized to issue up to 350,000,000 shares of common stock, no par value. The
following is a summary of the material provisions of the common stock contained
in our certificate of incorporation and bylaws. For more information about our
common stock, please refer to our articles of incorporation and
bylaws.
Subject
to preferences that may be applicable to any outstanding preferred stock, the
holders of common stock are entitled to receive ratably dividends, if any, as
may be declared from time to time by the board of directors out of funds legally
available for that purpose. In the event of our liquidation, dissolution or
winding up, whether voluntary or involuntary, the holders of common stock are
entitled to share ratably in all assets remaining after payment of liabilities,
subject to prior distribution rights of preferred stock, if any, then
outstanding. The common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are fully
paid and nonassessable, and the shares of common stock to be issued upon the
closing of this offering will be fully paid and nonassessable.
The
holders of common stock are entitled to one vote per share on all matters to be
voted upon by the shareholders. Under certain circumstances,
California law permits the holders of NutraCea common stock to cumulate their
votes for the election of directors, in which case holders of less than a
majority of the outstanding shares of NutraCea common stock could elect one or
more of NutraCea’s directors. Holders of NutraCea common stock have no
preemptive, subscription, or redemption rights. The outstanding shares of
NutraCea common stock are fully paid and nonassessable. The rights and
privileges of holders of NutraCea common stock are subject to, and may be
adversely affected by, the rights of holders of shares of NutraCea preferred
stock that NutraCea may designate and issue in the future.
Transfer
Agent
The
transfer agent for our common stock is American Stock Transfer &
Trust. Its address is 59 Maiden Lane, Plaza Level, New York, NY
10038, and its telephone number is (212) 936-5100.
Listing
Our
common stock trades on the OTC Bulletin Board under the symbol
"NTRZ.OB."
DESCRIPTION OF PREFERRED STOCK
We are
authorized to issue up to 20,000,000 shares of preferred stock, no par value, of
which 3,000,000 shares are designated Series A Convertible Preferred Stock,
25,000 shares are designated Series B Convertible Preferred Stock and 25,000
shares are designated Series C Convertible Preferred Stock. No shares
of our preferred stock are outstanding.
The
following description of preferred stock and the description of the terms of a
particular series of preferred stock that will be set forth in the related
prospectus supplement are not complete. These descriptions are qualified in
their entirety by reference to the certificate of determination relating to that
series. The rights, preferences, privileges and restrictions of the preferred
stock of each series will be fixed by the certificate of determination relating
to that series. The prospectus supplement also will contain a description of
certain United States federal income tax consequences relating to the purchase
and ownership of the series of preferred stock that is described in the
prospectus supplement.
Undesignated
Preferred Stock
Pursuant
to our articles of incorporation, our board of directors has the authority
without further action by our shareholders to issue one or more additional
series of preferred stock. Our board of directors is authorized to
issue preferred stock in one or more series and to fix the rights, preferences,
privileges, qualifications, limitations and restrictions thereof, including
dividend rights and rates, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences and the number of shares
constituting any series or the designation of such series, without any vote or
action by our shareholders. Any preferred stock to be issued could rank prior to
our common stock with respect to dividend rights and rights on liquidation. Our
board of directors, without shareholder approval, may issue preferred stock with
voting and conversion rights which could adversely affect the voting power of
holders of NutraCea common stock and discourage, delay or prevent a change in
control of NutraCea.
The
issuance of preferred stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of delaying, deferring or preventing a change in control without further action
by our shareholders and may adversely affect the market price of, and the voting
and other rights of, the holders of our common stock.
The
prospectus supplement with respect to any issuance of preferred stock will
specify:
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the maximum number of
shares;
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the designation of the
shares;
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the annual dividend rate, if any,
whether the dividend rate is fixed or variable, the date dividends will
accrue, the dividend payment dates, and whether dividends will be
cumulative;
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the price and the terms and
conditions for redemption, if any, including redemption at our option or
at the option of the holders, including the time period for redemption,
and any accumulated dividends or
premiums;
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the liquidation preference, if
any, and any accumulated dividends upon the liquidation, dissolution or
winding up of our affairs;
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any sinking fund or similar
provision, and, if so, the terms and provisions relating to the purpose
and operation of the fund;
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the terms and conditions, if any,
for conversion or exchange of shares of any other class or classes of our
capital stock or any series of any other class or classes, or of any other
series of the same class, or any other securities or assets, including the
price or the rate of conversion or exchange and the method, if any, of
adjustment;
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any or all other preferences and
relative, participating, optional or other special rights, privileges or
qualifications, limitations or
restrictions.
