RiceBran Technologies (Form: 10-Q, Received: 08/14/2013 15:34:29)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 0-32565

RiceBran Technologies

(Exact Name of Registrant as Specified in its Charter)

California		87-0673375
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6720 North Scottsdale Road, Suite 390		85253
Scottsdale, AZ		(Zip Code)
(Address of Principal Executive Offices)

Issuer’s telephone number, including area code: (602) 522-3000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

In0dicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule l2b-2 of the Exchange Act). Yes o No x

As of August 12, 2013, shares of the registrant’s common stock outstanding totaled 226,725,547.

RiceBran Technologies

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Form 10-Q

PART I. FINANCIAL INFORMATION			Page
	Item 1.	Financial Statements	2
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012
		Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2013 and 2012
		Condensed Consolidated Balance Sheets as of June 30, 2013, and December 31, 2012
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012
		Notes to Unaudited Condensed Consolidated Financial Statements
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
	Item 4.	Controls and Procedures	33
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	34
	Item 1A.	Risk Factors	34
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
	Item 3.	Defaults Upon Senior Securities	35
	Item 4.	Mine Safety Disclosures	35
	Item 5.	Other Information	35
	Item 6.	Exhibits	35
Signatures			35

Cautionary Note about Forward-Looking Statements

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue, liquidity or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. The forward-looking statements contained herein reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Actual results may differ materially from those projected in such forward-looking statements due to a number of factors, risks and uncertainties, including the factors that may affect future results set forth in this Current Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2012. We disclaim any obligation to update any forward looking statements as a result of developments occurring after the date of this quarterly report.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements.

Index

RiceBran Technologies

Condensed Consolidated Statements of Operations

Three and Six Months Ended June 30, 2013 and 2012

(Unaudited) (in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	2013			2012			2013			2012

Revenues	$	9,388		$	9,711		$	18,097		$	19,457
Cost of goods sold		8,110			7,948			15,853			15,953
Gross profit		1,278			1,763			2,244			3,504

Operating expenses:
Selling, general and administrative		2,355			3,058			5,261			6,703
Professional fees		223			516			730			987
Impairment of property		-			1,069			300			1,069
Total operating expenses		2,578			4,643			6,291			8,759

Loss from operations		(1,300	)		(2,880	)		(4,047	)		(5,255	)

Other income (expense):
Interest income		16			16			26			63
Interest expense		(1,024	)		(387	)		(1,653	)		(805	)
Foreign currency exchange, net		(538	)		(576	)		(288	)		(782	)
Change in fair value of derivative warrant and conversion liabilities		1,044			2,868			(2,494	)		506
Loss on extinguishment		(494	)		-			(526	)		(2,986	)
Financing expense		(564	)		(20	)		(564	)		(1,544	)
Other income		2			3			5			7
Other expense		(223	)		(23	)		(348	)		(117	)
Total other income (expense)		(1,781	)		1,881			(5,842	)		(5,658	)

Loss before income taxes		(3,081	)		(999	)		(9,889	)		(10,913	)
Income tax benefit		571			369			1,081			911
Net loss		(2,510	)		(630	)		(8,808	)		(10,002	)
Net loss attributable to noncontrolling interest in Nutra SA		543			429			1,028			972
Net loss attributable to RiceBran Technologies shareholders	$	(1,967	)	$	(201	)	$	(7,780	)	$	(9,030	)

Loss per share attributable to RiceBran Technologies shareholders
Basic	$	(0.01	)	$	(0.00	)	$	(0.04	)	$	(0.04	)
Diluted	$	(0.01	)	$	(0.00	)	$	(0.04	)	$	(0.04	)

Weighted average number of shares outstanding
Basic		214,733			204,589			211,729			203,634
Diluted		214,733			204,589			211,729			203,634

See Notes to Unaudited Condensed Consolidated Financial Statements

Index

RiceBran Technologies

Condensed Consolidated Statements of Comprehensive Loss

Three and Six Months Ended June 30, 2013 and 2012

(Unaudited) (in thousands)

	Three Months						Six Months
	2013			2012			2013			2012

Net loss	$	(2,510	)	$	(630	)	$	(8,808	)	$	(10,002	)

Other comprehensive loss - foreign currency translation, net of tax		(960	)		(1,584	)		(812	)		(1,237	)

Comprehensive loss, net of tax		(3,470	)		(2,214	)		(9,620	)		(11,239	)

Comprehensive loss attributable to noncontrolling interest, net of tax		1,013			1,205			1,426			1,578

Total comprehensive loss attributable to RiceBran Technologies shareholders	$	(2,457	)	$	(1,009	)	$	(8,194	)	$	(9,661	)

See Notes to Unaudited Condensed Consolidated Financial Statements

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RiceBran Technologies

Condensed Consolidated Balance Sheets

June 30, 2013 and December 31, 2012

(Unaudited) (in thousands, except share amounts)

	June 30,			December 31,
	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	213		$	1,040
Restricted cash		1,919			1,919
Accounts receivable, net of allowance for doubtful accounts of $409 and $518 (variable interest entity restricted $2,645 and $2,505)		4,003			3,487
Inventories		1,731			1,994
Deferred tax asset		223			234
Income and operating taxes recoverable		523			1,167
Deposits and other current assets		846			975
Total current assets		9,458			10,816
Property, net (variable interest entity restricted $5,245 and $5,757)		25,909			28,457
Goodwill		4,374			4,773
Intangible assets, net		1,951			2,575
Other long-term assets		867			385
Total assets	$	42,559		$	47,006

LIABILITIES, TEMPORARY EQUITY AND EQUITY
Current liabilities:
Accounts payable	$	3,623		$	3,021
Accrued expenses		4,744			4,509
Current maturities of debt (variable interest entity nonrecourse $7,277 and $7,013)		8,801			8,003
Total current liabilities		17,168			15,533
Long-term liabilities:
Long-term debt, less current portion (variable interest entity nonrecourse $6,935 and $7,454 )		12,334			11,581
Deferred tax liability		559			1,674
Derivative warrant liabilities		6,782			4,520
Total liabilities		36,843			33,308

Commitments and contingencies

Temporary Equity:
Redeemable noncontrolling interest in Nutra SA		7,836			9,262
Redeemable common stock (2,118,644 shares outstanding)		178			-
Total temporary equity		8,014			9,262

Equity:
Equity (deficit) attributable to RiceBran Technologies shareholders:
Preferred stock, 20,000,000 shares authorized and none issued		-			-
Common stock, no par value, 1,200,000,000 shares authorized, 220,300,654, and 207,616,097 shares issued and outstanding		211,856			210,396
Accumulated deficit		(212,200	)		(204,420	)
Accumulated other comprehensive loss		(1,954	)		(1,540	)
Total equity (deficit) attributable to RiceBran Technologies shareholders		(2,298	)		4,436
Total liabilities, temporary equity and equity	$	42,559		$	47,006

See Notes to Unaudited Condensed Consolidated Financial Statements

Index

RiceBran Technologies

Condensed Consolidated St atements of Cash Flows

Six Months Ended June 30, 2013 and 2012

(Unaudited) (in thousands)

	2013			2012
Cash flow from operating activities:
Net loss	$	(8,808	)	$	(10,002	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,999			2,524
Provision for doubtful accounts receivable		2			292
Stock and share-based compensation		336			692
Change in fair value of derivative warrant and conversion liabilities		2,494			(506	)
Loss on extinguishment		526			2,986
Financing expense		564			1,544
Impairment of property		300			1,069
Deferred tax benefit		(1,080	)		(911	)
Other		(20	)		166
Changes in operating assets and liabilities:
Accounts receivable		(1,063	)		(766	)
Inventories		243			405
Accounts payable and accrued expenses		1,173			(370	)
Pre-petition liabilities		-			(1,615	)
Other		469			329
Net cash used in operating activities		(2,865	)		(4,163	)

Cash flows from investing activities:
Purchases of property		(1,250	)		(3,793	)
Proceeds from sale of property		836			276
Payment for license		(1,200	)		-
Receipts on notes receivable		-			600
Restricted cash		-			200
Other		-			(16	)
Net cash used in investing activities		(1,614	)		(2,733	)

Cash flows from financing activities:
Payments of debt		(6,511	)		(5,345	)
Proceeds from issuance of debt, net of issuance costs		8,423			7,052
Proceeds from issuance of convertible debt and related warrants		537			2,411
Proceeds from sale of membership interest in RBT PRO		1,200			-
Net cash provided by financing activities		3,649			4,118

Effect of exchange rate changes on cash and cash equivalents		3			(18	)
Net change in cash and cash equivalents		(827	)		(2,796	)
Cash and cash equivalents, beginning of period		1,040			3,329
Cash and cash equivalents, end of period	$	213		$	533

Supplemental disclosures:
Cash paid for interest	$	1,278		$	704
Cash paid for income taxes		-			-

See Notes to Unaudited Condensed Consolidated Financial Statements

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RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements of RiceBran Technologies and subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC) for reporting on Form 10-Q; therefore, as permitted under these rules, certain footnotes and other financial information included in audited financial statements were condensed or omitted. The Interim Financial Statements contain all adjustments necessary to present fairly the interim results of operations, financial position and cash flows for the periods presented.

These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2012. The report of our independent registered public accounting firm that accompanies the audited consolidated financial statements for the year ended December 31, 2012, included in that Annual Report on Form 10-K, contains a going concern explanatory paragraph in which our independent registered public accounting firm expressed substantial doubt about our ability to continue as a going concern. We have experienced significant losses and negative cash flows and have an accumulated deficit in excess of $200 million as of June 30, 2013. Further, although we are focusing on raising additional funds to operate our business, there can be no assurances that these efforts will prove successful.

The interim results reported in these condensed consolidated financial statements are not necessarily indicative of the results to be expected for the full fiscal year, or any other future period, and have been prepared assuming we will continue as a going concern based on the realization of assets and the satisfaction of liabilities in the normal course of business.

Certain reclassifications have been made to amounts reported for the prior year to achieve consistent presentation with the current year.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are applicable to us and adoption of which could potentially have a material impact on our consolidated financial statements.

NOTE 2. BUSINESS

We are a human food ingredient and animal nutrition company focused on the procurement, bio-refining and marketing of numerous products derived from rice bran. We have proprietary and patented intellectual property that allows us to convert rice bran, one of the world’s most underutilized food sources, into a number of highly nutritious human food and animal nutrition products. Our target markets are human food and animal nutrition manufacturers and retailers, as well as natural food, functional food and nutraceutical supplement manufacturers and retailers, both domestically and internationally. We have developed a bio-refining approach to processing raw rice bran into various value added constituents such as stabilized rice bran (SRB), rice bran oil (RBO), defatted rice bran (DRB) and a variety of other valuable derivative products from each of these core products.

We have three reportable business segments: (i) Corporate; (ii) USA, which manufactures and distributes SRB in various granulations along with other products derived from rice bran via proprietary and patented enzyme treatment processes; and (iii) Brazil, which extracts crude RBO and DRB from rice bran, which are then further processed into a number of valuable human food and animal nutrition products. The Corporate segment includes selling, general and administrative expenses including public company expenses, litigation, and other expenses not directly attributable to other segments. No Corporate allocations are made to the other segments. General corporate interest is not allocated.

The USA segment consists of two locations in California and two locations in Louisiana all of which can produce SRB. One of the two Louisiana SRB facilities, located in Lake Charles, has been idle since May 2009. The USA segment also includes our Dillon, Montana Stage II facility which produces RiSolubles (a highly nutritious, carbohydrate and lipid rich fraction of SRB), RiFiber (a fiber rich derivative of SRB) and RiBalance (a complete rice bran nutritional package derived from further processing SRB). The manufacturing facilities included in our USA segment have proprietary and patented processing equipment and technology for the stabilization and further processing of rice bran into finished products. Approximately 50% of USA segment revenue is from sales of human food products and 50% is from sales of animal nutrition products.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

The Brazil segment consists of the consolidated operations of Nutra SA, LLC, whose only operating subsidiary is Industria Riograndens De Oleos Vegetais Ltda. ( Irgovel), located in Pelotas, Brazil. Irgovel manufactures RBO and DRB products for both the human and animal food markets in Brazil and internationally. In refining RBO to an edible grade, several co-products are obtained. One such product is distilled fatty acids, a valuable raw material for the detergent industry. DRB is sold in bulk as animal feed and compounded with a number of other ingredients to produce complex animal nutrition products which are packaged and sold under Irgovel brands in the Brazilian market. Approximately 46% of Brazil segment product revenue was from sales of RBO products and 54% was from sales of DRB products.

NOTE 3. LIQUIDITY AND MANAGEMENT’S PLAN

We continue to experience losses and negative cash flows from operations which raises substantial doubt about our ability to continue as a going concern. We currently have insufficient funds to support our operations and service our debt in the near term and have inadequate financing arrangements in place at this time. Although we believe that we will be able to obtain the funds necessary to operate our business, there can be no assurances that our efforts will prove successful. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

In the ongoing effort to improve profitability, significant emphasis will be placed on growing revenues. The growth of revenues is expected to include the following:

·	growth in existing markets for stabilized rice bran (SRB), rice bran oil (RBO) and defatted rice bran (DRB);

·	expanding our product offerings and improving existing products;

·	aligning with strategic partners who can provide channels for additional sales of our products; and

·	implementing price increases.

We may also monetize certain assets which could result in additional impairment of asset values. Asset monetization may include some or all of the following:

·	sale of certain facilities;

·	sale of an interest in one or more subsidiaries; or

·	sale of surplus equipment.

We continue to evaluate the possibility of raising funds through the issuance of additional subordinate debt or equity.

NOTE 4. LOSS PER SHARE (EPS)

Basic EPS is computed by dividing net income (loss) attributable to RiceBran Technologies shareholders by the weighted average number of common shares outstanding during all periods presented. Shares underlying options, warrants and convertible debt are excluded from the basic EPS calculation but are considered in calculating diluted EPS.

Diluted EPS is computed by dividing the net income (loss) attributable to RiceBran Technologies shareholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding if the impact of assumed exercises and conversions is dilutive. The dilutive effect of outstanding options and warrants is calculated using the treasury stock method. The dilutive effect of outstanding convertible debt is calculated using the if-converted method.

Below are reconciliations of the numerators and denominators in the EPS computations for the three and six months ended June 30, 2013 and 2012.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

	Three Months Ended						Six Months Ended
	2013			2012			2013			2012
NUMERATOR (in thousands):
Basic and diluted - net loss attributable to RiceBran Technologies shareholders	$	(1,967	)	$	(201	)	$	(7,780	)	$	(9,030	)

DENOMINATOR:
Basic EPS - weighted average number of shares outstanding		214,732,733			204,588,939			211,728,950			203,633,571
Effect of dilutive securities outstanding		-			-			-			-
Diluted EPS - weighted average number of shares outstanding		214,732,733			204,588,939			211,728,950			203,633,571

Number of shares of common stock which could be purchased with weighted average outstanding securities not included in diluted EPS because effect would be antidilutive-
Stock options (average exercise price for the three and six months ended June 30, 2013 of $0.14 and $0.15)		36,978,329			38,821,934			35,815,160			39,335,617
Warrants (average exercise price for the three and six months ended June 30, 2013 of $0.09 and $0.11)		146,254,823			120,710,994			153,804,297			113,711,533
Convertible debt (average conversion price for the three and six months ended June 30, 2013 of $0.07)		89,598,240			49,300,000			91,640,490			44,529,813

The impact of potentially dilutive securities outstanding at June 30, 2013 and 2012, was not included in the calculation of diluted EPS in 2013 and 2012 because to do so would be antidilutive. Those securities listed in the table above which were antidilutive in 2013 and 2012, which remain outstanding, could potentially dilute EPS in the future.

NOTE 5. REDEEMABLE NONCONTROLLING INTEREST IN NUTRA SA

We hold a variable interest which relates to our equity interest in Nutra SA, LLC (Nutra SA). We are the primary beneficiary of Nutra SA, and as such, Nutra SA’s assets, liabilities and results of operations are included in our consolidated financial statements. The other equity holders’ interests are reflected in net loss attributable to noncontrolling interest in Nutra SA, in the consolidated statements of operations, and redeemable noncontrolling interest in Nutra SA, in the consolidated balance sheets. Our variable interest in Nutra SA is our Brazil segment. A summary of the carrying amounts of Nutra SA balances included in our consolidated balance sheets follows (in thousands).

	June 30,		December 31,
	2013		2012
Cash and cash equivalents	$	132	$	562
Other current assets (restricted $2,645 and $2,505)		4,836		5,675
Property, net (restricted $5,245 and $5,757)		18,155		19,690
Goodwill and intangibles, net		5,390		6,215
Other noncurrent assets		155		54
Total assets	$	28,668	$	32,196

Current liabilities	$	5,507	$	5,141
Current portion of long-term debt (nonrecourse)		7,277		7,013
Long-term debt, less current portion (nonrecourse)		6,935		7,454
Other noncurrent liabilities		559		1,871
Total liabilities	$	20,278	$	21,479

Nutra SA’s debt is secured by its accounts receivable and property. Our parent company and our non-Brazilian subsidiaries do not guarantee any of Nutra SA’s debt.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

A summary of changes in redeemable noncontrolling interest for the three and six months ended June 30, 2013 and 2012, follows (in thousands).

	Three Months Ended						Six Months Ended
	2013			2012			2013			2012
Redeemable noncontrolling interest in Nutra SA, beginning of period	$	8,849		$	9,545		$	9,262		$	9,918
Investors' interest in net loss of Nutra SA		(543	)		(429	)		(1,028	)		(972	)
Investors' interest in other comprehensive loss of Nutra SA		(470	)		(776	)		(398	)		(606	)
Redeemable noncontrolling interest in Nutra SA, end of period	$	7,836		$	8,340		$	7,836		$	8,340

In December 2010, we entered into a membership interest purchase agreement (MIPA) with AF Bran Holdings-NL LLC and AF Bran Holdings LLC (Investors). The Investors’ interest was 49.0% in all periods presented. The Investors’ share of Nutra SA’s net income (loss) increases (decreases) redeemable noncontrolling interest.

The Investors have the right to purchase from Nutra SA up to an additional 750,000 units for another $1.5 million. If immediately prior to such purchase Nutra SA and Irgovel have sufficient cash to complete certain projects, then the units will have no voting rights. In the second quarter of 2013, we transferred $0.7 million in cash from the Parent Company to Nutra SA. In exchange, title was returned to us for certain equipment contributed to Nutra SA in December 2012 with an historical cost of $0.2 million.

