Arcadia Biosciences, Inc.

At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mark Kawakami, Chief Financial Officer at Arcadia. Please go ahead.

Thank you. Joining me on the call today is TJ Schaefer, Arcadia's President and Chief Executive Officer. This call is being webcast, and you can refer to the company's press release at arcadiabio.com. Before we start, we would like to remind you that Arcadia Biosciences will be making forward-looking statements on this call based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, The company's actual performance and results may differ materially from those described or implied today. You can review the company's safe harbor language and our most recently filed 10-K. With that, I'll now turn the call over to TJ.

Thanks, Mark, and thank you to everyone on the call for joining us today to discuss our 2025 first quarter financial results. It has only been seven weeks since we delivered our 2024 year-end update. but the momentum from the second half of 2024 has carried into 2025, and I am very pleased with our first quarter results. Zola Coconut Water continues to thrive and outperform our own internal expectations. In Q1 2025, our reported Zola sales increased 90% year over year, primarily driven by new distribution gains, which increased 70% compared to the same period last year. We continue to implement tight cost controls, resulting in strong gross margins and a 16% year-over-year reduction in operating expenses, inclusive of nearly half a million dollars in transaction-related fees during the quarter. In addition to our strong brand performance, we also made significant progress during the quarter, monetizing our intellectual property a goal we have discussed for several years. And finally, the pending business combination with Roosevelt Resources continues to move forward and we believe is on track to be completed towards the end of the summer. Today, I would like to discuss each of these topics in more detail, starting with the performance of Zola. As I just mentioned, our reported sales of Zola increased 90% compared to the same quarter last year, primarily driven by a 70% increase in new distribution. Growing Zola's presence in the marketplace has been a focus of Arcadia, and we believe it represents our best opportunity to significantly increase our share of coconut water industry sales given our relatively low penetration rate. Our sell-through or scan data sales increased 76% during the 13 weeks ended March 29, 2025, based on Nielsen data. This rate of sales growth is more than three times faster than the coconut water category, which grew 24% during the same time period. Coconut water continues to outpace the growth of many other beverage categories, driven by the shift in consumer preferences toward healthy, better-for-you beverages. With a rich source of key electrolytes such as potassium, magnesium, and calcium, consumers are recognizing that coconut water offers an excellent way to naturally rehydrate and re-energize. With Zola, we believe we have the best tasting coconut water that is packaged directly at the source in Thailand. In the past, we have conducted consumer taste tests where Zola was preferred to its competitors by a two to one margin. And we continue to focus on new products that we believe will bring more consumers into the category. For example, one year ago, we launched two new flavors, lime and pineapple into the marketplace. And I am happy to report that we have already sold more pineapple in the first four months of 2025 than we did all of last year, driven by new placements. Aside from new flavors, we are currently working on a number of new product offerings that will provide a twist on traditional coconut water that we are excited about. In fact, in a category review meeting earlier this year, we brought a sample of our new product to one of our largest customers and they were blown away by the flavor, decisively choosing our new offering over a competitive product. While our timeline to launch has been pushed back as a result of the pending business combination with Roosevelt, we expect to have our new innovation on the shelf early next year. In addition to product innovation, Zola also has a healthy pipeline and is currently in discussions with new customers and distributors, representing more than 50% of our current customer base. So far in Q2, we have already won new customer accounts and are optimistic about being awarded additional placements based on initial feedback from our category review meetings earlier this year. One positive outcome of these meetings that I would like to highlight is that we were awarded an additional SKU at existing customers representing more than 1,000 stores or nearly one-third of our current distribution. This is meaningful not only for the additional revenue that it will bring, but it also highlights the strong performance of the existing Zola SKUs and opens the door to additional placements and offerings in the future. From an inventory perspective, Zola is well-positioned. We have replenished our inventory ahead of the all-important beverage season after it was depleted last year following large new customer wins. The timing of this replenishment was beneficial as it gave us approximately three months of inventory before any of the recently announced tariffs took effect. Therefore, we expect tariffs to have little to no impact on our Q2 financial results. Going forward, we believe the 10% baseline tariff that went into effect in early April is not likely to have a significant impact on our results, as we have identified potential cost savings opportunities that we expect to largely offset the impact. As a result, we do not anticipate taking any action at this time in direct response to the baseline tariffs. Having said that, we continue to have conversations with our customers and distributors and have developed mitigation plans should the need occur. Shifting gears, I want to discuss the actions we have taken to exit Arcadia's legacy business and monetize our intellectual property. As disclosed on Form 8K on April 3rd, we entered into an agreement with BioSeries effective March 28th, 2025. Under the terms of the agreement, all rights related to certain previously licensed soy patents were returned to Arcadia along with $750,000 cash in exchange for Arcadia's granted patents and patent applications for reduced gluten and oxidative stability, as well as the elimination of all future royalties pursuant to a previous agreement between the two companies. This transaction represented a meaningful step for Arcadia in our efforts to streamline operations, exit the legacy ag tech business, and monetize our intellectual property So let me provide some context on the significance of this agreement. First, it allowed us to receive $750,000 of cash that was non-dilutive to Arcadia shareholders. Second, the SOI patent, which was originally acquired in a 2005 transaction more than 10 years prior to Arcadia going public, resulted in a $1 million contingent liability on our balance sheet. By regaining the rights to this patent, we were permitted to take the next step and notify the patent authorities of our intent to abandon the technology. The abandonment of this patent eliminated the possibility of future commercialization, allowing us to release the $1 million liability from our balance sheet. And finally, we are able to avoid any future expenses relating to the maintenance of patents and patent applications for technologies we are no longer pursuing. As a result of this transaction, along with various other agreements that have been previously disclosed, Arcadia no longer expects to receive any license or royalty fees or to incur any significant future expenses related to any of its wheat-related intellectual property. Currently, We have one remaining tomato patent that is licensed to a third party and represents a $1 million contingent liability on our balance sheet. While we can make no assurances, we are working on options that could result in the removal of that contingent liability, which would conclude our exit from the legacy ag tech business. The last topic I would like to discuss is the pending business combination with Roosevelt Resources. As you are aware, in December 2024, we signed a definitive agreement to combine with Roosevelt Resources pursuant to a securities exchange agreement. While the process has taken longer than originally anticipated, I want to reiterate that the planned transaction continues to move forward as evidenced by our recent Form 8-K filed on May 2nd with the SEC. The amendment to the exchange agreement that was filed modified one of the closing conditions allowing a party to terminate the agreement if the transaction was not completed from May 15th to August 15th in order to give both companies adequate time to prepare financials, respond to SEC comments, update our initial Form S-4 filing, and host a shareholder meeting to vote on proposals relating to the transaction. In addition, The amendment also provided for a fixed equity share ratio of 90-10 between the Roosevelt partners and Arcadia stockholders. The original exchange agreement included a calculation where the ownership stake could be adjusted upward or downward based on several factors, including the amount of cash and cash equivalents on Arcadia's books at the closing date. By keeping the ratio constant, We believe we are providing Arcadia stockholders with a greater level of ownership certainty post-transaction. In terms of next steps, both companies are working to finalize financial results for Q1 2025, along with other information, and we anticipate filing an amendment to the initial form S4 registration statement after this information and other disclosures are updated. Once the registration statement is declared effective, the proxy materials will be mailed out to stockholders of record to be voted on at the shareholder meeting. Although there are many uncertainties that could affect the overall timing of the transaction and no assurances are possible, we are hopeful of being in a position to close the transaction around the August 15th date noted in the First Amendment Agreement with Roosevelt. With that, I will now turn the call over to Mark to discuss our 2025 first quarter financial results in more detail. Mark?