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Preferred
stock, if any, will be fully paid and nonassessable upon issuance.
DESCRIPTION OF THE DEPOSITARY SHARES
General
At our
option, we may elect to offer fractional shares of preferred stock, rather than
full shares of preferred stock. If we do elect to offer fractional shares of
preferred stock, we will issue to the public receipts for depositary shares and
each of these depositary shares will represent a fraction of a share of a
particular series of preferred stock, as specified in the applicable prospectus
supplement. Each owner of a depositary share will be entitled, in proportion to
the applicable fractional interest in shares of preferred stock underlying that
depositary share, to all rights and preferences of the preferred stock
underlying that depositary share. These rights may include dividend, voting,
redemption and liquidation rights.
The
shares of preferred stock underlying the depositary shares will be deposited
with a bank or trust company selected by us to act as depositary, under a
deposit agreement between us, the depositary and the holders of the depositary
receipts. The depositary will be the transfer agent, registrar and dividend
disbursing agent for the depositary shares.
The
depositary shares will be evidenced by depositary receipts issued pursuant to
the depositary agreement. Holders of depositary receipts agree to be bound by
the deposit agreement, which requires holders to take certain actions such as
filing proof of residence and paying certain charges.
The
summary of terms of the depositary shares contained in this prospectus is not
complete. You should refer to the forms of the deposit agreement, our
certificate of incorporation and the certificate of designation for the
applicable series of preferred stock that are, or will be, filed with the
SEC.
Dividends
The
depositary will distribute cash dividends or other cash distributions, if any,
received in respect of the series of preferred stock underlying the depositary
shares to the record holders of depositary receipts in proportion to the number
of depositary shares owned by those holders on the relevant record date. The
relevant record date for depositary shares will be the same date as the record
date for the preferred stock.
In the
event of a distribution other than in cash, the depositary will distribute
property received by it to the record holders of depositary receipts that are
entitled to receive the distribution, unless the depositary determines that it
is not feasible to make the distribution. If this occurs, the depositary, with
our approval, may adopt another method for the distribution, including selling
the property and distributing the net proceeds to the holders.
Liquidation
Preference
If a
series of preferred stock underlying the depositary shares has a liquidation
preference, in the event of our voluntary or involuntary liquidation,
dissolution or winding up, holders of depositary shares will be entitled to
receive the fraction of the liquidation preference accorded each share of the
applicable series of preferred stock, as set forth in the applicable prospectus
supplement.
Redemption
If a
series of preferred stock underlying the depositary shares is subject to
redemption, the depositary shares will be redeemed from the proceeds received by
the depositary resulting from the redemption, in whole or in part, of the
preferred stock held by the depositary. Whenever we redeem any preferred stock
held by the depositary, the depositary will redeem, as of the same redemption
date, the number of depositary shares representing the preferred stock so
redeemed. The depositary will mail the notice of redemption to the record
holders of the depositary receipts promptly upon receiving the notice from us
and no fewer than 20 nor more than 60 days, unless otherwise provided in the
applicable prospectus supplement, prior to the date fixed for redemption of the
preferred stock.
Voting
Upon
receipt of notice of any meeting at which the holders of preferred stock are
entitled to vote, the depositary will mail the information contained in the
notice of meeting to the record holders of the depositary receipts underlying
the preferred stock. Each record holder of those depositary receipts on the
record date will be entitled to instruct the depositary as to the exercise of
the voting rights pertaining to the amount of preferred stock underlying that
holder’s depositary shares. The record date for the depositary will be the same
date as the record date for the preferred stock. The depositary will try, as far
as practicable, to vote the preferred stock underlying the depositary shares in
accordance with these instructions. We will agree to take all action that may be
deemed necessary by the depositary in order to enable the depositary to vote the
preferred stock in accordance with these instructions. The depositary will not
vote the preferred stock to the extent that it does not receive specific
instructions from the holders of depositary receipts.
Withdrawal of Preferred
Stock
Owners of
depositary shares will be entitled to receive upon surrender of depositary
receipts at the principal office of the depositary and payment of any unpaid
amount due to the depositary, the number of whole shares of preferred stock
underlying their depositary shares.
Partial
shares of preferred stock will not be issued. Holders of preferred stock will
not be entitled to deposit the shares under the deposit agreement or to receive
depositary receipts evidencing depositary shares for the preferred
stock.
Amendment
and Termination of the Deposit Agreement
The form
of depositary receipt evidencing the depositary shares and any provision of the
deposit agreement may be amended by agreement between the depositary and us.