Redeemable noncontrolling interest in Nutra SA is recorded in temporary equity, above the equity section and after liabilities on our consolidated balance sheets, because the Investors have the right to force a sale of Nutra SA assets in the future (see Drag Along Rights described below). We have assessed the likelihood of the Investors exercising these rights as less than probable at June 30, 2013, in part because it is more likely the Investors will exercise other rights prior to January 2014. We will continue to evaluate the probability of the Investors exercising their Drag Along rights each reporting period. We will begin to accrete the redeemable noncontrolling interest up to fair value if and when it is probable the Investors will exercise these rights.

We are restricted from competing with Nutra SA and Irgovel in Brazil as further described in the MIPA.

Under the limited liability company agreement for Nutra SA (LLC agreement), as amended., any units held by the Investors beginning January 1, 2014, accrue a yield at 8% (the Yield). Commencing with the first quarter of 2014, Nutra SA must make distributions to the Investors quarterly in the amount equal to the previously accrued and unpaid Yield plus any additional distributions owed to the Investors. Until March 31, 2014, or if at any time Nutra SA is past due on its obligations to pay the Investors the Yield, all amounts due to us for management fees or for shared employees as provided under the LLC Agreement shall be tolled and remain unpaid until all past due amounts, if any, owed to the Investors have been paid in full.

Following the payment of the Yield, Nutra SA must distribute all distributable cash (as defined in the LLC Agreement) to the members on March 31 of each year as follows: (i) first, to the Investors in an amount equal to 2.3 times the Investors’ capital contributions, less the aggregate amount of distributions paid to the Investors, (ii) second, to us in an amount equal to (i) two times the capital contributions made by us, less the aggregate amount of distributions paid to us; and (iii) third, to us and the Investors in proportion to our respective membership interests.

Under the LLC agreement, the business of Nutra SA is to be conducted by the manager, currently our CEO, subject to the oversight of the management committee. The management committee is comprised of three of our representatives and two Investor representatives. Upon an event of default or a qualifying event, we will no longer control the management committee and the management committee will include three Investor representatives and two of our representatives. In addition, following an event of default or a qualifying event, a majority of the members of the management committee may replace the manager of Nutra SA.

As of June 30, 2013, there have been no events of default. Events of default, as defined in the MIPA, are:

A Nutra SA business plan deviation, defined as the occurrence, for either 2013 or 2014, of a 20% unfavorable variation in two out of three of the following: (i) revenue, (ii) earnings before interest, taxes, depreciation and amortization (EBITDA) or (iii) debt,

A Nutra SA EBITDA default, which is defined as the failure to achieve 85% of planned EBITDA for three consecutive quarters, or

A material problem, which is defined as a material problem in a facility (unrelated to changes in law, weather, etc.) likely to cause a Nutra SA business plan deviation or Nutra SA EBITDA default, which results in damages not at least 80% covered by insurance proceeds.

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RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

As of June 30, 2013, there have been no qualifying events. The LLC agreement, defines a qualifying event as any event prior to September 16, 2014, which results, or will result in, (i) a person or group of persons exercising the right to appoint members to our board of directors holding one third or more of the votes of all board members, (ii) the sale, exchange, pledge or use as guarantee of one half or more of our ownership interest in Nutra SA to a third party or (iii) the bankruptcy of RiceBran Technologies or Nutra SA.

The Investors have certain rights, summarized below, under an investor rights agreement and the LLC agreement, as further defined in the agreements.

Conversion Rights – The Investors may exchange units in Nutra SA for equity interests in Irgovel. After any exchange, the Investors would possess the same rights and obligations with respect to the securities of Irgovel, as they have in Nutra SA.

Global Holding Company (GHC) Roll-Up – If we form an entity, GHC, to hold our Brazil segment assets, the Investors may exchange units in Nutra SA for equity interests in GHC. The investors may exercise this right after the second anniversary of the formation of GHC or, if an event of default has occurred, after the GHC formation date. The appraised fair value of the Investors’ interest in Nutra SA would be used to determine the amount of ownership interest the Investors would receive in GHC.

RiceBran Technologies Roll-Up – The Investors may exchange units in Nutra SA for our common stock. ^. This right is available upon the earlier of January 2014 or upon an event of default. We may elect to postpone our obligation to complete the roll-up to January 2015 if the roll-up would result in over 25% of our common stock being owned by the Investors. The appraised fair value of the Investors’ interest in Nutra SA and the market price of our stock would be used to determine the amount of ownership interest the Investors would receive.

Drag Along Rights – The Investors have the right to force the sale of all Nutra SA assets after the earlier of January 2014 or the date of an event of default or qualifying event. The right terminates upon the occurrence of certain events (a $50 million Nutra SA initial public offering or a change of control, as defined). We may elect to exercise a right of first refusal to purchase the Investors’ interest instead of proceeding to a sale.

In evaluating whether we are the primary beneficiary of Nutra SA, we considered the matters which could be put to a vote of the members. Until there is an event of default or a qualifying event, the Investors’ rights and abilities, individually or in the aggregate, do not allow them to substantively participate in the operations of Nutra SA. The Investors do not currently have the ability to dissolve Nutra SA or otherwise force the sale of all its assets. They do have such rights in the future (Drag Along Rights as described above). We will continue to evaluate our ability to control Nutra SA each reporting period.

Cash provided by operations in our Brazil segment is generally unavailable for distribution to our Corporate and USA segments pursuant to the terms of the LLC agreement .

NOTE 6. INVENTORIES

Inventories are composed of the following (in thousands):

	June 30,		December 31,
	2013		2012
Finished goods	$	1,211	$	1,146
Work in process		138		330
Raw materials		127		255
Packaging supplies		255		263
Total inventories	$	1,731	$	1,994

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 7. PROPERTY

Property consisted of the following (in thousands):

	June 30,		December 31,
	2013		2012
Land	$	390	$	403
Furniture and fixtures		357		358
Plant		15,023		14,362
Computer and software		1,400		1,407
Leasehold improvements		200		189
Machinery and equipment		15,402		15,053
Construction in progress		6,390		9,118
Property		39,162		40,890
Less accumulated depreciation		13,253		12,433
Property, net	$	25,909	$	28,457

Included in accounts payable at June 30, 2013, is $0.7 million related to amounts payable for capital expansion project additions.

NOTE 8. EQUITY METHOD INVESTMENT

In 2011, we entered into an agreement with a partner with the goal of developing technology to extract and concentrate protein from rice bran. In March 2013, the agreement was mutually terminated under terms whereby we each received (i) the right to separately develop, modify and improve the jointly developed technology owned by the partner and (ii) a nonexclusive, royalty free, perpetual license to that technology (License). We paid the partner $1.2 million as a lump sum in April 2013.

RBT PRO, LLC (RBT PRO) was a wholly owned subsidiary whose only asset was the License acquired in March 2013. I n April 2013, we entered into a series of agreements with various affiliates of Wilmar International Limited (collectively Wilmar). In connection therewith, we sold a 50% membership interest in RBT PRO to Wilmar for $1.2 million. RBT PRO granted an exclusive, royalty free, perpetual sublicense of the License to Wilmar for use throughout China and to the Parent Company for use worldwide, excluding China.

We also entered into a cross license agreement with Wilmar. We agreed to license to Wilmar all of our intellectual property with respect to processing of rice bran and its derivatives for use in China. Wilmar agreed to license to us (i) its intellectual property with respect to processing of rice bran, and its derivatives, based on the intellectual property licensed to Wilmar under the License for use worldwide, excluding China and (ii) its other intellectual property with respect to processing of rice bran, and its derivatives, for use worldwide, excluding certain countries in Asia.

Under the agreements, we obtained the right to purchase 45% of the capital stock of any entity Wilmar establishes to develop new products relating to rice bran or its derivative, as defined in the agreement, using the intellectual property licensed to Wilmar. If we decline the right to purchase 45% of the capital stock of any such new entity, we have the option to purchase 25% of the entity within two years of the entity’s formation. The exercise price for the option will equal 25% of the capital investment made in the entity, plus interest, as defined in the agreement.

There was no gain or loss recognized on these transactions because we entered the agreement with the partner in contemplation of the agreements with Wilmar. Our investment in RBT PRO is zero as of June 30, 2013 and RBT PRO has had no net income or loss since inception.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 9. DEBT

The following table summarizes current and long-term portions of debt (in thousands).

	June 30,		December 31,
	2013		2012
Corporate segment:
Senior convertible revolving note, net	$	1,291	$	-
Senior convertible debentures, net		198		1,048
Subordinated convertible notes, net		5,397		4,041
Other		38		28
		6,924		5,117
Brazil segment:
Capital expansion loans		5,070		5,555
Equipment financing		175		201
Working capital lines of credit		3,726		2,227
Advances on export letters of credit		3,165		3,953
Special tax programs		2,075		2,531
		14,211		14,467
Total debt		21,135		19,584
Current portion		8,801		8,003
Long-term portion	$	12,334	$	11,581

Corporate Segment

As of June 30, 2013, our convertible debt consists of the following components (in thousands):

	Senior Convertible			Senior			Subordinated Convertible Notes
	Revolving Note			Convertible Debentures			Halpern Entities			Other Investors			Total
Principal outstanding	$	(1,268	)	$	(195	)	$	(2,600	)	$	(3,373	)	$	(7,436	)
Discount		58			15			511			3,373			3,957
Derivative conversion liabilities		(81	)		(18	)		(1,371	)		(1,937	)		(3,407	)
Debt	$	(1,291	)	$	(198	)	$	(3,460	)	$	(1,937	)	$	(6,886	)

Debt - current portion	$	(1,291	)	$	(195	)	$	-		$	-		$	(1,486	)
Debt - long-term portion		-			(3	)		(3,460	)		(1,937	)		(5,400	)

Senior Convertible Revolving Note

Under a revolving credit facility with TCA Global Credit Master Fund, LP (TCA), effective May 2013, as amended July 2013, we may borrow up to $8 million, based on the amount of eligible accounts receivable we provide to secure the repayment of the amounts borrowed. We expect the amount of our eligible receivables will limit our ability to borrow under this facility, such that our outstanding borrowings at any time are less than approximately $2.4 million. Borrowings under the agreement are evidenced by a revolving note which accrues interest at the rate of 12% per year and is due in January 2014. We owe TCA various other fees under the agreement that are expected to average approximately 7% of average borrowings per year.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

USA segment accounts receivable collections are required to be directed to a TCA owned account. Collections TCA receives, in excess of amounts due for interest and fees, are treated as additional repayments and reduce amounts outstanding. Minimum cumulative repayments are $0.1 million as of October 2013, $0.2 million as of November 2013 and $0.3 million as of December 2013, or 15% of the total initially borrowed in each tranche, if greater. Until cumulative repayments equal the required minimum, TCA may withhold 20% of collections. We may request, on a weekly basis, that TCA advance us any amounts collected in excess of amounts (i) due for interest and fees and (ii) required to meet the minimum cumulative repayments.

In May 2013, we borrowed $1.4 million under the TCA revolving note (first tranche). The proceeds net of cash expenses totaled $1.2 million and were used to (1) pay down $0.4 million of debt, (2) fund a $0.5 million investment in Nutra SA and (3) for general corporate purposes. In addition to cash expenses we issued TCA 2,118,644 shares of our common stock with a market value of $0.2 million ($0.08 per share) at issuance. We also issued equity warrants to investment bankers with a fair value of $0.1 million for the purchase of 1,200,000 shares of common stock, exercisable at $0.08 per share, through May 2018. The total $0.5 million costs incurred with the first tranche closing, consisting of $0.3 million of cash expenses and the $ 0.2 million fair values of the common stock and warrants are recorded as debt issuance costs in other long-term assets and are being amortized to interest expense over the term of the note. During the second quarter of 2013, amounts outstanding under the agreement averaged $1.3 million.

In July 2013, we borrowed an additional $0.6 million under the TCA revolving note (second tranche). The net proceeds of $0.6 million were used to make a $0.1 million investment in Nutra SA and for general corporate purposes. In addition to cash expenses, we issued TCA 4,000,000 shares of our common stock with a market value of $0.2 million ($0.08 per share) at issuance. We issued equity warrants to investment bankers with a fair value of less than $0.1 million for the purchase of 514,286 shares of common stock, exercisable at $0.08 per share, through July 2018. The total $0.3 million costs incurred with the second tranche closing, consisting of $0.1 million of cash expenses and the $0.2 million fair values of the common stock and warrants will also be recorded as debt issuance costs in other long-term assets and be amortized to interest expense over the remaining term of the note.

We have guaranteed that TCA will realize a minimum $0.08 per share when shares of our common stock issued in connection with the first tranche are sold and a minimum $0.07 per share when shares issued in connection with the second tranche are sold, if the shares are sold within the period beginning one year from the date of issuance and ending three years from the date of issuance. We are required to issue additional shares in the event of a shortfall, sufficient for TCA to realize the minimums. Or TCA may elect for us to redeem the shares for a cash amount equal to the minimum for the related tranche in January 2014. As of June 30, 2013, the 2,118,644 shares of common stock issued to TCA in May 2013 are recorded in temporary equity at $0.2 million, the fair value of the shares at issuance, which exceeds the redemption value of the shares at June 30, 2013. The 4,000,000 shares of common stock issued to TCA in July 2013, will also be carried in temporary equity at the greater of their fair value at issuance or their current redemption value, until the redemption feature lapses.

Upon an event of default, as defined in the agreement, TCA has the right to voluntarily convert all or any portion of the outstanding principal, interest and other amounts due under the agreement into shares of our common stock at a conversion price equal to 85% of the lowest daily volume weighted average price during the five trading days immediately prior to the conversion date. Because the conversion feature could require us to issue an indeterminate number of shares for settlement, the conversion feature is a derivative liability, classified as debt on our balance sheets. If TCA voluntarily converts, we have guaranteed that TCA will realize a minimum per share, when shares of our common stock issued in connection with the conversion are sold, equal to the volume weighted average price of our common stock during the five trading days immediately prior to the conversion date. As a result of the $0.1 million conversion liability associated with the first tranche, we recorded a debt discount at issuance of $0.1 million which is amortizing to interest expense over the term of the revolving note. At June 30, 2013, the conversion liability on the revolving note is $0.1 million.

During the term of the agreement, the Corporate and USA segments may not without TCA’s consent or approval, among other things, (i) enter into new debt (ii) make any new investments, except capital expenditures less than $0.3 million per year, (iii) issue or redeem stock, (iii) declare or pay dividends or make other distributions to shareholders, and (iv) make loans and distributions of assets to any persons, including affiliates.

In connection with the TCA transaction, our factoring agreement was cancelled and we paid the $0.1 million outstanding balance on the agreement in the second quarter of 2013.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

Senior Convertible Debentures

In the first and second quarter of 2013, the holder of the debentures converted $0.1 million and $0.3 million of the outstanding principal into 1,400,000 shares and 4,285,714 shares of our common stock, at a conversion price of $0.07. We recognized, for each conversion, a loss on extinguishment of $0.1 million, representing the difference between the market values of the shares of common stock issued and the $0.1 and $0.4 million carrying amounts of the debt (including the related derivative conversion liability), on the date of conversion.

Under a May 2013 amendment to the senior convertible debenture, we agreed to prepay $0.3 million of the of the outstanding principal and issue 1,714,286 shares of common stock to the holder, and the holder agreed to share its senior interest in its collateral pari passu with TCA. The remaining $0.2 million principal is payable in equal monthly installments from July 2013 through December 2013. Prior to the amendment, principal was due in equal monthly installments from June 2013 to January 2014. We expensed the $0.3 million fair value of the shares issued in connection with the amendment and $0.01 million cash amendment fees as loss on extinguishment.

Subordinated Convertible Notes

In the second quarter of 2013, we issued subordinated convertible notes and related warrants, which are described in the chart below.

Issuance

Principal

Amount of

Notes (in

thousands)

Creditor's

Debt

Conversion

Right

Stated

Annual

Interest

Rate on

Debt

Maturity

Date of Debt

Number of

Under

Warrant

Exercise

Price of

Warrant

Expiration

Date of Warrant

Subordinated Convertible Notes and Warrants

538

Convertible immediately at $0.07 per share

July 2015 or July 2016

7,680,038

Exercisable immediately at $0.08 per share

July 2017 or May 2018

The convertible debt and warrants listed in the table above contain full ratchet antidilution provisions and require the holders to provide us with 61 day notice prior to conversion or exercise if the holder would have a beneficial ownership interest in excess of 4.99% immediately after conversion or exercise. The $0.5 million of proceeds from issuance of the convertible notes and related warrants was used for repayment of debt and for general corporate purposes.

With regard to the issuances of convertible notes and related warrants listed in the table above, the total of (1) the $0.5 million fair value of the conversion features issued, (2) the $0.5 million fair value of the liability warrants issued and (3) the $0.1 million fair value of our common stock issued, exceeded the $0.5 million proceeds from these issuances, therefore we recorded financing costs of $0.6 million in the second quarter of 2013. The initial debt discounts recorded for the convertible notes equaled the principal amount of the notes at issuance. Because the fair value at issuance of the conversion features and warrants exceeded the proceeds from these issuances, in each case, under the effective interest method, this will result in the debt discount being expensed when the principal of the note matures or is redeemed, in proportion to the principal reduction.

In May 2013, we entered into agreements to allow each holder of existing subordinated convertible notes and warrants to invest in additional notes and related warrants and provided that each holder making an additional investment (i) receive 2.5 shares of our common stock for each dollar invested and (ii) agree to extend the maturity date for all of their notes to July 2016. Further, each holder of outstanding convertible notes could elect (PIK Election), in lieu of receiving cash interest payments otherwise payable though June 2014 on their existing convertible notes to receive (i) an increase in the number of shares of common stock underlying their notes (ii) an equity warrant to purchase shares of our common stock and (ii) 2.5 shares of our common stock for each dollar of interest otherwise payable through June 2014.

