Fred Sommer - Ascendant Partners John Short - President and Chief Executive Officer Dale Belt - Chief Financial Officer Robert Smith - Senior Vice President of Operations Mark McKnight - Senior Vice President of Sales and Marketing.

Anthony Vendetti - Maxim Group.

Greetings ladies and gentlemen, and welcome. Welcome to the RiceBran Technologies Q2 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to introduce your host, Mr. Fred Sommer, of Ascendant Partners. Please go ahead, Mr. Sommer..

Thank you, operator, good afternoon listeners. Welcome to RiceBran Technologies second quarter 2015 financial results conference call. With us today are John Short, Chief Executive Officer and President of RiceBran Technologies; Dale Belt, Chief Financial Officer; Dr.

Robert Smith, Senior VP of Operations R&D and Mark McKnight, Senior Vice President of Sales and Marketing. Before I turn the call over to John, I want to remind listeners that during the call, management’s prepared remarks may contain forward-looking statements that are subject to risks and uncertainties.

Management may make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Actual results may differ from results discussed today, and therefore we refer you to a more detailed discussion of these risks and uncertainties in the company’s filings with the SEC.

In addition, any projections as to the company’s future performance represented by management include estimates as of today August 13, 2015, and the company assumes no obligation to update these projections in the future as market conditions change.

This webcast and certain financial information provided in this call, including reconciliations of non-GAAP financial measures to comparable GAAP financial measures are available at www.ricebrantech.com on the Investor Relations page. At this time, I would like to turn the call over to John Short, CEO and President of RiceBran Technologies.

John, please go ahead..

Thanks Fred and thanks to our listeners for joining the call. In the second quarter of 2015, consolidated revenues reached $11.4 million which represents an 18% sequential increase over the first quarter of this year and a slight increase from $11.3 of revenue recorded in Q2 of last year.

Consolidated revenue for the quarter was led by a USA segment where revenue reached $6.9 million a 35% increase from Q1 of 2015 and a slight increase from Q2, of 2014 USA segment revenue of $6.7 million.

I am pleased to report that due to the strong operational performance during the second quarter we achieved positive adjusted EBITDA of $543,000 in our USA segment. That result also allowed us to record a modest positive consolidated adjusted EBITDA in the second quarter.

This marks the first time we delivered positive consolidated adjusted EBITDA since we embarked on our capital restructuring plan and uplisted to NASDAQ. We expect to build its positive performance in the coming quarters as we continue to execute our tactical and strategic plans.

When looking at our Brazil’s segment on a local currency basis, revenue increased by 35% from R$10.2 million in Q2 of 2014 to R$13.9 million in Q2 of 2015. Nevertheless due to the impact of the currency devaluation in Brazil U.S. dollar reported Brazil’s segment revenues for the quarter were essentially flat at $4.5 million year-over-year.

While our Irogovel plant now has the capacity to consistently run at or above our target production rate of 300 metric tonnes per day the challenging economic and political conditions in Brazil have continued to cause supply chain disruptions and ongoing difficulty in obtaining sufficient RiceBran resulting in the plant processing only about 200 metric tonnes per day.

Q2 results in Brazil also reflect the company working through the sale of the remainder of the low quality finished products that resulted from the impact of the nationwide trucking strike in Q1.

Despite these challenges, in Q2, 2015 our adjusted EBITDA loss in Brazil narrowed the $530,000 representing a 43% improvement from a loss of $923,000 recorded in the first quarter of 2015.

In response to the continuing economic deterioration and supply chain disruptions in Brazil we implemented a number of initiatives early in the second quarter aimed at lining our developed cost structure with achievable production levels.

I am pleased to report that based on preliminary and audited results for the first month of this third quarter we generated modest positive cash flow for the month of July.

We believe, we are now positioned to continue to produce positive adjusted EBITDA in Brazil going forward at lower raw bran processing levels of about 200 metric tons per day without sacrificing our ability to produce at a target rate of 300 metric tons per days when economic conditions improve.

As previously mentioned USA segment was up slightly from Q1 of this year was up significantly from Q1 of this year.

Within that overall result, we see two important positive trends first, a continued decline in revenue from large package goods companies due to the world publicized competition from healthier alternatives was offset by sales of functional foods.