However, any amendment which materially and adversely alters the rights of the
holders of depositary shares, other than fee changes, will not be effective
unless the amendment has been approved by at least a majority of the outstanding
depositary shares. The deposit agreement may be terminated by the depositary or
us only if:
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all outstanding depositary shares
have been redeemed; or
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there has been a final
distribution of the preferred stock in connection with our dissolution and
such distribution has been made to all the holders of depositary
shares.
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Charges
of Depositary
We will
pay all transfer and other taxes and governmental charges arising solely from
the existence of the depositary arrangement. We will also pay charges of the
depositary in connection with:
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the initial deposit of the
preferred stock;
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the initial issuance of the
depositary shares;
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any redemption of the preferred
stock; and
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all withdrawals of preferred
stock by owners of depositary
shares.
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Holders
of depositary receipts will pay transfer, income and other taxes and
governmental charges and other specified charges as provided in the deposit
agreement for their accounts. If these charges have not been paid, the
depositary may:
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refuse to transfer depositary
shares;
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withhold dividends and
distributions; and
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sell the depositary shares
evidenced by the depositary
receipt.
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Miscellaneous
The
depositary will forward to the holders of depositary receipts all reports and
communications we deliver to the depositary that we are required to furnish to
the holders of the preferred stock. In addition, the depositary will make
available for inspection by holders of depositary receipts at the principal
office of the depositary, and at such other places as it may from time to time
deem advisable, any reports and communications we deliver to the depositary as
the holder of preferred stock.
Neither
the depositary nor we will be liable if either the depositary or we are
prevented or delayed by law or any circumstance beyond the control of either the
depositary or us in performing our respective obligations under the deposit
agreement. Our obligations and the depositary’s obligations will be limited to
the performance in good faith of our or the depositary’s respective duties under
the deposit agreement. Neither the depositary nor we will be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares or
preferred stock unless satisfactory indemnity is furnished. The depositary and
we may rely on:
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written advice of counsel or
accountants;
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information provided by holders
of depositary receipts or other persons believed in good faith to be
competent to give such information;
and
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documents believed to be genuine
and to have been signed or presented by the proper party or
parties.
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Resignation
and Removal of Depositary
The
depositary may resign at any time by delivering a notice to us. We may remove
the depositary at any time. Any such resignation or removal will take effect
upon the appointment of a successor depositary and its acceptance of such
appointment. The successor depositary must be appointed within 60 days after
delivery of the notice for resignation or removal. The successor depositary must
be a bank and trust company having its principal office in the United States of
America and having a combined capital and surplus of at least
$50,000,000.
Federal
Income Tax Consequences
Owners of
the depositary shares will be treated for U.S. federal income tax purposes as if
they were owners of the preferred stock underlying the depositary shares. As a
result, owners will be entitled to take into account for U.S. federal income tax
purposes any deductions to which they would be entitled if they were holders of
such preferred stock. No gain or loss will be recognized for U.S. federal income
tax purposes upon the withdrawal of preferred stock in exchange for depositary
shares. The tax basis of each share of preferred stock to an exchanging owner of
depositary shares will, upon such exchange, be the same as the aggregate tax
basis of the depositary shares exchanged. The holding period for preferred stock
in the hands of an exchanging owner of depositary shares will include the period
during which such person owned such depositary shares.
DESCRIPTION OF THE WARRANTS
We may
issue warrants for the purchase of our common stock or preferred stock or any
combination thereof. Warrants may be issued independently or together with our
common stock or preferred stock and may be attached to or separate from any
offered securities. Each series of warrants will be issued under a separate
warrant agreement to be entered into between us and a bank or trust company, as
warrant agent. The warrant agent will act solely as our agent in connection with
the warrants. The warrant agent will not have any obligation or relationship of
agency or trust for or with any holders or beneficial owners of warrants. This
summary of certain provisions of the warrants is not complete. For the terms of
a particular series of warrants, you should refer to the prospectus supplement
for that series of warrants and the warrant agreement for that particular
series.