One holder made an additional investment in a subordinated convertible note and related warrant of $0.4 million in May 2013 (included in the issuances discussed two paragraphs above), and, as a result, (i) the maturity date on the holder’s outstanding convertible notes in the principal amount of $1.1 million was extended from July 2015 to July 2016 and (ii) we issued 1,000,000 shares of common stock. No gain or loss was recognized as a result of the extension of the maturity date of the existing notes as the terms were not substantially different.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

Other holders of convertible notes in the principal amount of $0.3 million made the PIK Election, without making an additional investment. As a consequence, in the second quarter of 2013, we issued 605,255 shares of common stock with a fair value of $0.2 million and, in lieu of paying interest of $0.1 million accrued through June 30, 2013, we (i) increased the shares of common stock underlying the holders convertible notes 869,171 shares and (ii) issued equity warrants for the purchase of up to 869,171 shares of common stock, at an exercise price of $0.08 per share, and a May 2018 expiration. The equity warrants were recorded in equity, at their $0.1 million fair value as of the date of issuance. The change in fair value of the convertible notes from the increase in the underlying shares was less than $0.1 million. We recognized a loss on extinguishment for the difference between the fair value of the consideration issued and the accrued interest as of the date of the PIK election. Changes in fair value after the PIK elections, from increases in the shares of common stock underlying the PIK warrants and underlying the related convertible notes are recorded as interest expense.

Other Notes

In the second quarter of 2013, we also issued to Mr. Halpern a promissory note in the principal amount of $0.1 million, which was paid in full later in the quarter.

Brazil Segment

All Brazil segment debt is denominated in the Brazilian Real (R$), except advances on export letters of credit which are denominated in U.S. Dollars.

In the first quarter of 2013, Irgovel received R$2.0 million ($1.0 million) under a working capital line of credit agreement. The lending bank withheld R$1.0 million ($0.5 million) of the amount borrowed in a bank account, until the second quarter of 2013, when Irgovel had sufficient accounts receivable to withdraw the funds.

NOTE 10. PRE-PETITION LIABILITIES

On November 10, 2009, our parent company (formerly known as NutraCea) filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Arizona in the proceeding entitled In re: NutraCea, Case No. 2:09-bk-28817-CGC. None of our subsidiaries were included in the bankruptcy filing. Creditors voted overwhelmingly in favor of an amended plan of reorganization which called for the payment in full of all allowed claims, and the plan became effective on November 30, 2010. In January 2012, we made our final $1.6 million distribution to the general unsecured creditors.

NOTE 11. EMPLOYEE BONUS PLAN

In 2010, our board of directors approved a cash incentive bonus plan. As of August 14, 2013, the plan, as amended, provides for payment of $0.6 million to employees, still employed at the time of payment, when (1) we are cash flow positive, defined by our board as earnings before interest, taxes, depreciation, amortization and certain non-cash charges, and (2) cash is available for the payment as determined by our board at its sole discretion. In 2013, our board of directors approved an executive bonus plan which provides for payments of $0.3 million to employees, still employed at the time of payment, when cash is available for the payment as determined by our board at its sole discretion. Because the consolidated operating cash flow and cash availability conditions were not met as of June 30, 2013, and December 31, 2012, our board of directors has not approved payments and no accruals have been recorded for these bonuses.

NOTE 12. COMMITMENTS AND CONTINGENCIES

In addition to the matters discussed below, from time to time we are involved in litigation incidental to the conduct of our business. When applicable, we record accruals for contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in the opinion of management, individually or in the aggregate, no such lawsuits are expected to have a material effect on our financial position or results of operations. Defense costs are expensed as incurred and are included in professional fees.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

Litigation

On August 28, 2008, former Irgovel stockholder David Resyng filed an indemnification suit against Irgovel, Osmar Brito and the remaining former Irgovel stockholders (Sellers), requesting: (i) the freezing of the escrow account maintained in connection with the transfer of Irgovel’s corporate control to us and the presentation of all documentation related to the transaction, and (ii) damages in the amount of the difference between (a) the sum received by David Resyng in connection with the judicial settlement agreement executed in the action for the partial dissolution of the limited liability company filed by David Resyng against Irgovel and the Sellers and (b) the amount received by the Sellers in connection with the sale of Irgovel’s corporate control to us, in addition to moral damages as determined in the court’s discretion. The amount of damage claimed by Mr. Resyng is approximately $3 million.

We believe that the filing of the above lawsuit is a fundamental default of the obligations undertaken by the Sellers under the Quotas Purchase Agreement for the transfer of Irgovel’s corporate control, executed by and among the Sellers and us on January 31, 2008 (Purchase Agreement). Consequently, we believe that the responsibility for any indemnity, costs and expenses incurred or that may come to be incurred by Irgovel and/or us in connection with the above lawsuit is the sole responsibility of the Sellers.

On February 6, 2009, the Sellers filed a collection lawsuit against us seeking payment of the second installment of the purchase price under the Purchase Agreement, which the Sellers allege is approximately $1.0 million. We have withheld payment of the second installment pending resolution of the Resyng lawsuit noted above. The Parent Company has not been served with any formal notices in regard to this matter. To date, only Irgovel has received formal legal notice. In addition, the Purchase Agreement requires that all disputes between us and the Sellers be adjudicated through arbitration. As part of the Purchase Agreement, $2.0 million was deposited into an escrow account to cover contingencies with the net remaining funds payable to the Sellers upon resolution of all contingencies. We believe any payout due to the lawsuit will be made out of the escrow account. As of June 30, 2013 and December 31, 2012, the balance in the escrow account was $1.9 million and is included in restricted cash in our balance sheets. There is an escrow liability related to the lawsuit in accrued expenses on our balance sheets as of June 30, 2013 and December 31, 2012, totaling $1.3 million and $1.4 million. When the escrow account was funded, we established an accrued liability equal to the amount of the escrow for contingencies and the net balance due to the Sellers under the terms of the Purchase Agreement. As of June 30, 2013, $0.7 million of pre-acquisition contingencies have either been paid or specifically identified and accrued, leaving a balance of $1.4 million to settle any remaining contingencies. We believe that there is no additional material exposure as any amounts determined to be owed as a result of the above noted litigation and contingencies will be covered by the escrow account. The Parent Company has agreed to pay ninety percent of any funds received from the escrow account to Nutra SA, with no resulting change in our Nutra SA voting rights.

NOTE 13. EQUITY, SHARE-BASED COMPENSATION AND LIABILITY WARRANTS

A summary of equity activity for the six months ended June 30, 2013, (in thousands, except share data) follows.

	Common Stock				Accumulated			Accumulated Other Comprehensive			Total
	Shares		Amount		Deficit			Loss			Equity
Balance, December 31, 2012		207,616,097	$	210,396	$	(204,420	)	$	(1,540	)	$	4,436
Share-based compensation, options		-		234		-			-			234
Conversion of senior subordinated debenture		5,685,714		500		-			-			500
Common stock issued for fees and services		6,998,843		588		-			-			588
Warrants issued for fees and services		-		138		-			-			138
Foreign currency translation		-		-		-			(414	)		(414	)
Net loss		-		-		(7,780	)		-			(7,780	)
Balance June 30, 2013		220,300,654	$	211,856	$	(212,200	)	$	(1,954	)	$	(2,298	)

In June 2013, our shareholders approved an increase in the number of our authorized shares of common stock from 500,000,000 to 1,200,000,000.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

A summary of stock option and warrant activity for the six months ended June 30, 2013, follows.

	Options							Equity and Liability Warrants
	Shares Under Options				Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)		Shares Under Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding, December 31, 2012		33,850,895		$	0.16		6.3		161,353,777		$	0.12		3.5
Granted		5,750,000			0.08				9,749,205			0.08
Impact of anti-dilution clauses		-			-				416,437			-
Exercised		-			-				-			-
Forfeited, expired or cancelled		(2,642,143	)		0.41				(29,221,130	)		0.33
Outstanding, June 30, 2013		36,958,752		$	0.13		6.4		142,298,289		$	0.08		3.8
Exercisable, June 30, 2013		29,184,863		$	0.13		5.8		142,298,289		$	0.08		3.8

Options

In April 2013, our board increased the number of shares of common stock that each non-employee director automatically receives annually each January 1 under our 2010 Equity Incentive Plan from 250,000 to 1,000,000 shares. In connection with the increase in the automatic director grant, in April 2013, our board granted each of our five non-employee directors a stock option to purchase up to 750,000 shares of common stock. Each option has an exercise price of $0.08 per share, vests in nine equal monthly installments ending December 31, 2013, and expires in April 2023. In January 2013, we issued each of those five non-employee directors an option for the purchase of up to 250,000 shares of common stock under the non-employee director automatic grant provision. Each option has an exercise price of $0.08 per share, vests in twelve equal monthly installments ending December 2013, and expires in January 2023.

In April 2013, the Board granted each of the two directors serving on the Strategic Committee and consulting special counsel a stock option to purchase up to 250,000 shares of common stock. Each option has an exercise price of $0.08 per share, vests in twelve equal monthly installments ending in March 2014 and expires in April 2018.

Warrants

We have outstanding warrants classified as equity (equity warrants) and as derivative warrant liability (liability warrants). We have certain warrant agreements in effect for outstanding liability warrants that contain antidilution clauses. Under the antidilution clauses, in the event of equity issuances, we may be required to lower the exercise price on liability warrants and increase the number of shares underlying liability warrants. Equity issuances may include issuances of our common stock, certain awards of options to employees, and issuances of warrants and/or other convertible instruments below a certain exercise price.

The April 2013 issuances of convertible debt and related warrants triggered the antidilution clauses in certain warrants and, as a result, we lowered the exercise price and increased the number of underlying shares on those liability warrants in April 2013. The affected warrants subsequently expired in April 2013 with 29,221,130 underlying shares.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

The following table summarizes information related to outstanding warrants:

			As of June 30, 2013						As of December 31, 2012
Range of Exercise Prices		Type of Warrant	Shares Under Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Shares Under Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$	0.07-$0.08	Liability		139,077,938	$	0.08		3.8		131,397,900	$	0.08		4.2
$	0.08	Equity		2,069,167		0.08		4.9		-		-		-
$	0.23	Equity		605,730		0.23		3.4		605,730		0.23		3.9
$	0.33	Liability		-		-		-		28,804,693		0.33		0.3
$	0.69	Equity		545,454		0.69		0.3		545,454		0.69		0.8
				142,298,289	$	0.08		3.8		161,353,777	$	0.12		3.5

NOTE 14. SEGMENT INFORMATION

The tables below present segment information for the periods identified and provide reconciliations of segment information to total consolidated information (in thousands).

Three Months Ended June 30, 2013	Corporate			USA			Brazil			Consolidated
Revenues	$	-		$	3,125		$	6,263		$	9,388
Cost of goods sold		-			2,358			5,752			8,110
Gross profit		-			767			511			1,278
Depreciation and amortization (in selling, general and administrative)		(5	)		(118	)		(195	)		(318	)
Intersegment fees		(56	)		-			56			-
Other operating expense		(1,219	)		(144	)		(897	)		(2,260	)
Loss from operations	$	(1,280	)	$	505		$	(525	)	$	(1,300	)

Net loss attributable to RiceBran Technologies shareholders	$	(1,909	)	$	505		$	(563	)	$	(1,967	)
Interest expense		599			-			425			1,024
Depreciation (in cost of goods sold)		-			233			479			712
Purchases of property		2			116			416			534

Six Months Ended June 30, 2013	Corporate			USA			Brazil			Consolidated
Revenues	$	-		$	6,034		$	12,063		$	18,097
Cost of goods sold		-			4,563			11,290			15,853
Gross profit		-			1,471			773			2,244
Depreciation and amortization (in selling, general and administrative)		(11	)		(239	)		(399	)		(649	)
Intersegment fees		-			-			-			-
Other operating expense		(2,335	)		(1,121	)		(2,186	)		(5,642	)
Loss from operations	$	(2,346	)	$	111		$	(1,812	)	$	(4,047	)

Net loss attributable to RiceBran Technologies shareholders	$	(7,122	)	$	411		$	(1,069	)	$	(7,780	)
Interest expense		875			-			778			1,653
Depreciation (in cost of goods sold)		-			458			891			1,349
Purchases of property		6			128			1,116			1,250

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

Three Months Ended June 30, 2012	Corporate			USA			Brazil			Consolidated
Revenues	$	-		$	3,153		$	6,558		$	9,711
Cost of goods sold		-			2,154			5,794			7,948
Gross profit		-			999			764			1,763
Depreciation and amortization (in selling, general and administrative)		(43	)		(308	)		(35	)		(386	)
Intersegment fees		56			-			(56	)		-
Impairment of property		-			(1,069	)		-			(1,069	)
Other operating expense		(1,447	)		(628	)		(1,113	)		(3,188	)
Loss from operations	$	(1,434	)	$	(1,006	)	$	(440	)	$	(2,880	)

Net loss attributable to Rice Bran Technologies shareholders	$	1,259		$	(1,015	)	$	(445	)	$	(201	)
Interest expense		166			9			212			387
Depreciation (in cost of goods sold)		-			278			421			699
Purchases of property		-			64			2,186			2,250

Six Months Ended June 30, 2012	Corporate			USA			Brazil			Consolidated
Revenues	$	-		$	6,564		$	12,893		$	19,457
Cost of goods sold		-			4,553			11,400			15,953
Gross profit		-			2,011			1,493			3,504
Depreciation and amortization (in selling, general and administrative)		(71	)		(639	)		(460	)		(1,170	)
Intersegment fees		112			-			(112	)		-
Impairment of property		-			(1,069	)		-			(1,069	)
Other operating expense		(2,723	)		(1,297	)		(2,500	)		(6,520	)
Loss from operations	$	(2,682	)	$	(994	)	$	(1,579	)	$	(5,255	)

Net loss attributable to Rice Bran Technologies shareholders	$	(7,009	)	$	(1,010	)	$	(1,011	)	$	(9,030	)
Interest expense		321			17			467			805
Depreciation (in cost of goods sold)		-			535			819			1,354
Purchases of property		-			66			3,727			3,793

The tables below present segment information for selected balance sheet accounts (in thousands).

	Corporate		USA		Brazil		Consolidated
As of June 30, 2013
Inventories	$	-	$	801	$	930	$	1,731
Property, net		57		7,697		18,155		25,909
Goodwill		-		-		4,374		4,374
Intangible assets, net		-		935		1,016		1,951
Total assets		3,100		10,791		28,668		42,559

As of December 31, 2012
Inventories		-		764		1,230		1,994
Property, net		36		8,731		19,690		28,457
Goodwill		-		-		4,773		4,773
Intangible assets, net		-		1,133		1,442		2,575
Total assets		3,201		11,609		32,196		47,006

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

All changes in goodwill between December 31, 2012 and June 30, 2013, relate to foreign currency translation. Corporate segment total assets include cash, restricted cash, property and other assets.

The following table presents revenue by geographic area for the three and six months ended June 30, 2013 and 2012 (in thousands).

	Three Months				Six Months
	2013		2012		2013		2012
United States	$	6,202	$	2,787	$	9,797	$	5,816
Brazil		2,391		4,855		6,662		9,771
Other international		795		2,069		1,638		3,870
Total revenues	$	9,388	$	9,711	$	18,097	$	19,457

NOTE 15. FAIR VALUE MEASUREMENT

The fair value of cash and cash equivalents, accounts and other receivables and accounts payable approximates their carrying value due to their shorter maturities. As of June 30, 2013, the fair value of our USA segment debt is approximately $2.5 million higher than the carrying value of that debt, based on current market rates for similar debt with similar maturities. The fair value of our Brazil segment debt approximates the carrying value of that debt based on the current market rates for similar debt with similar maturities.

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Certain assets and liabilities are presented in the financial statements at fair value. Assets and liabilities measured at fair value on a recurring basis include derivative warrant and conversion liabilities. Assets and liabilities measured at fair value on a non-recurring basis may include property.

We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market:

●

Level 1 – inputs include quoted prices for identical instruments and are the most observable.

●

Level 2 – inputs include quoted prices for similar assets and observable inputs such as interest rates, currency exchange rates and yield curves.

●

Level 3 – inputs are not observable in the market and include management’s judgments about the assumptions market participants would use in pricing the asset or liability.

For instruments measured using Level 3 inputs, a reconciliation of the beginning and ending balances is disclosed.

The following tables summarize the fair values by input hierarchy of items measured at fair value on a recurring basis on our consolidated balance sheets (in thousands):

			Level 1		Level 2		Level 3			Total
June 30, 2013
Derivative warrant liabilities	(1	)	$	-	$	-	$	(6,782	)	$	(6,782	)
Derivative conversion liabilities	(2	)		-		-		(3,407	)		(3,407	)
Total liabilities at fair value			$	-	$	-	$	(10,189	)	$	(10,189	)

December 31, 2012
Derivative warrant liabilities	(1	)	$	-	$	-	$	(4,520	)	$	(4,520	)
Derivative conversion liabilities	(2	)		-		-		(2,199	)		(2,199	)
Total liabilities at fair value			$	-	$	-	$	(6,719	)	$	(6,719	)

(1)

These warrants are valued using the lattice model each reporting period and the resultant change in fair value is recorded in the statements of operations. The lattice model requires us to assess the probability of future issuance of equity instruments at a price lower than the current exercise price of the warrants. The risk-free interest rate is determined by reference to the treasury yield curve rate of instruments with the same term as the warrant. Additional assumptions that were used to calculate fair value follow.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

	June 30, 2013		December 31, 2012
Risk-free interest rate		0.0% - 1.4%		0.1% - 0.7%
		(1.0% weighted average)		(0.6% weighted average)
Expected volatility		85%		93%

(2)

These conversion liabilities are valued using a lattice model each reporting period and the resultant change in fair value is recorded in the statements of operations. The lattice model requires us to assess the probability of future issuance of equity instruments at a price lower than the current conversion price of the debt. The risk-free interest rate is determined by reference to the treasury yield curve rate of instruments with the same term as the underlying debt. Additional assumptions that were used to calculate fair value follow.

	June 30, 2013		December 31, 2012
Risk-free interest rate		0.1-0.7%		0.2-0.3%
	(0.5% weighted average)		(0.3% weighted average)
Expected volatility		85%		93%

The following tables summarize the changes in level 3 items measured at fair value on a recurring basis (in thousands):

	Fair Value as of Beginning of Period			Total Realized and Unrealized Gains (Losses)			Issuance of New Instruments			Net Transfers (Into) Out of Level 3		Fair Value, at End of Period			Change in Unrealized Gains (Losses) on Instruments Still Held
					(1	)					(2)
Six Months Ended June 30, 2013
Derivative warrant liability	$	(4,520	)	$	(1,724	)	$	(538	)	$	-	$	(6,782	)	$	(1,724	)
Derivative conversion liability		(2,199	)		(770	)		(537	)		99		(3,407	)		(896	)
Total Level 3 fair value	$	(6,719	)	$	(2,494	)	$	(1,075	)	$	99	$	(10,189	)	$	(2,620	)

Six Months Ended June 30, 2012
Derivative warrant liability	$	(1,296	)	$	(667	)	$	(4,969	)	$	711	$	(6,221	)	$	(272	)
Derivative conversion liability		-			1,173			(3,686	)		-		(2,513	)		1,173
Total Level 3 fair value	$	(1,296	)	$	506		$	(8,655	)	$	711	$	(8,734	)	$	901

(1)	Included in change in fair value of derivative warrant and conversion liabilities in our consolidated statements of operations.