Our strategy for changing our product mix to higher margin functional food ingredients and package functional foods continues to gain tractions. We expect that trend to continue and going forward as the consumer progressively moves away from highly processed foods to healthier alternatives.

Second, as a result of the change in product mix and more efficiently operating our facilities, our gross margin percentage increased 8.5 percentage points to 32.7% in Q2 compared to 24.2% last year. This improved gross margin produced $619,000 of additional gross profit dollars in the quarter on a modest increase of revenues of only about $141,000.

I’m also pleased to report that we have purchased orders in house and expect to ship our first production orders in nutri-cosmetics in this third quarter. As with all new product category launches, we expect sales to start off modestly and build over the next several quarters.

However, we also expect our nutri-cosmetics offerings to contribute to further improvements in gross margin performance overtime. We see the addition of nutri-cosmetics as another important step as we continue to change our product mix to improve both revenues and margins.

For the balance of 2015 and looking forward to 2016 we remain focused on several key objectives. In our USA segment we are focused on driving sales in higher margin categories while managing our supply chain to improve both top and bottoming performance.

The continued deterioration of revenues from large packaged consumer products companies offset by growth in functional food sales may result in less rapid topline growth in the near term, nevertheless we believe a continued focus on improving product mix will enable us to improve bottom line results and build a more solid base from which to grow in the future.

In Brazil, we continue to focus on shifting our sales mix towards a higher percentage of exports developing human ingredient sales derived from the defatted bran stream for both export and domestic sale and aligning the plants operational cost to the realities of the raw material availability.

Keep in mind that increasing the ratio of exports to domestic sales will not happen overnight and significant improvement in domestic sales in Brazil will be tied in part to improvements in the Brazilian economy.

Nevertheless, we believe we’ve taken the appropriate steps necessary to realign production cost at Irogovel in the short term and remain well positioned to ramp up production quickly when economic and bran supply conditions improve. Before handing the call over to Dale, Robert and Mark, I want to make one additional comment about Brazil.

We are moving forward to implement our previously announced agreement with Cooperativa Agroindustrial de Alegrete Ltda, CAAL to install our proprietary extruders in its rice mill in Alegrete about 500 kilometers north of Irogovel. We expect to have that project completed and operating before year end.

When complete, this product will give us an additional source of stable, high quality bran for oil extracts [Indiscernible]. Importantly, the installation at CAAL will also give Irogovel the option of producing full fat stabilized rice bran and derivatives, the same product families we produce and sell in the U.S.

markets for sale in Brazil and perhaps other Mermentau [ph] markets.

While this option will not bring immediate benefits since markets in Brazil will need to be developed this is the beginning of a strategic repositioning of a Brazil business that will allow Irogovel to move into higher priced, higher margin human ingredient and functional food products when economic conditions improve.

As mentioned in the prior calls, we continuously entertain discussions about possible strategic partnerships across all areas of our business. As we move ahead to launch both at bran products in the Brazil market, we are working to identify possible strategic partners as it can accelerate our entry into that market.

We are also exploring opportunity outside of Brazil to gain access to meaningful quantities or organic raw rice brand for stabilization and distribution through our USA segment.

To be clear we have no agreements in place at this time related to these or other strategic initiatives, however we will continue to consider opportunities as they present themselves.

I’ll stop here and pass the call to Dale after Dale, Robert will update you on operational and supply chain issues and Mark will update you on sales and marketing activities..

Thanks, John. For the second quarter of 2015 consolidated revenues were $11.4 million and this represents an increase of 18% compared to the prior quarter and up about 1% over the prior year’s second quarter.

Consolidated gross profit improved to $2.2 million in the second quarter of 2015, that’s a 112% sequential increase in consolidated gross profit in comparison to Q1 of this year and it’s an 87% increase when compared to Q2, 2014. Overall, our consolidated gross profit percentage increased by 9.1 percentage points compared to Q2, 2014.

The improved performance in gross profit was a direct result of the two primary issues already noted by John. One, the continuing emphasis on shifting our USA segment sales mix towards higher margin products and two, the cost reduction steps taken in Brazil during the second quarter.