The
prospectus supplement relating to a particular series of warrants to purchase
our common stock or preferred stock will describe the terms of the warrants,
including the following:
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the title of the
warrants;
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the offering price for the
warrants, if any;
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the aggregate number of the
warrants;
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the designation and terms of the
common stock or preferred stock that may be purchased upon exercise of the
warrants;
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if applicable, the designation
and terms of the securities with which the warrants are issued and the
number of warrants issued with each
security;
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if applicable, the date from and
after which the warrants and any securities issued with the warrants will
be separately transferable;
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the number of shares of common
stock or preferred stock that may be purchased upon exercise of a warrant
and the exercise price for the
warrants;
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the dates on which the right to
exercise the warrants shall commence and
expire;
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if applicable, the minimum or
maximum amount of the warrants that may be exercised at any one
time;
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the currency or currency units in
which the offering price, if any, and the exercise price are
payable;
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if applicable, a discussion of
material U.S. federal income tax
considerations;
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the antidilution provisions of
the warrants, if any;
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the redemption or call
provisions, if any, applicable to the
warrants;
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any provisions with respect to
holder’s right to require us to repurchase the warrants upon a change in
control; and
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any additional terms of the
warrants, including terms, procedures, and limitations relating to the
exchange, exercise and settlement of the
warrants.
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Holders
of equity warrants will not be entitled to:
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vote, consent or receive
dividends;
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receive notice as shareholders
with respect to any meeting of shareholders for the election of our
directors or any other matter;
or
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exercise any rights as
shareholders of
NutraCea.
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We may
sell the securities offered through this prospectus (i) to or through
underwriters or dealers, (ii) directly to purchasers, including our affiliates,
(iii) through agents, or (iv) through a combination of any these methods. The
securities may be distributed at a fixed price or prices, which may be changed,
market prices prevailing at the time of sale, prices related to the prevailing
market prices, or negotiated prices. The prospectus supplement will include the
following information:
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the terms of the
offering;
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the names of any underwriters or
agents;
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the name or names of any managing
underwriter or underwriters;
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the purchase price of the
securities;
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the net proceeds from the sale of
the securities;
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any delayed delivery
arrangements;
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any underwriting discounts,
commissions and other items constituting underwriters’
compensation;
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any discounts or concessions
allowed or reallowed or paid to dealers;
and
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any commissions paid to
agents.
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Sale
Through Underwriters or Dealers
If
underwriters are used in the sale, the underwriters will acquire the securities
for their own account, including through underwriting, purchase, security
lending or repurchase agreements with us. The underwriters may resell the
securities from time to time in one or more transactions, including negotiated
transactions. Underwriters may sell the securities in order to facilitate
transactions in any of our other securities (described in this prospectus or
otherwise), including other public or private transactions and short sales.
Underwriters may offer securities to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. Unless otherwise indicated in the
prospectus supplement, the obligations of the underwriters to purchase the
securities will be subject to certain conditions, and the underwriters will be
obligated to purchase all the offered securities if they purchase any of them.
The underwriters may change from time to time any initial public offering price
and any discounts or concessions allowed or reallowed or paid to
dealers.
If
dealers are used in the sale of securities offered through this prospectus, we
will sell the securities to them as principals. They may then resell those
securities to the public at varying prices determined by the dealers at the time
of resale. The prospectus supplement will include the names of the dealers and
the terms of the transaction.
Direct
Sales and Sales Through Agents
We may
sell the securities offered through this prospectus directly. In this case, no
underwriters or agents would be involved. Such securities may also be sold
through agents designated from time to time. The prospectus supplement will name
any agent involved in the offer or sale of the offered securities and will
describe any commissions payable to the agent. Unless otherwise indicated in the
prospectus supplement, any agent will agree to use its reasonable best efforts
to solicit purchases for the period of its appointment. In no event
will any agent receive commissions in excess of 8% unless otherwise expressly
permitted by FINRA Rule 2710. Further, any warrants issued to agents as part of
their compensation for placing any of our securities under this Prospectus will
comply with FINRA Rule 2710(g)(1) in that such warrant will not be exercisable
for 6 moths following the closing date of any offering nor will it be
transferable except under limited circumstances set forth in such
rule.
We may
sell the securities directly to institutional investors or others who may be
deemed to be underwriters within the meaning of the Securities Act with respect
to any sale of those securities. The terms of any such sales will be described
in the prospectus supplement.
Delayed
Delivery Contracts
If the
prospectus supplement indicates, we may authorize agents, underwriters or
dealers to solicit offers from certain types of institutions to purchase
securities at the public offering price under delayed delivery contracts. These
contracts would provide for payment and delivery on a specified date in the
future. The contracts would be subject only to those conditions described in the
prospectus supplement. The applicable prospectus supplement will describe the
commission payable for solicitation of those contracts.
Market
Making, Stabilization and Other Transactions
Unless
the applicable prospectus supplement states otherwise, each series of offered
securities (other than common stock) will be a new issue and will have no
established trading market. We may elect to list any series of offered
securities on an exchange. Any underwriters that we use in the sale of offered
securities may make a market in such securities, but may discontinue such market
making at any time without notice. Therefore, we cannot assure you that the
securities will have a liquid trading market.