(2)	Represents transfers to equity as a result of the exercise of a warrant in 2012 and conversion of debt in 2013.

The following tables summarize the fair values by input hierarchy of items measured at fair value in our balance sheets on a nonrecurring basis (in thousands) .

											2013
			As of June 30, 2013								Impairment
			Level 1		Level 2		Level 3		Total		Losses
											(1)
Property, net	(1	)	$	-	$	-	$	394	$	394	$	300
Property, net			$	-	$	-	$	394	$	394	$	300

											2012
			As of December 31, 2012								Impairment
			Level 1		Level 2		Level 3		Total		Losses
											(1)
Property, net	(1	)	$	-	$	-	$	1,058	$	1,058	$	1,069
Property, net			$	-	$	-	$	1,058	$	1,058	$	1,069

(1)

Machinery and equipment not currently in use was evaluated for impairment and as a result was written down to estimated fair value in the first quarter of 2013 and the second of quarter of 2012. Fair value is an estimate of net realizable value comprised of an estimate of proceeds from sale, based on an internal evaluation of market conditions, less estimated costs to sell. The estimate of net realizable value is subject to change.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 16. RELATED PARTY TRANSACTIONS

Transactions with Director Baruch Halpern

In January 2012, Baruch Halpern became a member of our board of directors. Mr. Halpern is the principal in Halpern Capital, Inc. (HC). Under a February 2011 financial advisor agreement we were obligated to pay HC success fees ranging from 2.5% to 5.0% of the consideration received from certain equity, convertible securities or debt transactions. We were also required to issue warrants to purchase shares of common stock that equaled from 2.5% to 5.0% of the consideration received in those transactions, divided by either the market price of the common stock or the conversion price of the securities issued in the transaction. This agreement terminated April 1, 2012, however we remained obligated to pay HC success fees and issue HC warrants on any transaction with an investor introduced by HC though March 31, 2013.

During the three months ended March 31, 2012, in connection with the January 2012 issuances of the subordinated convertible notes and senior convertible note, and related warrants, HC received $0.1 million in cash fees under the financial advisor agreement. Mr. Halpern also received warrants exercisable for 712,500 shares of our common stock at $0.10 per share and warrants exercisable for 150,000 shares of our common stock at $0.15 per share, which were owed to HC under the financial advisor agreement. During the three months ended March 31, 2013, HC received no success fees or transaction warrants.

In January 2012, we agreed to extend the expiration dates on certain liability warrants, held by Mr. Halpern and his family, for the purchase of 5,166,520 shares of common stock at an exercise price of $0.10 per share from July 2014 to January 2017. The resulting $0.1 million change in the fair value of the warrants increased other income (expense).

Mr. Halpern held as of June 30, 2013 and December 31, 2012, $2.6 million of subordinated convertible notes. During the three and six months ended June 30, 2013, we accrued $0.1 million of interest on the convertible notes beneficially owned by Mr. Halpern, paid less than $0.1 million of interest and made no principal payments. During the three and six months ended June 30, 2012, we received $0.1 million of cash in connection with issuances of convertible debt and related warrants to entities beneficially owned by Mr. Halpern.

In April 2013, we issued a promissory note in the principal amount of $0.1 million to Mr. Halpern. The note bore interest at 10% and was repaid in full in May 2013.

During the three months ended March 31, 2012, we paid HC $0.4 million relevant to HC’s class 6 general unsecured creditor claim as part of our payment obligations under the Amended Plan of Reorganization. The claim represented payment for services rendered prior to the November 2009 bankruptcy petition filing.

Other Transactions with Directors and Officer

W. John Short, CEO and director, invested $50 thousand in the January 2012 subordinated convertible notes and related warrants and $25 thousand in the April 2013 subordinated convertible notes and related warrants. During the three and six months ended June 30, 2013 and 2012, we paid less than $0.1 million of interest on the convertible notes. In June 2013, Mr. Short made a PIK Election for interest accruing under the notes from February 2013 through June 2014. In connection with the election, we issued to Mr. Short 16,490 shares of common stock and an equity warrant with 22,799 underlying shares and we increased the shares underlying Mr. Short’s convertible notes by 22,799 shares as payment for interest accruing under the convertible notes from February 2013 through June 2013.

Index

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis addresses material changes in the results of operations and financial condition of RiceBran Technologies and subsidiaries for the periods presented. This discussion and analysis should be read in conjunction with the consolidated financial statements, the related notes thereto, and management’s discussion and analysis of results of operations and financial condition included in our Annual Report on Form 10-K, for the year ended December 31, 2012.

We continue to experience losses and negative cash flows from operations on a consolidated basis which raises substantial doubt about our ability to continue as a going concern. We currently have insufficient funds to support our operations and service our debt in the near term and have inadequate financing arrangements in place at this time. Although we believe that we will be able to obtain the funds necessary to continue as a going concern there can be no assurances that our efforts will prove successful. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

The Brazil segment consists of the consolidated operations of Nutra SA, LLC, whose operating subsidiary is Industria Riograndens De Oleos Vegetais Ltda. ( Irgovel), located in Pelotas, Brazil. Irgovel manufactures RBO and DRB products for both the human and animal food markets in Brazil and internationally. In refining RBO to an edible grade, several co-products are obtained. One such product is distilled fatty acids, a valuable raw material for the detergent industry. DRB is sold in bulk as animal feed and compounded with a number of other ingredients to produce complex animal nutrition products which are packaged and sold under Irgovel brands in the Brazilian market. Approximately 46% of Brazil segment product revenue was from sales of RBO products and 54% was from sales of DRB products.

Results of Operations

THREE MONTHS ENDED JUNE 30, 2013 AND 2012

Consolidated net loss attributable to RiceBran Technologies shareholders for the three months ended June 30, 2013, was $2.0 million compared to $0.2 million, for the three months ended June 30, 2012. A $1.6 million improvement between periods in loss from operations was more than offset by a $3.7 million increase in other expense. The increase in other expense)was comprised of (i) a $3.3 million increase in interest expense, financing expense, and loss on extinguishment recognized in the Corporate segment as a result of debt repayments, modifications and issuances and (ii) a $0.3 million increase in interest expense and penalties in the Brazil segment due to increased debt levels.

Index

Revenue and Gross Profit

Revenues (in thousands):

	Three Months Ended June 30,
	2013		% of Total Revenues		2012		% of Total Revenues		Change			% Change
USA segment	$	3,125		33.3	$	3,153		32.5	$	(28	)		(0.9	)
Brazil segment		6,263		66.7		6,558		67.5		(295	)		(4.5	)
Total revenues	$	9,388		100.0	$	9,711		100.0	$	(323	)		(3.3	)

Consolidated revenues for the three months ended June 30, 2013, were $9.4 million compared to $9.7 million in the prior year period, a decrease of $0.3 million, or 3.3%. Second quarter 2013 USA segment revenues remained largely unchanged from the second quarter of 2012. Brazil segment revenues decreased $0.3 million, or 4.5%, in the second quarter of 2013 compared to the second quarter of 2012, as a result of the 5.3% decline in the average exchange rate between these periods.

Gross profit (in thousands):

	Three Months Ended June 30,
	2013		Gross Profit %		2012		Gross Profit %		Change			Change in Gross Profit %
USA segment	$	767		24.5	$	999		31.7	$	(232	)		(7.1	)
Brazil segment		511		8.2		764		11.6		(253	)		(3.5	)
Total gross profit	$	1,278		13.6	$	1,763		18.2	$	(485	)		(4.5	)

Consolidated gross profit in 2013 decreased $0.5 million, or 4.5 percentage points, to $1.3 million for the three months ended June 30, 2013, compared to $1.8 million in the prior year period.

The USA segment gross profit declined $0.2 million, to $0.8 million in the second quarter of 2013, from $1.0 million in the second quarter of 2012, due to higher raw bran prices in 2013 compared to 2012. Raw bran costs were approximately 22% higher as of June 30, 2013, compared to June 30, 2012.

The Brazil segment gross profit declined $0.3 million, or 3.5 percentage points, from 11.6% to 8.2%. Raw bran costs were approximately 19% higher as of June 30, 2013, compared to June 30, 2012. Revenue per kilo increased 8% between periods. The volumes of bran processed and sold were approximately the same each period.

Index

Operating Expenses (in thousands):

	Three Months Ended June 30, 2013
	Corporate			USA		Brazil			Consolidated
Selling, general and administrative	$	1,010		$	262	$	1,083		$	2,355
Professional fees		214			-		9			223
Intersegment fees		56			-		(56	)		-
Total operating expenses	$	1,280		$	262	$	1,036		$	2,578

	Three Months Ended June 30, 2012
	Corporate			USA		Brazil			Consolidated
Selling, general and administrative	$	1,261		$	936	$	861		$	3,058
Professional fees		229			-		287			516
Intersegment fees		(56	)		-		56			-
Impairment of property		-			1,069		-			1,069
Total operating expenses	$	1,434		$	2,005	$	1,204		$	4,643

	Favorable (Unfavorable) Change
	Corporate			USA		Brazil			Consolidated
Selling, general and administrative	$	251		$	674	$	(222	)	$	703
Professional fees		15			-		278			293
Intersegment fees		(112	)		-		112			-
Impairment of property		-			1,069		-			1,069
Total operating expenses	$	154		$	1,743	$	168		$	2,065

Consolidated operating expenses were $2.6 million for the second quarter of 2013, compared to $4.6 million for the second quarter of 2012, an improvement of $2.1 million. The reduction in USA segment impairment charges between periods contributed $1.1 million to the improvement. During the second quarter of 2012, machinery and equipment not currently in use was evaluated for impairment and as a result was written down $1.1 million to estimated fair value.

The improvement in Corporate segment selling, general and administrative expenses (SG&A) of $0.3 million related to a reduction in compensation expense for stock options.

USA segment SG&A expenses decreased $0.7 million due to a $0.5 million change in gain on sale of excess property and $0.2 million lower depreciation expense. Depreciation expense was lower as a result of impairment charges taken in the second quarter of 2012.

Brazil segment SG&A increased $0.2 million due to increases in p ayroll and related expenses as a result of government mandated annual cost of living adjustments that were effective beginning June 2012. Brazil segment professional fees decreased $0.3 million because the Brazil segment no longer pays investor fees to the investors in Nutra SA LLC (Nutra SA). The investors in Nutra SA have agreed to waive all investor fees until further notice.

Index

Other Income (Expense) (in thousands):

	Three Months Ended June 30, 2013
	Corporate			USA			Brazil			Consolidated
Interest income	$	-		$	-		$	16		$	16
Interest expense		(599	)		-			(425	)		(1,024	)
Foreign currency exchange, net		-			-			(538	)		(538	)
Change in fair value of derivative warrant and conversion liabilities		1,044			-			-			1,044
Loss on extinguishment		(494	)		-			-			(494	)
Financing expense		(564	)		-			-			(564	)
Other		(17	)		-			(204	)		(221	)
Other income (expense)	$	(630	)	$	-		$	(1,151	)	$	(1,781	)

	Three Months Ended June 30, 2012
	Corporate			USA			Brazil			Consolidated
Interest income	$	12		$	-		$	4		$	16
Interest expense		(166	)		(9	)		(212	)		(387	)
Foreign currency exchange, net		-			-			(576	)		(576	)
Change in fair value of derivative warrant and conversion liabilities		2,868			-			-			2,868
Financing expense		(20	)		-			-			(20	)
Other		-			-			(20	)		(20	)
Other income (expense)	$	2,694		$	(9	)	$	(804	)	$	1,881

	Favorable (Unfavorable) Change
	Corporate			USA			Brazil			Consolidated
Interest income	$	(12	)	$	-		$	12		$	-
Interest expense		(433	)		9			(213	)		(637	)
Foreign currency exchange, net		-			-			38			38
Change in fair value of derivative warrant and conversion liabilities		(1,824	)		-			-			(1,824	)
Loss on extinguishment		(494	)		-			-			(494	)
Financing expense		(544	)		-			-			(544	)
Other		(17	)		-			(184	)		(201	)
Other income (expense)	$	(3,324	)	$	9		$	(347	)	$	(3,662	)

Consolidated other expense was $1.8 million for the second quarter of 2013, compared to other income of $1.9 million for the second quarter of 2012. The increase in other expense of $3.7 million was comprised of the following:

a $0.6 million increase in interest expense, as a result of (i) an increase in average debt outstanding in both the Corporate and Brazil segments and (ii) the increase in interest expense in the Corporate segment as a result of amortizing the debt discount on a senior debenture when the principal was paid in 2013;

the Corporate segment $0.5 million loss on extinguishment in 2013, comprised of losses on the conversion of $0.3 million of our senior debenture and the prepayment of $0.3 million on those debentures as described in the Debt note to the consolidated financial statements included herein;

the Corporate segment $0.5 million financing expense in 2013 associated with issuances of the subordinated convertible notes and related warrants. The expense represented the excess of the fair value of the derivative conversion and warrant liabilities, and other consideration, at issuance over the proceeds from issuance as described in the Debt footnote to the financial statements;

a $0.2 million increase in other expense in Brazil related to late payment penalties on tax obligations;

a Corporate segment $1.8 million increase in expense from the change in the fair value of derivative warrant and conversion liabilities, primarily as a result of changes in the price of our common stock between valuation dates. Our liability warrants and conversion liabilities are valued using the lattice model each reporting period and the resulting change in fair value is recorded in the statements of operations. The lattice model requires us to assess the probability of future issuance of equity instruments at a price lower than the current exercise price of the warrants and make certain other assumptions. The decrease in the price of our common stock from March 31 to June 30 in each period, was the primary reason the derivative warrant and conversion liabilities fair value decreased, resulting in the recognition of other income in the second quarters of 2013 and 2012.

Index

SIX MONTHS ENDED JUNE 30, 2013 AND 2012

Consolidated net loss attributable to RiceBran Technologies shareholders for the six months ended June 30, 2013, was $7.8 million, or $0.04 per share, compared to $9.0 million, or $0.04 per share, in the prior period. The $1.2 million improvement between periods in loss from operations was comprised of a $1.3 million decline in gross profit, offset by a $2.5 million improvement in operating expenses.

Revenue and Gross Profit

Revenues (in thousands):

	Six Months Ended June 30,
	2013		% of Total Revenues		2012		% of Total Revenues		Change			% Change
USA segment	$	6,034		33.3	$	6,564		33.7	$	(530	)		(8.1	)
Brazil segment		12,063		66.7		12,893		66.3		(830	)		(6.4	)
Total revenues	$	18,097		100.0	$	19,457		100.0	$	(1,360	)		(7.0	)

Consolidated revenues for the six months ended June 30, 2013, were $18.1 million compared to $19.5 million in the prior year period, a decrease of $1.4 million, or 7.0%.

USA segment revenues decreased $0.5 million, or 8.1%, in the first half of 2013 compared to the first half of 2012. Animal feed product revenues decreased $0.7 million on lower volume while human nutrition product revenues increased $0.2 million. The decline in animal feed revenue was attributable to the loss of one customer.

Brazil segment revenues decreased $0.8 million, or 6.4%, in the first half of 2013 compared to the first half of 2012. Revenues decreased $1.1 million as a result of the 8.4% decline in the average exchange rate between these periods. Offsetting this $1.1 million decline was a $0.3 million increase in animal feed revenues. As part of a capital expansion project, we improved our animal feed production capabilities and launched new products which were unavailable for sale in 2012.

Gross profit (in thousands):

	Six Months Ended June 30,
	2013		Gross Profit %		2012		Gross Profit %		Change			Change in Gross Profit %
USA segment	$	1,471		24.4	$	2,011		30.6	$	(540	)		(6.3	)
Brazil segment		773		6.4		1,493		11.6		(720	)		(5.2	)
Total gross profit	$	2,244		12.4	$	3,504		18.0	$	(1,260	)		(5.6	)

Consolidated gross profit in 2013 decreased $1.3 million, or 5.6 percentage points, to $2.2 million for the six months ended June 30, 2013, compared to $3.5 million in the prior year period.

The USA segment gross profit declined $0.5 million, to $1.5 million in the first half of 2013, from $2.0 million in the first half of 2012, due to the impact of higher raw bran prices in 2013 compared to 2012. Raw bran costs were approximately 22% higher as of June 30, 2013, compared to June 30, 2012.

The Brazil segment gross profit declined $0.7 million, or 5.2 percentage points, from 11.6% to 6.4%. Raw bran costs were approximately 19% higher as of June 30, 2013, compared to June 30, 2012. Revenue per kilo increased 18% between periods. Kilos processed were 11% lower in the first half of 2013 than in the first half of 2011. Since a significant portion of plant operating costs are fixed, lower volumes result in higher per unit production costs and negatively impacts gross profit percentage.

Index

Operating Expenses (in thousands):

	Six Months Ended June 30, 2013
	Corporate			USA		Brazil		Consolidated
Selling, general and administrative	$	1,883		$	1,060	$	2,318	$	5,261
Professional fees		463			-		267		730
Impairment of property		-			300		-		300
Total operating expenses	$	2,346		$	1,360	$	2,585	$	6,291

	Six Months Ended June 30, 2012
	Corporate			USA		Brazil		Consolidated
Selling, general and administrative	$	2,394		$	1,936	$	2,373	$	6,703
Professional fees		400			-		587		987
Intersegment fees		(112	)		-		112		-
Impairment of property		-			1,069		-		1,069
Total operating expenses	$	2,682		$	3,005	$	3,072	$	8,759

	Favorable (Unfavorable) Change
	Corporate			USA		Brazil		Consolidated
Selling, general and administrative	$	511		$	876	$	55	$	1,442
Professional fees		(63	)		-		320		257
Intersegment fees		(112	)		-		112		-
Impairment of property		-			769		-		769
Total operating expenses	$	336		$	1,645	$	487	$	2,468

Consolidated operating expenses were $6.3 million for the first half of 2013, compared to $8.8 million for the first half of 2012, an improvement of $2.5 million. The reduction in USA segment impairment charges between periods contributed $0.8 million to the improvement. The impairment charge in the six months ended June 30, 2012, related to the impairment of machinery and equipment not currently in use, which was written down $1.1 million to its estimated fair value in the second quarter of 2012. In the first quarter of 2013, we reevaluated machinery and equipment not in use and, based on current market conditions recorded an additional impairment of $0.3 million to write the machinery and equipment down to an estimated fair value of $0.4 million. The estimate of net realizable value is subject to change.