Any
underwriter may also engage in stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Rule 104 under the Securities
Exchange Act. Stabilizing transactions involve bids to purchase the underlying
security in the open market for the purpose of pegging, fixing or maintaining
the price of the securities. Syndicate covering transactions involve purchases
of the securities in the open market after the distribution has been completed
in order to cover syndicate short positions.
Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate
member when the securities originally sold by the syndicate member are purchased
in a syndicate covering transaction to cover syndicate short positions.
Stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the securities to be higher than it would be in the absence
of the transactions. The underwriters may, if they commence these transactions,
discontinue them at any time.
Electronic
Auctions
We may
also make sales through the Internet or through other electronic means. Since we
may from time to time elect to offer securities directly to the public, with our
without the involvement of agents, underwriters or dealers, utilizing the
Internet (sometimes referred to as the “world wide web”) or other forms of
electronic bidding or ordering systems for the pricing and allocation of such
securities, you will want to pay particular attention to the description of that
system, which we will provide in a prospectus supplement.
Such
electronic system may allow bidders to directly participate, through electronic
access to an auction site, by submitting conditional offers to buy that are
subject to acceptance by us, and which may directly affect the price or other
terms and conditions at which such securities are sold. These bidding or
ordering systems may present to each bidder, on a so-called “real-time” basis,
relevant information to assist in making a bid, such as the clearing spread at
which the offering would be sold, based on the bids submitted, and whether a
bidder’s individual bids would be accepted, prorated or rejected. Of course,
many pricing methods can and may also be used.
Upon
completion of such an electronic auction process, securities will be allocated
based on prices bid, terms of bid or other factors. The final offering price at
which securities would be sold and the allocation of securities among bidders
would be based in whole or in part on the results of the Internet or other
electronic bidding process or auction.
General
Information
Agents,
underwriters, and dealers may be entitled, under agreements entered into with
us, to indemnification by us against certain liabilities, including liabilities
under the Securities Act. Our agents, underwriters, and dealers, or their
affiliates, may be customers of, engage in transactions with or perform services
for us, in the ordinary course of business.
Weintraub
Genshlea Chediak Law Corporation will pass upon legal matters in connection with
the validity of the securities offered hereby for us. Certain members
of, and persons associated with, Weintraub Genshlea Chediak Law Corporation own
or control less than 0.1% of the shares of our common stock in the
aggregate.
The
consolidated financial statements of NutraCea as of December 31, 2007 and
2006, and for each of the years in the two-year period ended December 31,
2007, and management’s assessment of the effectiveness of internal control over
financial reporting as of December 31, 2007 have been incorporated by
reference herein in reliance upon the reports of Perry-Smith, LLP, independent
registered public accounting firm, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
The
consolidated financial statements of NutraCea as of December 31, 2005, and
for the year ended December 31, 2005, have been incorporated by reference
herein in reliance upon the reports Malone & Bailey, PC, independent
registered public accounting firm, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file
reports, proxy statements and other information with the Securities and Exchange
Commission, or the Commission, in accordance with the Securities Exchange Act of
1934, or the Exchange Act. You may read and copy our reports, proxy statements
and other information filed by us at the public reference room of the Commission
located at 100 F Street, N.E., Washington, D.C. 20549. Please call the
Commission at 1-800-SEC-0330 for further information about the public reference
rooms. Our reports, proxy statements and other information filed with the
Commission are available free of charge to the public over the Internet at the
Commission’s website at http://www.sec.gov.
The
Commission allows us to “incorporate by reference” certain information we file
with them, which means that we can disclose important information by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and information that we file later with the
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until our offering is complete. We also incorporate by
reference any of these filings made after the date of the initial registration
statement and prior to effectiveness of the registration statement.
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(1)
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Our Annual Report on Form 10-K
for the fiscal year ended December 31, 2007, filed with the Commission on
March 17, 2008.
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(2)
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Our Current Reports on Form 8-K,
filed with the Commission on January 15, 2008, January 30, 2008, February
7, 2008, February 25, 2008, March 15, 2008, March 21, 2008 and April 24,
2008.
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(3)
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The description of the our common
stock contained in our registration statement on Form 10-SB filed with the
Commission on April 19, 2001 under Section 12 of the Exchange Act,
including any amendment or report filed for the purpose of updating such
description.
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You may
request a copy of these filings, at no cost, by writing or telephoning us at the
following address:
NutraCea
5090
North 40th Street,
Fourth Floor
Phoenix,
Arizona 85018
Attention:
Investor Relations
(602)
522-3000