The improvement in corporate segment selling, general and administrative expenses (SG&A) of $0.5 million related to a reduction in compensation expense for stock options and payroll as a result of reduction in force and the end of stock option vesting periods.

USA segment SG&A expenses decreased $0.8 million due to a $0.4 million change in gain on sale of excess property and $0.4 million lower depreciation expense. Depreciation expense was lower in 2013 as a result of an impairment charges taken in the second quarter of 2012.

Brazil segment professional fees decreased $0.3 million because the Brazil segment no longer pays investor fees to the investors in Nutra SA. The investors in Nutra SA have agreed to waive all investor fees until further notice.

Index

Other Income (Expense) (in thousands):

	Six Months Ended June 30, 2013
	Corporate			USA			Brazil			Consolidated
Interest income	$	-		$	-		$	26		$	26
Interest expense		(875	)		-			(778	)		(1,653	)
Foreign currency exchange, net		-			-			(288	)		(288	)
Change in fair value of derivative warrant and conversion liabilities		(2,494	)		-			-			(2,494	)
Loss on extinguishment		(526	)		-			-			(526	)
Financing expense		(564	)		-			-			(564	)
Other		(17	)		-			(326	)		(343	)
Other income (expense)	$	(4,476	)	$	-		$	(1,366	)	$	(5,842	)

	Six Months Ended June 30, 2012
	Corporate			USA			Brazil			Consolidated
Interest income	$	18		$	-		$	45		$	63
Interest expense		(321	)		(17	)		(467	)		(805	)
Foreign currency exchange, net		-			-			(782	)		(782	)
Change in fair value of derivative warrant and conversion liabilities		506			-			-			506
Loss on extinguishment		(2,986	)		-			-			(2,986	)
Financing expense		(1,544	)		-			-			(1,544	)
Other		-			-			(110	)		(110	)
Other income (expense)	$	(4,327	)	$	(17	)	$	(1,314	)	$	(5,658	)

	Favorable (Unfavorable) Change
	Corporate			USA			Brazil			Consolidated
Interest income	$	(18	)	$	-		$	(19	)	$	(37	)
Interest expense		(554	)		17			(311	)		(848	)
Foreign currency exchange, net		-			-			494			494
Change in fair value of derivative warrant and conversion liabilities		(3,000	)		-			-			(3,000	)
Loss on extinguishment		2,460			-			-			2,460
Financing expense		980			-			-			980
Other		(17	)		-			(216	)		(233	)
Other income (expense)	$	(149	)	$	17		$	(52	)	$	(184	)

Consolidated other expense was $5.8 million for the first half of 2013, compared to other expense of $5.7 million for the first half of 2012. The $0.2 million increase in other expense was comprised of the following:

a $0.8 million increase in interest expense, as a result of (i) an increase in average debt outstanding in both the Corporate and Brazil segments and (ii) the increase in interest expense in the Corporate segment as a result of amortizing the debt discount on a senior debenture when the principal was paid in 2013;

the $2.5 million reduction in Corporate segment loss on extinguishment to a $0.5 million in 2013 compared to the $3.0 million loss in 2012. In 2013, the losses were related to the conversion of $0.3 million of our senior debenture and the prepayment of $0.3 million on those debentures as described in the Debt note to the consolidated financial statements included herein;

the $1.0 million reduction in Corporate segment financing expense to $0.6 million in 2013 from $1.5 million in 2012. In 2013 the loss was associated with the issuance of subordinated convertible notes and related warrants and represented the excess of the fair value of the derivative conversion and warrant liabilities, and other consideration, at issuance over the proceeds from issuance, as described in the Debt footnote to the consolidated financial statements;

a $0.2 million increase in other expense in Brazil related to penalties on tax obligations; offset by

a $0.4 million improvement in foreign exchange; and

a Corporate segment $3.0 million decrease in income from the change in the fair value of derivative warrant and conversion liabilities, Our liability warrants and conversion liabilities are valued using the lattice model each reporting period and the resulting change in fair value is recorded in the statements of operations. The lattice model requires us to assess the probability of future issuance of equity instruments at a price lower than the current exercise price of the warrants and make certain other assumptions.

Index

Liquidity and Capital Resources

We continue to experience losses and negative cash flows from operations on a consolidated basis which raises substantial doubt about our ability to continue as a going concern. We currently have insufficient funds to support our operations and service our debt in the near term and have inadequate financing arrangements in place at this time. Although we believe that we will be able to obtain the funds necessary to continue as a going concern, there can be no assurances that our efforts will prove successful. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

With respect to liquidity and capital resources, we manage the Brazil segment, consisting currently of our plant in Brazil, separately from our U.S. based Corporate and USA segments. Cash on hand at our Brazil segment is generally unavailable for distribution to our Corporate and USA segments pursuant to the terms of the limited liability company agreement for Nutra SA . Cash used in operating activities for the six months ended June 30, 2013 and 2012, is presented below by segment (in thousands).

	Six Months Ended June 30, 2013
	Corporate and USA			Brazil			Consolidated
Net loss	$	(6,711	)	$	(2,097	)	$	(8,808	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		708			1,291			1,999
Change in fair value of derivative warrant and conversion liabilities		2,494			-			2,494
Loss on extinguishment		526			-			526
Financing expense		564			-			564
Impairment of property		300			-			300
Other adjustments, net		27			(789	)		(762	)
Changes in operating assets and liabilities		(408	)		1,230			822
Net cash used in operating activities	$	(2,500	)	$	(365	)	$	(2,865	)

	Six Months Ended June 30, 2012
	Corporate and USA			Brazil			Consolidated
Net loss	$	(8,019	)	$	(1,983	)	$	(10,002	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		1,245			1,279			2,524
Change in fair value of derivative warrant and conversion liabilities		(506	)		-			(506	)
Loss on extinguishment		2,986			-			2,986
Impairment of property		1,069			-			1,069
Financing expense		1,544			-			1,544
Other adjustments, net		859			(620	)		239
Changes in operating asset and liabilities:
Pre-petition liabilities		(1,615	)		-			(1,615	)
Other changes, net		(513	)		111			(402	)
Net cash used in operating activities	$	(2,950	)	$	(1,213	)	$	(4,163	)

Corporate and USA

On a combined basis, the Corporate and USA segments used $2.5 million of cash in operating activities in the first half of 2013 compared to $3.0 million in the first half of 2012.

In the ongoing effort to improve profitability, significant emphasis will be placed on growing revenues. The growth of revenues is expected to include the following:

·	growth in existing markets for stabilized rice bran (SRB), rice bran oil (RBO) and defatted rice bran (DRB);

·	expanding our product offerings and improving existing products;

·	aligning with strategic partners who can provide channels for additional sales of our products; and

·	implementing price increases.

Index

We may also monetize certain assets which could result in additional impairment of asset values. Asset monetization may include some or all of the following:

·	sale of certain facilities;

·	sale of an interest in one or more subsidiaries; or

·	sale of surplus equipment.

We continue to evaluate the possibility of raising funds through the issuance of additional subordinate debt or equity.

We continue to work to improve Corporate and SRB segment cash flows from operations. We made final distributions to unsecured creditors which reduced pre-petition liabilities by $1.6 million in the first half of 2012 . Payments of pre-petition liabilities reduced cash flows from operations in the periods paid, but were in payment of obligations incurred prior to our November 2009 filing of the voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. The funds for the 2012 distributions, included in cash used in operations, were derived from receipts on notes receivable, and proceeds from issuances of the subordinated convertible notes, senior convertible debentures and related warrants in January 2012.

Cash used in investing activities in the first six months of 2013 and 2012 included $0.8 million and $0.3 million of proceeds from the sale of USA segment equipment. Proceeds from the 2013 sales were used for general corporate purposes. The first six months of 2012, also included $0.6 million from collections of USA segment notes receivable and $0.2 million of restricted cash released for the payment of pre-petition liabilities.

In 2011, we entered into an agreement with a partner with the goal of developing technology to extract and concentrate protein from rice bran. In March 2013, the agreement was mutually terminated under terms whereby we each received (i) the right to separately develop, modify and improve the jointly developed technology owned by the partner and (ii) we received a nonexclusive, royalty free, perpetual license to that technology (License). We agreed to pay the partner $1.2 million as a lump sum in April 2013. In April 2013 we sold a 50% interest in our subsidiary holding the License and paid this $1.2 million obligation to the partner with the proceeds of the sale.

Cash provided by financing activities in the first six months of 2013 and 2012 included $0.5 million and $2.4 million of proceeds, net of costs, which we received from the issuance of subordinated convertible debt, the senior convertible debenture and related warrants (see the Debt note to the consolidated financial statements). The net proceeds of $0.5 million and $2.4 million have been used to fund the working capital needs of the Corporate and USA segments, including distributions to the unsecured creditors in 2012.

Under a revolving credit facility with TCA Global Credit Master Fund, LP (TCA), effective May 2013, as amended July 2013, we may borrow up to $8 million, based on the amount of eligible accounts receivable we provide to secure the repayment of the amounts borrowed. Borrowings under the agreement are evidenced by a revolving note which accrues interest at the rate of 12% per year and is due in January 2014. We owe TCA various other fees under the agreement that are expected to average approximately 7% of average borrowings per year.

In May 2013, we borrowed $1.4 million under the TCA revolving note. The proceeds, net of cash expenses, totaled $1.2 million and were used to (1) pay down $0.4 million of debt, (2) fund a $0.5 million investment in Nutra SA and (3) for general corporate purposes. In July 2013, we borrowed an additional $0.6 million. The net proceeds of $0.6 million were used to make a $0.1 million investment in Nutra SA and for general corporate purposes. We expect the amount of our eligible receivables will limit our ability to borrow under this facility, such that our outstanding borrowings at any time are less than approximately $2.4 million.

Brazil

The Brazil segment used $0.4 million in operating cash in the first half of 2013, compared to $1.2 million of operating cash in the first half of 2012. The reduction in use of cash was primarily the result of increased payables. Irgovel negotiated extended payment terms with certain vendors during the second quarter of 2013.

Index

Irgovel is currently undergoing a capital expansion project involving installation of new equipment and improvements to existing infrastructure. As of June 30, 2013, additional capital expenditures on the project are expected to total R$5.2 million ($2.3 million at the June 30, 2013 exchange rate) of which R$1.7 million ($0.7 million) was included in accounts payable as of June 30, 2013. Additional financing and/or capital will be required to complete the project. As a result of the project, we also expect production at the Irgovel facility to shut down near the end of December 2013 for approximately 4-6 weeks while certain new equipment is brought on line. The timing of this shut down is subject to change based on availability of funds, the timing of the delivery of equipment from suppliers, the availability of installers and other factors. Where possible, we intend to stockpile certain inventory for sale during the period the plant is shutdown. However, this inventory may not be adequate to timely fulfill all outstanding orders during this period. In addition, during such shutdown, we will have to continue to expend capital to maintain the Irgovel facility and equipment. Facility shut-down and subsequent restart expenses may adversely affect periodic results when these events occur.

The investors who hold a 49% interest in Nutra SA, which owns Irgovel, have the right to purchase from Nutra SA up to an additional 750,000 units for another $1.5 million. If immediately prior to such purchase Nutra SA and Irgovel have sufficient cash to complete certain projects, then the units will have no voting rights. In the second quarter of 2013, we transferred $0.7 million in cash from the Parent Company to Nutra SA. In exchange, title was returned to us for certain equipment contributed to Nutra SA in December 2012 with an historical cost of $0.2 million. We are currently attempting to raise funds to enable us to make an additional capital investment in Nutra SA, sufficient to (i) complete the projects (ii) provide the working capital Irgovel requires and (iii) maintain our 51% ownership interest in Nutra SA.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risk, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides us financing and liquidity support or market risk or credit risk support.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures on the date of the financial statements. On an ongoing basis, we evaluate the estimates, including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates.

For further information about other critical accounting policies, see the discussion of critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are applicable to us and adoption of which could potentially have a material impact on our consolidated financial statements.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Not applicable

Item 4.

Controls and Procedures

We evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Index

PART II. OTHER INFORMATION

Item1.

Legal Proceedings

We are involved in or subject to, or may become involved in or subject to, routine litigation, claims, disputes, proceedings and investigations in the ordinary course of business. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in the opinion of management, individually or in the aggregate, no such lawsuits are expected to have a material effect on our financial position or results of operations. When applicable, we record accruals for contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated.

Item 1A.

Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, which could materially affect our business, financial condition, liquidity or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity or future results.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended June 30, 2013, we issued the securities described below without registration under the Securities Act.

On April 1, 2013, April 5, 2013, April 9, 2013, we issued to creditors convertible notes with principal amounts totaling $1.4 million, which are convertible into common stock at $0.07 per share and bear interest at an annual rate of 10.0%, and related warrants to purchase up to a total of 1,965,753 shares of common stock at an exercise price of $0.08 per share. See the Debt note to the consolidated financial statements contained herein for further description of the transaction.

As a result of the convertible debt and related warrant issuances described above, we adjusted the exercise price and increased the number of shares underlying existing warrants to purchase common stock issued to the investors and advisors in the April 2008 equity financing, pursuant to the antidilution provisions contained in the respective warrants. The shares underlying the warrants increased from 28,804,692 shares to 29,221,131 shares and the exercise price adjusted from $0.333 per share to $0.328 per share. All of the changes were to warrants held by existing warrant holders without additional consideration pursuant to the terms of the respective financings, and no commission or other remuneration was paid or given directly or indirectly to any person in connection therewith. The changes to the existing warrants were exempt from registration under Section 3(a)(9) of the Securities Act of 1933.

On April 18, 2013, we increased the number of shares of common stock that each non-employee director automatically receives annually each January 1 under our 2010 Equity Incentive Plan from 250,000 to 1,000,000 shares. In connection with the increase in the automatic director grant, in April 2013, we granted each of our five non-employee directors a stock option to purchase up to 750,000 shares of common stock. Each option has an exercise price of $0.08 per share, vests in nine equal monthly installments ending December 31, 2013, and expires on April 18, 2023.

On April 18, 2013, we granted each of the three directors serving on the strategic committee of our board a stock option to purchase up to 250,000 shares of common stock. Each option has an exercise price of $0.08 per share, vests in twelve equal monthly installments ending March 31, 2014 and expires on April 18, 2018.

On April 30, 2013, we issued 250,000 shares of our common stock pursuant to an investor relations advisor agreement.

Index

On May 24, 2013, we entered into agreements to allow each holder of existing subordinated convertible notes and warrants to invest in additional notes and related warrants and provided that each holder making an additional investment (i) receive 2.5 shares of our common stock for each dollar invested and (ii) agree to extend the maturity date for all of their convertible notes to July 2016. Further, each holder of outstanding convertible notes could elect (PIK Election), in lieu of cash interest payments otherwise payable though June 2014 on their existing notes to receive (i) an increase in the number of shares of common stock underlying their notes (ii) a warrant to purchase shares of our common stock and (iii) 2.5 shares of our common stock for each dollar of interest otherwise payable through June 2014. On May 24, 2013, one subordinate convertible note holder made an additional investment of $0.4 million under the agreements in a subordinated convertible note in the principal amount of $0.4 million, which is convertible into common stock at $0.07 per share and bear interest at an annual rate of 10.0%, and warrants to purchase up to a total of 5,714,285 shares of common stock at an exercise price of $0.08 per share and a May 2018 expiration. As a result, (i) the maturity date on existing notes in the principal amount of $1.1 million was extended from July 2015 to July 2016 and (ii) we issued 1,000,000 shares of common stock. In addition, on May 24, 2013, we issued 496,644 shares of common stock, and in lieu of paying interest accrued through June 30, 2013 on all of the holder’s outstanding notes, (i) increased the shares of common stock underlying the holder’s outstanding notes 695,108 shares and (ii) issued equity warrants for the purchase of up to 695,108 shares of common stock, at an exercise price of $0.08 per share and a May 2018 expiration.

On June 19, 2013, two holders of subordinated convertible notes and warrants made a PIK Election. As a consequence, we issued to these holders 108,611 shares of common stock, and in lieu of paying interest accrued through June 30, 2013, (i) increased the shares of common stock underlying their convertible notes by 174,059 shares and (ii) issued warrants for the purchase of 174,059 shares of common stock, at an exercise price of $0.08 per share and a May 2018 expiration.

On June 30, 2013, we issued 158,371shares of our common stock pursuant to a consulting agreement.

Unless otherwise indicated above, the securities were issued pursuant to the private placement exemption provided by Section 4(2) of the Securities Act of 1933. All issuances above were made without any public solicitation, to a limited number of persons and were acquired for investment purposes only.

Cash on hand at our Brazil segment is generally unavailable for distribution to our Corporate and USA segments pursuant to the terms of the limited liability company agreement for Nutra SA. Pursuant to the terms of our senior debt instruments, we may not pay any dividends while the debentures or senior revolving credit facility are outstanding.

Item 3.

Defaults upon Senior Securities

None

Item 4.

Mine Safety Disclosures

None.

Item 5.

Other Information

None

Item 6.

Exhibits

The following exhibits are attached hereto and filed herewith:

Index

Exhibit Number	Description of Exhibit
3.1	Amendment to Articles of Incorporation, filed with the Secretary of State of California on July 12, 2013 (filed herewith)
10.1	Senior Secured Revolving Credit Facility Agreement with TCA Global Credit Master Fund, LP, dated as of April 30, 2013 ( incorporated herein by reference to exhibits previously filed on registrant’s current report on Form 8-K, filed on May 30, 2013)
10.2	Promissory Note issued to TCA Global Credit Master Fund, LP, dated as of April 30, 2013 (incorporated herein by reference to exhibits previously filed on registrant’s current report on Form 8-K, filed on May 30, 2013)
10.3	Form of Guaranty Agreement by Subsidiary Guarantors in favor of TCA Global Credit Master Fund, LP, dated as of April 30, 2013 (incorporated herein by reference to exhibits previously filed on registrant’s current report on Form 8-K, filed on May 30, 2013)
10.4	Security Agreement with TCA Global Credit Master Fund, LP, dated as of April 30, 2013 (incorporated herein by reference to exhibits previously filed on registrant’s current report on Form 8-K, filed on May 30, 2013)
10.5	Form of Security Agreement, effective May 24, 2013, by Subsidiary Guarantors and TCA Global Credit Master Fund, LP (incorporated herein by reference to exhibits previously filed on registrant’s current report on Form 8-K, filed on May 30, 2013)
10.6	Form of Pledge with TCA Global Credit Master Fund, LP, dated as of April 30, 2013 (incorporated herein by reference to exhibits previously filed on registrant’s current report on Form 8-K, filed on May 30, 2013)
10.7	Amendment and Waiver Agreement with Hillair Capital Investments L.P., dated as of May 24, 2013 (incorporated herein by reference to exhibits previously filed on registrant’s current report on Form 8-K, filed on May 30, 2013)
10.8	Amended and Restated Security Agreement, dated as of May 24, 2013 (filed herewith)
10.9	Amended and Restated Note and Warrant Purchase Agreement, dated as of May 24, 2013 (filed herewith)
10.10	Restated Subordination Agreement, dated as of May 24, 2013 (filed herewith)
10.11	Amendment 1 to Senior Secured Revolving Credit Facility Agreement with TCA Global Credit Master Fund, LP, dated as of July 18, 2013 (filed herewith)
10.12	Promissory Note issued to TCA Global Credit Master Fund, LP, dated as of July 18, 2013 (filed herewith)

31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS (1)	XBRL Instance Document
101.SCH (1)	XBRL Taxonomy Extension Schema Document
101.CAL (1)	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (1)	XBRL Taxonomy Extension Calculation Definition Document
101.LAB (1)	XBRL Taxonomy Extension Calculation Label Document
101.PRE (1)	XBRL Taxonomy Extension Calculation Presentation Document

(1)

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August 14, 2013

		/s/ W. John Short
		W. John Short
		Chief Executive Officer

		/s/ J. Dale Belt
		Jerry Dale Belt
		Chief Financial Officer

AMENDED AND RESTATED

NOTE AND WARRANT PURCHASE AGREEMENT

This Amended and Restated Note and Warrant Purchase Agreement (this “ Agreement ”), dated as of May 24, 2013 (“ Effective Date ”) is entered into by and among RiceBran Technologies, a California corporation (the “ Company ”), and the persons and entities listed on the schedule of investors attached hereto as Schedule I (each an “ Investor ” and, collectively, the “ Investors ”). The parties agree as follows:

RECITALS

A. The Company and those Investors listed on Schedule I hereto as “Initial Closing Investors”, “Second Closing Investors”, “Third Closing Investors”, “Fourth Closing Investors”, and “Fifth Closing Investors” (collectively, “ Early Investors ”) are parties to a Note and Warrant Purchase Agreement, dated as of January 17, 2012, which Note and Warrant Purchase Agreement was amended on July 31, 2012 by that certain Amendment of Loan Documents (“ Loan Document Amendment ”) (as amended by the Loan Document Amendment, the “ Purchase Agreement ”).

B. The Company and the Investors are entering into this Agreement to allow Investors that participate in Subsequent Closings (as defined below) to acquire promissory notes that have different terms than those issued to Investors under the Purchase Agreement in Prior Closings (as defined below) and to acquire, in addition to such promissory notes and warrants to purchase Company common stock, restricted shares of the Company’s common stock.

C. This Agreement (i) amends and restates the Purchase Agreement in its entirety as of the Effective Date, (ii) amends the Loan Document Amendment as of the Effective Date by deleting Sections 2.2 and 2.3 of the Loan Document Amendment in their entirety, and (iii) amends the terms of the Initial Notes (as defined below) for those Investors electing to participate in the Subsequent Closing (as defined below)

D. The Early Investors executing this Agreement represent a Majority in Interest, and such Early Investors, together with the Company, may amend the Purchase Agreement as provided in this Agreement.

E. The Company and the Early Investors have entered into a security agreement, dated as of January 17, 2012, which security agreement was amended on July 31, 2012 by the Loan Document Amendment (as amended before the Effective Date, the “ Prior Security Agreement ”). The requisite number of Early Investors and the Company have entered into, and caused all the Early Investors to be bound by, an Amended and Restated Security Agreement, dated as of the Effective Date (“ Security Agreement ”) and in the form attached hereto as Exhibit C , which Security Agreement amends and restates in its entirety the Prior Security Agreement.

F. On the terms and subject to the conditions set forth herein, each Investor is willing to purchase from the Company, and the Company is willing to sell to such Investor, a secured convertible promissory note in the principal amount set forth opposite such Investor’s name on Schedule I hereto, together with a related warrant to acquire shares of the Company’s Common Stock.

G. Capitalized terms not otherwise defined herein shall have the meaning set forth in the form of Notes (as defined below) attached hereto as Exhibits A-1 and A-2 .

AGREEMENT

Notes, Warrants, Elections and Amendments .

(a) Issuance of Notes . On January 17, 2012, May 12, 2012, July 31, 2012, August 31, 2012 and April 2013, the Company issued to the Early Investors convertible promissory notes in the form attached hereto as Exhibit A-1 pursuant to the Purchase Agreement (“ Initial Notes ”). The form of the Initial Notes attached hereto reflects changes made to such Notes pursuant to the Loan Document Amendment. Subject to the terms and conditions of this Agreement, the Company agrees to issue and sell to each Investor at a Closing occurring on or after the Effective Date (each a “ Subsequent Closing ”), and each Investor as a Subsequent Closing (“ Subsequent Investor ”) agrees, severally and not jointly, to purchase, a secured convertible promissory note in the form of Exhibit A-2 hereto (each, a “ Subsequent Note ”, and with the Initial Notes, each a “ Note ” and collectively, the “ Notes ”), in the principal amount set forth opposite the respective Investor’s name for the applicable Subsequent Closing on Schedule I hereto . The RiceX Company, a Delaware corporation, and Rice Science, LLC, a Delaware limited liability company (collectively, “ Patent Subsidiaries ”), will be obligors under the Notes. The “ Conversion Price ” of a Note issued at a Closing (as defined below) shall equal Seven Cents ($0.07), subject to adjustment as provided in the Note. The Company may sell Notes at one or more Closings (as defined below) that collectively have aggregate initial principal amounts of up to Eight Million Dollars ($8,000,000) (“ Maximum Offering Amount ”), which Maximum Offering Amount does not include any additional principal that may become outstanding under the Notes pursuant to their terms relating to the conversion of accrued interest into principal.

(b) Issuance of Warrants . In connection with the issuance and sale of the Initial Notes, the Company issued to each Investor a warrant in the form attached hereto as Exhibit B-1 (“ Initial Warrants ”) to purchase shares of the Company’s common stock. The form of the Initial Warrants attached hereto reflects changes made to such Initial Warrants pursuant to the Loan Document Amendment. In consideration for the purchase by a Subsequent Investor of a Note at a Subsequent Closing, the Company will issue to such Subsequent Investor a warrant in the form of Exhibit B-2 (the “ Subsequent Warrants ”, and together with the Initial Warrants, each a “ Warrant ” and collectively, the “ Warrants ”) to purchase up to a number of shares of Common Stock equal to the quotient obtained by dividing (i) the principal amount of the Note issued to the Investor at a Closing by (ii) the initial Conversion Price of the Note sold to Investor at a Closing (“ Warrant Share Number ”). The Warrant Share Number for each Warrant will be set forth opposite each Investor’s name on the Schedule I hereto. The per share exercise price of a Warrant issued at a Closing (“ Exercise Price ”) shall equal Eight Cents ($0.08).

(c) Issuance of Restricted Stock to Subsequent Investors . Each Subsequent Investor that pays to the Company at least Ten Thousand Dollars ($10,000) to purchase a Subsequent Note and a Subsequent Warrant at a Subsequent Closing, shall receive, in addition to such Subsequent Note and Subsequent Warrant, two and one half (2.5) shares of the Company’s common stock for each Dollar invested by such Subsequent Investor at the Subsequent Closing (“ Investment Shares ”). Each Subsequent Investor understands that (i) the Subsequent Notes that will be issued to such Subsequent Investor in a Subsequent Closings will provide for interest to be paid in kind as provided in the Subsequent Note and (ii) the Initial Notes issued to the Subsequent Investors will be amended as provided herein to provide for interest to be paid in kind. As consideration for this accommodation, each Subsequent Investor shall receive, in addition to the Investment Shares, a number of restricted shares of the Company’s common stock equal to the product of (i) two and one half (2.5) and (ii) the amount of interest that accrues under the Initial Notes and the Subsequent Notes held by the Subsequent Investor that is paid in kind instead of being paid in cash (“ PIK Shares ”, and together with the Investment Shares, the “ Shares ”).

(d) Issuance of PIK Warrants to Subsequent Investors . In addition to the consideration described above, Subsequent Investors shall receive a PIK Warrant in the form attached hereto as Exhibit B-3 . The PIK Warrant shall have a per share exercise price of $0.08 (as adjusted for stock splits, stock dividends, recapitalizations and the like), be exercisable through the period that the Initial Warrants held by the Participating Investor are exercisable, and will, at any time during the period in which the PIK Warrant is exercisable, be exercisable for up to the number of shares of Company Common Stock equal to the quotient obtained by dividing (i) the amount of interest that is converted to principal pursuant to Section 2 of any Notes held by the Participating Investor in lieu of being paid in cash by (ii) $0.07 (as adjusted for stock splits, stock dividends, recapitalizations and the like).

(e) Amendment of Initial Notes and Initial Warrants for Participating Investors . If an Early Investor participates in a Subsequent Closing (“ Participating Investor ”), (1) the Initial Notes held by such Participating Investor (“ Amended Notes ”) shall be automatically amended upon such Subsequent Closing as provided in this Section 1(e) as follows

(i) Definition of Exempt Issuances . The definition of “Exempt Issuance” in each Initial Note held by or initially issued to the Participating Investor shall be amended to include (a) the issuance of securities pursuant to the Existing Convertible Debt Facility, the Exchange Debentures, the New Convertible Debt Facility and the TCA Debt Facility (as each of these terms are defined in the Security Agreement), (b) any securities issued pursuant to this Agreement and (c) any securities issued upon exercise of PIK Warrants.

(ii) Extension of Maturity Date . Each Investor may, by providing written notice to the Company on or before June 30, 2013, elect to change the Maturity Date of the Amended Notes to July 31, 2016. Such Maturity Date shall become effective upon receipt by the Company of such written notice.

(iii) PIK Interest Payments . Section 2 of each Initial Note held by or initially issued to a Participating Investor shall be amended and restated in its entirety, effective as of the date of the Subsequent Closing in which the Participating Investor invests in the Company, to read as follows:

“2. Interest . Prior to the Maturity Date, all interest on this Note that accrues during a calendar quarter (“ Quarterly Accrued Interest ”) shall be paid to Investor by increasing, effective as of the first day of the immediately following calendar quarter, the principal amount outstanding on this Note by an amount equal to the Quarterly Accrued Interest that accrued during the immediately preceding calendar quarter. The Company may prepay any portion of the principal hereunder that represents Quarterly Accrued Interest.”

and, (2) the Initial Warrants held by such Participating Investor shall automatically be amended upon such Subsequent Closing to include in and add to the definition of “Exempt Issuances” (a) the issuance of securities pursuant to the Existing Convertible Debt Facility, the Exchange Debentures, the New Convertible Debt Facility and the TCA Debt Facility (as each of these terms are defined in the Security Agreement), (b) any securities issued pursuant to this Agreement and (c) any securities issued upon exercise of PIK Warrants.

(f) Election by Non-Participating Investors . This Section 1(f) shall apply to Early Investors that do not participate in a Subsequent Closing (“ Non-Participating Investors ”). Each Non-Participating Investor, may, by sending written notice to the Company and complying with the terms of this Section 1(f) (“ PIK Election ”), elect to receive, in lieu of cash payment for accrued interest, the following rights and property:

(i) Restricted Stock . If a Non-Participating Investor makes a PIK Election, such Non-Participating Investor shall receive a number of restricted shares of the Company’s common stock equal to the product of (i) two and one half (2.5) and (ii) the difference between (A) the dollar amount of interest that has accrued and that will accrue through the applicable maturity date on such Non-Participating Investor’s Initial Notes (assuming all interest accrues at the regular interest rate) and (B) any accrued interest on such Initial Notes that has been paid in cash (“ Non-Participating PIK Shares ”). If a Non-Participating Investor later becomes a Participating Investor, any Non-Participating PIK Shares of stock received by such Investor pursuant to this Section 1(f)(i) shall offset and reduce any PIK Shares that such Investor would otherwise receive pursuant to Section 1(c) above.

(ii) Amendment to Note . If a Non-Participating Investor makes a PIK Election, then Section 2 of each Initial Note held by such Non-Participating Investor shall be amended and restated in its entirety, effective as of the date that the Non-Participating Investor makes the PIK Election, to read as follows:

(iii) Issuance of Warrant . If a Non-Participating Investor makes a PIK Election, such Non-Participating Investor shall be issued a warrant to purchase shares of the Company’s Common Stock (“ PIK Warrant ”) in the form attached hereto as Exhibit B-3 . The terms of the PIK Warrant issued to Non-Participating Investors shall be the same as the terms of the PIK Warrants issued to Subsequent Investors at a Subsequent Closing.

In order to make a PIK Election, the Non-Participating Investor shall (i) make written representations for the benefit of the Company at the time of such PIK Election that are substantially similar to the representations contained in Section 3 hereof and that relate to the Non-Participating PIK Shares, the PIK Warrant and the Initial Notes, as amended by Section 1(f) below, and (ii) agree to amend any Initial Warrants that were issued to such Non-Participating Investor to include in and add to the definition of “Exempt Issuances” (a) the issuance of securities pursuant to the Existing Convertible Debt Facility, the Exchange Debentures, the New Convertible Debt Facility and the TCA Debt Facility (as each of these terms are defined in the Security Agreement), (b) any securities issued pursuant to this Agreement and (c) any securities issued or issuable upon exercise of PIK Warrants.

(g) Closing .

(i) The sale and purchase of the Notes and Warrants shall take place at one or more closings (each of which is referred to in this Agreement as a “ Closing ”) to be held at the offices of Weintraub Tobin Chediak Coleman Grodin Law Corporation, 400 Capitol Mall, Eleventh Floor, Sacramento, CA 95814. The initial Closing (“ Initial Closing ”) occurred on January 17, 2012, the second Closing occurred on May 12, 2012 (“ Second Closing ”), the third Closing occurred on July 31, 2012 (“ Third Closing ”), the fourth Closing occurred on August 31, 2012 (“ Fourth Closing ”), and the fifth Closing occurred in April 2013 (“ Fifth Closing ”, and together with the Initial Closing, the Second Closing, the Third Closing and the Fourth Closing, the “ Prior Closings ”).

(ii) The aggregate principal amount of the Notes sold at the Prior Closings was $5,512,603. Subject to the terms and conditions of this Agreement, the Company may sell and issue Notes (and the corresponding Warrants) at one or more subsequent closings occurring on or after the Effective Date (each, a “ Subsequent Closing ”), up to the balance of the Maximum Offering Amount to such persons or entities as may be approved by the Company in its sole discretion. Any such sale and issuance in a Subsequent Closing shall be on the terms and conditions described herein for Subsequent Closing Investors, and such persons or entities shall, upon execution and delivery of the relevant signature pages, become parties to, and be bound by, this Agreement and the Security Agreement, without the need for an amendment to this Agreement or the Security Agreement except to add such person’s or entity’s name to the appropriate exhibit to such agreements, and shall have the rights and obligations hereunder and thereunder, in each case as of the date of the applicable Subsequent Closing. Each Subsequent Closing shall take place at such date, time and place as shall be approved by the Company in its sole discretion; provided, however, no Subsequent Closing will occur later than December 31, 2013.

(iii) Immediately after each Closing, Schedule I will be amended to list the Investors purchasing Notes and Warrants hereunder at a Closing, the purchase price paid by each Investor at such Closing and the Warrant Share Number for each Warrant issued to an Investor at such Closing.

(h) Delivery . At each Closing, the Company will deliver to each Investor in such Closing an executed Note and Warrant relating to such Closing, against receipt by the Company of the corresponding “ Purchase Price ” set forth opposite such Investor’s name on Schedule I hereto, by (a) wire transfer in accordance with the Company’s instructions, (b) cancellation of indebtedness owed by the Company to such Investor or (c) any combination of the foregoing. In the event that payment by an Investor is made, in whole or in part, by cancellation of indebtedness, then such Investor shall surrender to the Company for cancellation at the Closing any evidence of indebtedness or shall execute an instrument of cancellation in form and substance acceptable to the Company.

(i) Prior Halpern Loan .

(i) Background . The Company and Baruch Halpern and Shoshana Halpern, as trustees of the Shoshana Shapiro Halpern Revocable Trust UA June 13, 2006 (“ Prior Investor ”) were parties to a Note and Warrant Purchase Agreement, dated as of October 7, 2011 (“ Prior Purchase Agreement ”). Pursuant to the Prior Purchase Agreement, the Company issued to Prior Investor (i) a convertible promissory note in the original principal amount of One Million Seven Hundred Seventy Three Thousand One Hundred Eighty Six Dollars and Thirty Four Cents ($1,773,186.34), (ii) a convertible promissory note in the original principal amount of Five Hundred Fifty Thousand Dollars ($550,000) (together, the “ Prior Notes ”), and (iii) a warrant to purchase Two Million Three Hundred Twenty Three Thousand One Hundred Eighty Six (2,323,186) shares of the Company’s common stock (“ Prior Warrant ”).

(ii) Prior Notes as Payment . At the Initial Closing, the Prior Notes automatically cancelled and terminated and all outstanding principal and unpaid interest under the Prior Notes as of the date of the Initial Closing constituted a payment by Prior Investor to purchase a Note and Warrant hereunder at the Initial Closing.

(iii) Prior Warrant . Upon the Initial Closing, the Prior Warrant automatically terminated and the Prior Investor ceased to have any rights thereunder.

(iv) Termination of Prior Purchase Agreement . At the Initial Closing, all rights and obligations of the Company and Prior Investor under the Prior Purchase Agreements terminated. Prior Investor and/or the Company filed a termination statement with respect to any UCC filings made in connection with the Prior Purchase Agreement.

(j) Attorney’s Fees . The Company shall pay all reasonable attorneys’ fees of the Investors incurred in collecting payments due under the Notes or in enforcing any judgment obtained in any related proceeding.

(k) Amendment to Notes .

2. Representations and Warranties of the Company . Except as set forth in Schedule II hereto (the “ Disclosure Schedule ”), which Disclosure Schedule may be updated by the Company at each Closing, the Company represents and warrants to each Investor purchasing at a Closing that, as of the date of such Closing:

(a) Due Incorporation, Qualification, etc . The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of California; (ii) has the corporate power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a Material Adverse Effect. As used in this Agreement, a “ Material Adverse Effect ” means any effect, circumstance, occurrence or change that (i) is material and adverse to the financial position, results of operations or business of the Company, or (ii) would materially impair the ability of the Company to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the transactions contemplated by this Agreement.

(b) Authority . The execution, delivery and performance by the Company of each Transaction Document to be executed by the Company and the consummation of the transactions contemplated thereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company. The execution, delivery and performance by the Patent Subsidiaries of each Transaction Document to be executed by the Patent Subsidiaries and the consummation of the transactions contemplated thereby (i) are within the power of the Patent Subsidiaries and (ii) have been duly authorized by all necessary actions on the part of the Patent Subsidiaries.

(c) Enforceability . Each Transaction Document executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. The issuance of the Notes and Warrants, and their subsequent conversion or exercise, as applicable, will not be subject to the preemptive rights of any shareholder of the Company. Except as provided otherwise in Section 2(c) of the Disclosure Schedule , the Company has sufficient authorized shares of Common Stock to allow for conversion of the Notes and exercise of the Warrants. Each Transaction Document executed, or to be executed, by the Patent Subsidiaries has been, or will be, duly executed and delivered by the Patent Subsidiaries and constitutes, or will constitute, a legal, valid and binding obligation of the Patent Subsidiaries, enforceable against the Patent Subsidiaries in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(d) Non-Contravention . The authorization, execution and delivery by the Company of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby do not and will not (i) violate the Company’s Articles of Incorporation or Bylaws (“ Charter Documents ”) or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any material mortgage, indenture, agreement, instrument or contract, including, without limitation, Plan, to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any Lien upon any property, asset or revenue of the Company (other than any Lien arising under the Transaction Documents) or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

(e) Approvals . Except as have been obtained by the Company, no consent, approval, order or authorization of any governmental authority or other Person (including, without limitation, the shareholders of any Person) is required in connection with the execution and delivery of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby.

(f) No Violation or Default . The Company is not in violation of or in default with respect to (i) its Charter Documents or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; or (ii) any material mortgage, indenture, agreement, instrument or contract, including, without limitation, the Plan, to which the Company is a party or by which it is bound (nor is there any waiver in effect which, if not in effect, would result in such a violation or default), where, in each case, such violation or default, individually, or together with all such violations or defaults, could reasonably be expected to have a Material Adverse Effect.

(g) Litigation . Except as set forth in Section 2(g) of the Disclosure Schedule or under the title “Legal Proceedings” in the SEC Reports (as defined below), no actions (including, without limitation, derivative actions), suits, proceedings or investigations are pending or, to the knowledge of the Company, threatened against the Company at law or in equity in any court or before any other governmental authority that could reasonably be expected to result in a Material Adverse Effect.

(h) Title; Real Property . Except as set forth in Section 2.1(h) of the Disclosure Schedule , the Company owns and has good and marketable title in fee simple absolute to, or a valid leasehold interest in, all the real properties and good title to its other respective assets and properties that are material to its business. Except as set forth in Section 2.1(h) of the Disclosure Schedule , such assets and properties are subject to no Lien other than any Lien arising or permitted under the Transaction Documents and Liens that do not materially affect the value of such assets or properties and do not materially interfere with the use made of such properties and assets by the Company. All of the real property owned or leased by the Company as of the date of this Agreement (other than the offices leased by the Company at its corporate offices in Scottsdale, Arizona) is located in Dillon, Montana, Mermentau, Louisiana, Lake Charles, Louisiana, and West Sacramento, California. The Company’s corporate offices in Scottsdale, Arizona are used only for administrative purposes.

(i) Intellectual Property . To the best of its knowledge, the Company or the Patent Subsidiaries own or possess sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other intellectual property rights material to the Company or the Patent Subsidiaries business as now conducted and as proposed to be conducted without any conflict with, or infringement of the rights of, others. The Company and/or the Patent Subsidiaries have not received written notice of infringement or violation of any intellectual property which would reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect.

(j) Financial Statements . The Financial Statements of the Company that are included in the Company’s most recent Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (“ Commission ”) before the date of the Closing and any of the Company’s Quarterly Reports on Form 10-Q filed with the Commission thereafter (i) are in accordance with the books and records of the Company, which have been maintained in accordance with good business practice; (ii) have been prepared in conformity with general accepted accounting principles as in effect in the United States of America from time to time; and (iii) fairly present in all material respects the consolidated financial position of the Company and its subsidiaries as of the dates presented therein and the results of operations, changes in financial positions or cash flows, as the case may be, for the periods presented therein. The Company’s assets have not materially changed and no material assets have been disposed of since the dates covered on the Company’s financial statements.

(k) No Material Adverse Effect . Since the date of the most recent balance sheet contained in the most recent Form 10-K or Form 10-Q filed by the Company with the Commission through the date of the applicable Closing, (i) there has been no event or occurrence that would reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect; (ii) no cash, stock or other dividends, or other distributions with respect to capital stock, have been declared or paid by the Company, nor has the Company purchased or redeemed any of its shares or shares of a subsidiary or other affiliate; and (iii) there has not been any damage, destruction or loss (whether or not covered by insurance) affecting any asset of the Company, except as would not reasonably be expected to result in a Material Adverse Effect.

(l) Authorized and Outstanding Stock, Options and Other Rights . The authorized capital stock of the Company consists of 500,000,000 shares of Common Stock, no par value per share, and 20,000,000 shares of Preferred Stock, no par value per share. No shares of Preferred Stock are outstanding. Section 2(l) of the Disclosure Schedule sets forth the number of shares of Common Stock outstanding. All outstanding shares of Common Stock are validly issued, fully paid and non-assessable. Section 2(l) of the Disclosure Schedule lists the number of shares of Common Stock underlying outstanding warrants, convertible notes and stock options. Except as set forth in the Section 2(l) of the Disclosure Schedule or as provided in this Agreement or the Company’s public filings with the Commission, no subscriptions, options, warrants, convertible securities or other rights or commitments which would enable the holder to acquire any shares of capital stock or other investment securities of the Company, or which enable or require the Company to acquire shares of its capital stock or other investment securities issued by the Company from any holder, are authorized, issued or outstanding. The shares to be issued, sold and delivered upon conversion of the Notes and in accordance with the terms of the Warrants will be duly authorized and validly issued, fully paid and nonassessable and, based in part upon the representations and warranties of the Investors in this Agreement, will be issued in compliance with all applicable federal and state securities laws.

(m) Indebtedness . Except as set forth in the Company’s most recent Form 10-K filed by the Company with the Commission before the applicable Closing and any Forms 10-Q or 10-K filed thereafter (collectively “ SEC Reports ”) or Section 2(m) of the Disclosure Schedule , neither the Company nor any of its subsidiaries other than NutraSA, LLC have any outstanding Indebtedness. “ Indebtedness ” means, without duplication, all (i) indebtedness for borrowed money, (ii) notes payable, whether or not representing obligations for borrowed money, (iii) obligations representing the deferred purchase price for property or services, (iv) obligations secured by any mortgage or lien on property owned or acquired subject to such mortgage or lien, whether or not the liability secured thereby shall have been assumed, (v) all guaranties, endorsements and other contingent liabilities, in respect of Indebtedness of others, whether or not the same are or should be so reflected in the Company’s balance sheet, except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (vi) that portion of any lease payments due under leases required to be capitalized in accordance with generally accepted accounting principles consistently applied, and (vii) unsecured debt of the Company.

(n) Environmental Matters . To the knowledge of the Company, and except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, neither the Company nor any other person having an interest in any property which the Company owns or leases, or has owned or leased, or in which it either holds any security interest, mortgage, or other liens or interest, including, without limitation, as beneficiary of a deed of trust (the “ Property ”), has engaged in the generation, use, manufacture, treatment, transportation, storage (in tanks or otherwise) or disposal of Hazardous Material on or from the Property except as allowable by and in accordance with Environmental Laws. To the knowledge of the Company, and except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, there has been no: (i) presence, use, generation, handling, treatment, storage, release, threatened release, migration or disposal of Hazardous Material on the Property; (ii) condition that could result in any use, ownership or transfer restriction on the Property; or (iii) condition of nuisance on or from the Property. During the past six years, the Company has not received any written notice of a condition that could reasonably be expected to give rise to any private or governmental suit, claim, action, proceeding or investigation against the Company, any such other person or such Property as a result of any of the foregoing events or has knowledge of any condition that could reasonably be expected to give rise to any private or governmental suit, claim, action, proceeding or investigation. “ Hazardous Material ” means any substance that is (A) listed, classified or regulated pursuant to any Environmental Law; (B) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive material or radon; and (C) any other substance which may be the subject of regulatory action by any government authority in connection with any Environmental Law. “ Environmental Law ” means any federal, state, local or foreign statute, law, regulation, order, decree, permit, authorization, opinion, common law or agency requirement relating to: (A) the protection, investigation or restoration of the environment, health, safety or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Material or (C) noise, odor, indoor air, employee exposure, wetlands, pollution, contamination or any injury or threat of injury to persons or property relating to any Hazardous Material.

(o) Financial Position; Satisfaction of Obligations under Plan . After giving effect to the transactions contemplated by this Agreement, the Company will be able to pay its debts as they become due in the ordinary course of business, and the fair value of the total assets of the Company will at least equal the sum of its total liabilities, and none of the transactions contemplated by this Agreement will cause the Company to be in violation of any of Sections 500, 501, 502 or 503 of the California Corporations Code.

(p) Subsidiaries . Except as set forth in Exhibit 21.01 of the Company’s most recent Annual Report on Form 10-K filed before the applicable Closing (“ Exhibit 21 ”), the Company does not directly or indirectly beneficially own any shares of capital stock of any other corporation or entity, and is not a part of nor has any ownership interest in any limited liability company, trust, general or limited partnership or any unincorporated association. Other than NutraSA, LLC, which owns 100% of a corporation that operates a rice bran facility in Brazil, no material assets other than patents are held by any of the entities set forth in Exhibit 21.1.

(q) No Undisclosed Liabilities . To the Company’s knowledge, neither the Company nor any of its subsidiaries has any liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, that is not reflected in the Company’s consolidated financial statements filed with the Commission, except for liabilities and obligations incurred in the ordinary course of business that are not material, either individually or in the aggregate.

3. Representations and Warranties of Investors . Each Investor, for that Investor alone, represents and warrants to the Company upon the acquisition of the Note and the Warrants as follows:

(a) Information on Company . The Investor has been furnished, prior to the applicable Closing, with information regarding the business, operations and financial condition of the Company, including without limitation, the Company’s most recent Form 10-K filed with the Commission before the applicable Closing, all Forms 10-Q and 8-K filed subsequent to such Form 10-K, all exhibits filed with such Forms 10-K, 10-Q and/or 8-K, and all filings made with the Commission available at the EDGAR website. In addition, the Investor has received such other information concerning the Company’s operations, financial condition and other matters as the Investor has requested in writing, and considered all factors the Investor deems material in deciding on the advisability of investing in the Note, Warrant and any other securities issuable to Investor hereunder. The Company has, prior to the Closing in which Investor is purchasing a Note and Warrant, granted to such Investor the opportunity to ask questions of and receive satisfactory answers from representatives of the Company, its officers, directors and employees concerning the Company and materials relating to the terms and conditions of the purchase and sale of the Note, the Warrant and any other securities issuable to Investor hereunder, and based thereon believes it can make an informed decision with respect to its investment in the Note and Warrant. Neither such information nor any other investigation conducted by such Investor or its representatives shall modify, amend or otherwise affect such Investor’s right to rely on the Company’s representations and warranties contained in this Agreement. The Investor has conducted its own due diligence and has not relied on any third-party other than the Company, including without limitation Halpern Capital, in making its investment decision.

(b) Accredited Investor . The Investor is, and will be at the time of the applicable Closing, an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Such Investor is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended; is experienced in investments and business matters, has made investments of a speculative nature; understands that an investment in the Note and Warrant involves a high degree of risk, and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable the Investor to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment. The Investor has the authority and is duly and legally qualified to purchase and own the Note, the Warrant and any other security of the Company acquired by the Investor hereunder. The Investor is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof. The information set forth on Schedule 1 for the Investor is accurate.

(c) Purchase of Notes and Warrants . At the Closing, the Investor will purchase the Note, the Warrant and any other security of the Company acquired by the Investor hereunder, as principal for its own account for investment only and not as a nominee or agent and not with a view towards or for resale in connection with the distribution of the Note, the Warrant, any other security of the Company acquired by the Investor hereunder or any other securities issuable upon exercise or conversion thereof, except pursuant to sales that are registered under, or are exempt from the registration requirements of, the Securities Act.

(d) Compliance with Securities Act . The Investor understands and agrees that the Note, the Warrant, any other security of the Company acquired by the Investor hereunder and the underlying securities thereof are “restricted securities” and have not been registered under the Securities Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the Securities Act (based in part on the accuracy of the representations and warranties of Investor contained herein), and that such securities must be held indefinitely unless a subsequent disposition is registered under the Securities Act or any applicable state securities laws or is exempt from such registration. Such Investor is aware that the Company is under no obligation to effect any such registration with respect to the Note, the Warrant, any other security of the Company acquired by the Investor hereunder, or the securities underlying such securities.

(e) Restriction on Transfer . Each Investor that will receive Shares understands and agrees that any certificates representing the Shares will contain typical restrictive legends and any other legends required under State securities laws. Prior to any proposed sale, assignment, transfer or pledge of any of the Shares, unless there is in effect a registration statement under the Securities Act of 1933 covering the proposed transfer, Investor shall give written notice to the Company of Investor's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied at such Investor's expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall be, reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transfer of the Shares may be effected without registration under the Securities Act, or (ii) any other evidence reasonably satisfactory to counsel to the Company, whereupon Investor shall be entitled to transfer such Shares in accordance with the terms of the notice delivered by Investor to the Company, provided that, in the event that the Shares are transferred other than in accordance with Rule 144 promulgated under the Securities Act, such transferee has executed an investment representation statement in customary form and agreed to be bound by the terms of this Section.

(f) Communication of Offer . The offer to sell the Note, the Warrant and any other security of the Company acquired by the Investor hereunder was directly communicated to the Investor by the Company. At no time was the Investor presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form of general advertising, or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with such communicated offer.

(g) Organization; Authority . If an entity, such Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder.

(h) Authority; Enforceability . This Agreement and other agreements delivered together with this Agreement or in connection herewith have been duly authorized, executed and delivered by the Investor and are valid and binding agreements enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity; and Investor has full corporate power and authority necessary to enter into this Agreement and such other agreements and to perform its obligations hereunder and under all other agreements entered into by the Investor relating hereto.

(i) Correctness of Representations . Such Investor understands that the Note, the Warrant and any other security of the Company acquired by the Investor hereunder are being offered and sold to it in reliance upon specific exemptions from the registration requirements of federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations and warranties of such Investor set forth in this Section 3 in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the Note, the Warrant and any other security of the Company acquired by the Investor hereunder. Each Investor represents that the foregoing representations and warranties are true and correct as of the date hereof and, unless an Investor otherwise notifies the Company prior to the Closing, shall be true and correct as of Closing.

(j) No Tax or Legal Advice . Such Investor understands that nothing in this Agreement, any other agreement or any other materials presented to such Investor in connection with the purchase and sale of the Note, the Warrant and any other security of the Company acquired by the Investor hereunder constitutes legal, tax or investment advice. Such Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Note, the Warrant and any other security of the Company acquired by the Investor hereunder.

4. Conditions to Closing of the Investors . Each Investor’s obligations at a Closing are subject to the fulfillment, on or prior to the Closing, of all of the following conditions, any of which may be waived in whole or in part by the Investor:

(a) Representations and Warranties . The representations and warranties made by the Company in Section 2 hereof shall have been true and correct when made, and shall be true and correct as of the date of such Closing.

(b) Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Notes and Warrants.

(c) Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Notes and Warrants shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.

(d) Proceedings and Documents . All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Investors.

(e) Mortgages . The Company shall have caused a mortgage, deed of trust or other applicable instrument (collectively, “ Mortgages ”) in form reasonably satisfactory to a Majority in Interest to be recorded in the appropriate governmental offices to secure the Obligations with the Company’s real property interests (“ Company Real Property ”) located in Dillon, Montana, Mermentau, Louisiana, Lake Charles, Louisiana, and West Sacramento, California.

(f) Transaction Documents . The Company shall have duly executed and delivered to the Investors the following documents:

(i) This Agreement;

(ii) Each Note (including execution by the Patent Subsidiaries) and Warrant issued hereunder to the Investors at such Closing;

(iii) If applicable, the Shares issuable hereunder to the Investors at such Closing;

(iv) If applicable, the PIK Warrants issuable hereunder to the Investors at such Closing;

(v) The Security Agreement (including execution by the Patent Subsidiaries); and

(vi) All UCC-1 financing statements and other documents and instruments which the Investor may reasonably request, including filings required to be made in the United States Patent and Trademark Office, to perfect its security interest in the collateral described in the Security Agreement.

(g) Escrow . If the Purchase Price for one or more Investors will be released to the Company through an escrow at a Closing, each such Investor shall have entered into an escrow agreement in form reasonably acceptable to the Company and such Investor.

5. Conditions to Obligations of the Company . The Company’s obligation to issue and sell the Notes, the Warrants and any other security of the Company at a Closing is subject to the fulfillment, on or prior to such Closing, of the following conditions, any of which may be waived in whole or in part by the Company:

(a) Representations and Warranties . The representations and warranties made by the Investors in Section 3 hereof at a Closing shall be true and correct when made, and shall be true and correct on the date of such Closing.

(b) Governmental Approvals and Filings . Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Notes, the Warrants and any other securities of the Company acquired by the Investors hereunder.

(c) Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Notes shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.

(d) Security Agreement . The Collateral Agent (as defined in the Security Agreement) and each Investor required to amend the Security Agreement shall have executed and delivered the Security Agreement.

(e) Notes . Each Investor purchasing a Note at a Closing shall have executed and delivered such Note.

(f) Proceedings and Documents . All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Company.

(g) Legal Requirements . At the Closing, the sale and issuance by the Company, and the purchase by the Investors at such Closing, of the applicable Notes, Warrants and Company securities shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.

(h) Subordination Agreements . Each of the Investors shall have entered into a subordination agreement in form satisfactory to the Investors and the Convertible Debt Lenders (as defined in the Security Agreement) (“ Subordination Agreement ”).

(i) Escrow . If the Purchase Price for one or more Investors will be released to the Company through an escrow at a Closing, each such Investor shall have entered into an escrow agreement in form reasonably acceptable to the Company and such Investor.

(j) Purchase Price . Each Investor at a Closing shall have delivered to the Company the Purchase Price in immediately available funds in respect of the Note and Warrant being purchased by such Investor referenced in Schedule 1 hereof for such Closing.

6. Miscellaneous .

(a) Waivers and Amendments . Except as expressly provided otherwise herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by the Company and Investors holding a Majority in Interest; provided, however, that Investors purchasing Notes and Warrants in a Closing after the Initial Closing may become parties to this Agreement in accordance with Section 1(e) without any amendment of this Agreement or the Security Agreement pursuant to this paragraph or any consent or approval of any other Investor; and provided, further, that if any amendment, waiver, discharge or termination operates in a manner that treats any Investor at a particular Closing different from other Investors at such Closing with respect to the Notes and Warrants issued to them at such Closing, the consent of such Investor shall also be required for such amendment, waiver, discharge or termination. Any such amendment, waiver, discharge or termination effected in accordance with this paragraph shall be binding upon each holder of any of the securities purchased under this Agreement at the time outstanding (including securities into which such securities have been converted or exchanged or for which securities have been exercised) and each future holder of all such securities.

(b) Governing Law . This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions of the State of California or of any other state.

(c) Survival . The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.

(d) Successors and Assigns . Subject to the restrictions on transfer described in Sections 6(e) and 6(f) below, the rights and obligations of the Company and the Investors shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

(e) Registration, Transfer and Replacement of the Notes . The Notes issuable under this Agreement shall be registered notes. The Company will keep, at its principal executive office, books for the registration and registration of transfer of the Notes. Prior to presentation of any Note for registration of transfer, the Company shall treat the Person in whose name such Note is registered as the owner and holder of such Note for all purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in any Note, the holder of any Note, at its option, may in person or by duly authorized attorney surrender the same for exchange at the Company’s chief executive office, and promptly thereafter and at the Company’s expense, except as provided below, receive in exchange therefor one or more new Note(s), each in the principal requested by such holder, dated the date to which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such Person or Persons as shall have been designated in writing by such holder or its attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new Note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on such Note or, if no interest shall have yet been so paid, dated the date of such Note.

(f) Assignment by the Company . The rights, interests or obligations hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of Investors holding a Majority in Interest.

(g) Entire Agreement . This Agreement together with the other Transaction Documents constitute and contain the entire agreement among the Company and Investors and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof.

(h) Notices . All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party as follows: (i) if to an Investor, at such Investor’s address or facsimile number set forth in the Schedule of Investors attached as Schedule I , or at such other address as such Investor shall have furnished the Company in writing, or (ii) if to the Company, at 6720 N. Scottsdale Road, Suite 390, Scottsdale, Arizona 85253, facsimile: (602) 522-3001, Attn: Chief Executive Officer, or at such other address or facsimile number as the Company shall have furnished to the Investors in writing. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by facsimile (with receipt of appropriate confirmation), (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) four days after being deposited in the U.S. mail, first class with postage prepaid.

(i) Separability of Agreements; Severability of this Agreement . The Company’s agreement with each of the Investors is a separate agreement and the sale of the Notes and Warrants to each of the Investors is a separate sale. Unless otherwise expressly provided herein, the rights of each Investor hereunder are several rights, not rights jointly held with any of the other Investors. Any invalidity, illegality or limitation on the enforceability of the Agreement or any part thereof, by any Investor whether arising by reason of the law of the respective Investor’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to other Investors. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(j) Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement. Electronic copies of signed signature pages will be deemed binding originals.

(k) Post-Initial Closing Activities . At the request of a Majority in Interest the Company shall cause an amended mortgage, deed of trust or other applicable instrument in form reasonably satisfactory to a Majority in Interest to be recorded in the appropriate governmental offices to secure Obligations with the Company Real Property. The Company covenants and agrees to execute, file and record such documents and do such other acts and things as are necessary or appropriate to further effect the terms of this Agreement.

[Signature Page Follows]

The parties have caused this Amended and Restated Note and Warrant Purchase Agreement to be duly executed and delivered as of the date and year first written above.

	COMPANY:
	RICEBRAN TECHNOLOGIES
	a California corporation

	By:	/s/ J. Dale Belt
		Jerry Dale Belt, Chief Financial Officer

	INVESTORS:

	/s/ Gregory J. Vislocky
	Gregory J. Vislocky

	The Shoshana Shapiro Halpern Revocable
	Trust UA June 13, 2006

	By:	/s/ Baruch Halpern
		Baruch Halpern, Trustee

	By:	/s/ Shoshna Halpern
		Shoshana Halpern, Trustee

[Signature Page for Amended and Restated Note and Warrant Purchase Agreement]

Signature Page for Additional Investors at a Subsequent Closing

INVESTOR:


Name of Investor


Signature of Investor


Title of Signatory, if applicable

SCHEDULE I

SCHEDULE OF INVESTORS

**Note to Table Below: The number of Warrant Shares reflects anti-dilution adjustments made to the Warrants on July 31, 2012. Accordingly, the number of Warrant Shares listed below for the Investors in the Initial Closing and the Second Closing is greater than the number of Warrant Shares at the time of issuance.

Initial Closing Investors: January 17, 2012
Investor	Address for Notice	Note Amount		Warrant Share Number
Gregory J. Vislocky	7700 NE Parkway Drive, Suite 300 Vancouver, WA 98662 Tel.:(360) 735-7155, Ext. 257 Fax:(360) 823-0126	$	500,000		7,142,857

Brian Rick Delamarter	3396 Stoneridge Lane Los Angeles, CA 90077 Tel.:(818) 906-2709	$	500,000		8,571,429

Harold Guy Delamarter	7700 NE Parkway Drive, Suite 300 Vancouver, WA 98662	$	250,000		3,571,429

The Shoshana Shapiro Halpern Revocable Trust UA June 13, 2006	Baruch Halpern 20900 NE 30th Ave, Suite 200 Aventura, FL 33180	$	2,500,000		35,714,286

Weintraub Partners	Attn: Chris Chediak 400 Capitol Mall, 11 ^th Floor Sacramento, CA 95814 Tel.:(916) 558-6000	$	250,000		3,571,429

W. John Short and Karen A Wilson	c/o RiceBran Technologies 6720 N. Scottsdale Road, Suite 390 Scottsdale, AZ Tel.:(602) 522-3000	$	25,000		357,143

Edward L McMillan Revocable Trust	c/o RiceBran Technologies 6720 N. Scottsdale Road, Suite 390 Scottsdale, AZ Tel.:(602) 522-3000	$	25,000		428,571

Investor	Address for Notice	Note Amount		Warrant Shares
Zanesville Partners Fund, LLC	James Lintzenich c/o RiceBran Technologies 6720 N. Scottsdale Road, Suite 390 Scottsdale, AZ Tel.:(602) 522-3000	$	50,000		857,143

Alon Gibli	9 Great Jones Street #3 New York, NY 10012	$	75,000		1,071,429

Michael Geliebter	10553 Rocca Place Los Angeles, CA Tel.: (310) 597-0783	$	150,000		2,571,429

Total Initial Closing		$	4,325,000
Second Closing Investors: May 10, 2012
Alon Gibli	9 Great Jones Street #3 New York, NY 10012	$	50,000		714,286
Third Closing Investors: July 31, 2012
Gregory J. Vislocky	7700 NE Parkway Drive, Suite 300 Vancouver, WA 98662 Tel.: (360) 735-7155, Ext. 257 Fax:(360) 823-0126	$	500,000		7,142,857

Harold Guy Delamarter	7700 NE Parkway Drive, Suite 300 Vancouver, WA 98662	$	250,000		3,571,429

Baruch Halpern IRA	Baruch Halpern 20900 NE 30th Ave, Suite 200 Aventura, FL 33180	$	100,000		1,428,571

Total Third Closing		$	850,000
Fourth Closing Investors: August 31, 2012
Alon Gibli	9 Great Jones Street #3 New York, NY 10012	$	150,000		2,142,857

Fifth Closing Investors: April 2013
Gregory J. Vislocky	7700 NE Parkway Drive, Suite 300 Vancouver, WA 98662 Tel.: (360) 735-7155, Ext. 257 Fax:(360) 823-0126	$	100,000	1,428,571

W. John Short and Karen A Wilson	c/o RiceBran Technologies 6720 N. Scottsdale Road, Suite 390 Scottsdale, AZ Tel.:(602) 522-3000	$	25,000	357,143

Weintraub Partners	Attn: Chris Chediak 400 Capitol Mall, 11 ^th Floor Sacramento, CA 95814 Tel.:(916) 558-6000	$	12,603	180,039
Sixth Closing Investors: May 2013
Gregory J. Vislocky	7700 NE Parkway Drive, Suite 300 Vancouver, WA 98662 Tel.: (360) 735-7155, Ext. 257 Fax:(360) 823-0126	$	400,000	5,714,285

SCHEDULE II

DISCLOSURE SCHEDULE

Exhibit A-1

FORM OF INITIAL NOTE

Exhibit A-2

FORM OF SUBSEQUENT NOTE

Exhibit B

FORM OF WARRANT

Exhibit B-2

FORM OF SUBSEQUENT WARRANT

Exhibit B-3

FORM OF PIK WARRANT

Exhibit C

FORM OF SECURITY AGREEMENT

Date: July 12, 2013

/s/ W. John Short
W. John Short, President

/s/ J. Dale Belt
J. Dale Belt, Secretary

Collateral Agent :
	Gregory J. Vislocky
	7700 NE Parkway Dr. Suite 300
	Vancouver, WA 98662
	Telephone: (360) 735-7155, Ext. 257
	Email: gvislocky@prestigecare.com

And:
	Baruch Halpern
	20900 NE 30 ^th Ave., Suite 200
	Aventura, FL 33180
	Telephone: (786) 528-1400
	Email: bhalpern@halperncapital.com

Any Company :
	RBT
	6720 N. Scottsdale Road, Suite 390
	Scottsdale, AZ 85253
	Attention: W. John Short, CEO
	Telephone: (602) 522-3000
	Facsimile: (602) 522-3001
with a copy to :
	Weintraub Tobin Chediak Coleman Grodin Law Corporation
	400 Capitol Mall, 11th Floor
	Sacramento, CA 95814
	Attention: Chris Chediak, Esq.
	Telephone: (916) 558-6016
	Facsimile: (916) 446-1611
	Email: cchediak@weintraub.com

If to the Preferred Lenders:	Hillair Capital Investments L.P.
	c/o Hillair Capital Management LLC
	330 Primrose Road, Suite 660
	Burlingame, CA 94010
	Attention: Sean M. McAvoy

	TCA Global Credit Master Fund, LP
	1404 Rodman Street Hollywood, FL 33020 Attention: Robert Press
	Facsimile: (786) 323-1651

With a copy to:	Lucosky Brookman LLP
(which shall not constitute notice)	101 Wood Avenue South, 5 ^th Floor Woodbridge, NJ 08830
	Attention: Seth A. Brookman, Esq.
	Facsimile: (732) 395-4401

If to the Borrower:	6720 North Scottsdale Road, Suite 390
	Scottsdale, AZ 85253
	Attention: W. John Short
	Facsimile: [•]

With a copy to:	Weintraub Tobin Chediak Coleman Grodin
(which shall not constitute notice)	400 Capitol Mall, 11 ^th Floor
	Sacramento, CA 95814
	Attention: Chris Chediak, Esq.
	Facsimile: (916) 446-1611

RICEBRAN TECHNOLOGIES				THE RICEX COMPANY
				a Delaware corporation

By:	/s/ J. Dale Belt			By:	/s/W. John Short
	Jerry Dale Belt, Chief Financial Officer				W. John Short, President

RICE SCIENCE, LLC
a Delaware limited liability company

	By:	RiceBran Technologies, its member

		By:	/s/ J. Dale Belt
			Jerry Dale Belt, Chief Financial Officer

Collateral Agents	Investors

/s/ Baruch Halpern	/s/ Gregory J. Vislocky
Baruch Halpern	Gregory J. Vislocky

/s/ Gregory J. Vislocky	The Shoshana Shapiro Halpern
Gregory J. Vislocky	Revocable Trust UA June 13, 2006

	By:	/s/ Baruch Halpern
		Baruch Halpern, Trustee

	By:	/s/Shoshana Halpern
		Shoshana Halpern, Trustee

If to the Subordinated Creditors:

	Gregory J. Vislocky
	7700 NE Parkway Drive, Suite 300
	Vancouver, WA 98662
	Fax:(360) 823-0126

	Brian Rick Delamarter
	3396 Stoneridge Lane
	Los Angeles, CA 90077

	Harold Guy Delamarter
	7700 NE Parkway Drive, Suite 300
	Vancouver, WA 98662
	Fax:(360) 823-0126

	The Shoshana Shapiro Halpern Revocable Trust UA June 13, 2006
	20900 NE 30th Ave, Suite 200
	Aventura, FL 33180
	Attention: Baruch Halpern

	Weintraub Partners
	400 Capitol Mall, 11 ^th Floor
	400 Capitol Mall, 11 ^th Floor
	Attention: Chris Chediak, Esq.
	Attention: Chris Chediak, Esq.

	W. John Short and Karen A Wilson
	c/o RiceBran Technologies
	6720 N. Scottsdale Road, Suite 390
	Scottsdale, AZ 85253

	The Revocable Trust of Edward L. McMillan
	Revocable Trust U/D/T dated February 17, 1999
	c/o RiceBran Technologies
	6720 N. Scottsdale Road, Suite 390
	Scottsdale, AZ 85253

	Zanesville Partners Fund, LLC
	c/o RiceBran Technologies
	6720 N. Scottsdale Road, Suite 390
	Scottsdale, AZ 85253

	Alon Gibli
	9 Great Jones Street #3
	New York, NY 10012

	Michael Geliebter
	10553 Rocca Place
	Los Angeles, CA

	Pensco Trust Co., FBO Baruch Halpern IRA
	20900 NE 30th Ave, Suite 200
	Aventura, FL 33180
	Attention: Baruch Halpern

HILLAIR CAPITAL INVESTMENTS, L.P.

By:	/s/ Scott D. Kaufman
Name:	Scott D. Kaufman
Title:	Managing Partner of Hillair Capital Management LLC as investment advisor to Hillair Capital Investments LP

TCA GLOBAL CREDIT MASTER FUND, LP

By:	TCA Global Credit Fund GP, Ltd.
Its:	General Partner

By:
Name:	Robert Press
Title:	Director

	SUBORDINATED CREDITORS:

	/s/ Greg Vislocky
	(Greg Vislocky)

	/s/ Brian Rick Delamarter
	(Brian Rick Delamarter)

	/s/ Harold Guy Delamarter
	(Harold Guy Delamarter)

	Walter John Short and Karen A. Wilson

	/s/ W. John Short
	(W. John Short)

	/s/ Karen A. Wilson
	(Karen A. Wilson)

	The Revocable Trust of Edward L. McMillan Revocable
	Trust U/D/T dated February 17, 1999

	By:	/s/ Edward L. McMillan
	Name:	Edward L. McMillan
	Its:	Trustee

	Pensco Trust Co., FBO Baruch Halpern IRA

	/s/ Baruch Halpern
	(Baruch Halpern)

	/s/ Alon Gibli
	(Alon Gibli)

	/s/ Michael Geliebter
	(Michael Geliebter)

NUTRACEA, LLC,
SRB-IP, LLC,
SRB-MERM, LLC,
SRB-LC, LLC,
SRB-MT, LLC,
SRB-WS, LLC,
RICEX COMPANY,
RICEX NUTRIENTS, INC.,
RICE SCIENCE, LLC,
RICE RX, LLC,

US$120,000	October 18, 2013
US$200,000	November 18, 2013
US$260,000	December 18, 2013
US$320,000	January 18, 2014
US$380,000	February 18, 2014
US$440,000	March 18, 2014
US$500,000	April 18, 2014
US$560,000	May 18, 2014
US$620,000	June 18, 2014
US$660,000	July 18, 2014

LENDER:

TCA GLOBAL CREDIT MASTER FUND, LP

By:	TCA Global Credit Fund GP, Ltd.
Its:	General Partner

By:
Name:	Robert Press
Title:	Director

GUARANTORS:

NUTRACEA, LLC

By:	/s/ J. Dale Belt
Name:	J. Dale Belt
Title:	SRB-IP. LLC

SRB-MERM, LLC

By:	/s/J. Dale Belt
Name:	/s/ J. Dale Belt
Title:	Secretary

SRB-LC, LLC

By:	/s/J. Dale Belt
Name:	/s/ J. Dale Belt
Title:	Secretary

SRB-MT, LLC

By:	/s/J. Dale Belt
Name:	/s/ J. Dale Belt
Title:	Secretary

	SRB-WS, LLC

	By:	/s/J. Dale Belt
	Name:	/s/ J. Dale Belt
	Its:	Secretary

	RICEX COMPANY

	By:	/s/J. Dale Belt
	Name:	/s/ J. Dale Belt
	Its:	Secretary

	RICE SCIENCE LLC

	By:	/s/J. Dale Belt
	Name:	/s/ J. Dale Belt
	Its:	Secretary

	RICE RX, LLC

	By:	/s/J. Dale Belt
	Name:	/s/ J. Dale Belt
	Its:	Secretary

Issuance Date: July 18, 2013	US$2,400,000

Effective Date: July 18, 2013

	RICEBRAN TECHNOLOGIES

	By:/s/ J. Dale Belt

	Name: J. Dale Belt
	Title: Chief Financial Officer

Conversion Calculations Date
of Conversion:
Conversion Price
Principal Amount and/or Interest to be Converted:
Number of Common Shares to be Issued:

Dated: August 14, 2013		/s/ W. John Short

		Name: W. John Short
		Title: Chief Executive Officer

Dated: August 14, 2013		/s/ J. Dale Belt

		Name: Jerry Dale Belt
		Title: Chief Financial Officer