When comparing to last year, gross profit percentage for the second quarter improved by 8.5 percentage points in the USA segment and 9.1 percentage points in our Brazil segment. As John mentioned earlier we continue to face a number of macroeconomic issues in Brazil.

In spite of a 35% increase in the local currency revenues in Q2, compared to the same quarter of 2014, Brazil segment revenue was essentially flat in U.S. dollars compared to last year’s second quarter due to the continuing decline of the Brazilian real. We believe further decline in the real is possible for the remainder of this year.

From an operational perspective, we believe the major issues confronted at the Irogovel facility that were associated with the plant shutdown and the restart and so on are well behind us.

Furthermore in Q2, we implemented cost cutting measures and operational changes that are based on preliminary unaudited results produced positive adjusted EBITDA at Irogovel in the month of July.

Our objective is to maintain that positive momentum in the current difficult economic and political environment as we move forward to the second half of this year and into 2016. Our consolidated operating expenses declined by $393,000 to $3.8 million in the second quarter of 2015 compared to $4.2 million in the 2014 period.

The decline is attributable simply to the following factors; decreases in USA segment salaries, wages and benefits, decreases in amortization and depreciation expense in both our operating segments and the impact of lower operating expenses recorded in the Brazil segment due to the decline and value of Brazilian currency.

We continue to work diligently as always to tightly manage our expenses in all of our reporting segments. In the second quarter of 2015, we recorded positive consolidated adjusted EBITDA of $13,000 as compared to a loss of $1.6 million in the first quarter of 2015. In Q2 of 2014 we reported a consolidated Adjusted EBITDA loss of $1.1 million.

While we were only marginally positive on a consolidated adjusted EBITDA basis in the quarter, we are diligently focused on continuing to build on this momentum in the second half of the year. And I should point out that our reconciliation of adjusted EBITDA can be found on our website.

In Q2, 2015 we recorded a net loss attributable to shareholders of $3.5 million which is $0.38 per share based on approximately $9.2 million weighted average shares outstanding. This is an $11.6 million improvement from the $15.1 million loss or 352 per share recorded in the second quarter of 2014.

With regard to our other expenses, we reported an expense for loss on extinguishment during the quarter. These expenses are non cash charge that represents the unamortized debt discount associated with the extinguishment of outstanding subordinated notes and the fair value of warrants that were issued as part of the replacement notes.

As previously announced in May, we entered into a new senior credit facility with Full Circle Capital. As a condition of entering into that debt facility, we modified the terms of our existing subordinated notes and were required under accounting rules to treat the old notes as an extinguishment.

From a balanced sheet liquidity perspective we ended the quarter with $2.6 million in cash and cash equivalents compared to $3.6 million as of the end of last year.

Those of who listened to our May conference call in the first quarter of this year know that we received an award from the Brazil Arbitration Panel related to the 2008 Acquisition of Irogovel. Including interest in arbitration cost, the arbitration award currently totals approximately R$7.7 million.

The award cannot be appealed and its accrues interest at a 14% per annum interest rates until it’s paid. With this positive outcome, we filed a motion in U.S District Court seeking a court order to release the $1.9 million of restricted cash held at an escrow account at a U.S. bank.

We are confident that we will be able to recover those funds which if received will be used to support ongoing operations. We believe these cash resources combined with operational improvements in the coming quarters will provide us with adequate cash resources to deliver on our business plans. And with that, Robert, I will turn this over to you..

Thank you, Dale. Throughout the second quarter, our operational team has worked on the development and implementation of strategic initiatives to address and improve a number of supply chain issues in both of our operating segments to maximise profitability as we grow our business.

In California where drought conditions remained at unprecedented levels, we have taken several steps to ensure adequate bran supply. First we have connected our existing stabilization equipment to a second mill at one of our existing facilities to increase availability of raw rice bran for stabilization.

We saw this as – we saw this opportunity as the fastest and the most cost effective way to increase bran availability in a short term.

We also secured an additional 16,000 square feet of warehouse space in the West Sacramento to allow us to increase inventories of stabilized bran to avoid supply chain disruptions at our West Sacramento Distribution Center.

We continue to pursue the installation of additional stabilization equipment our third milling facility in the Sacramento Valley. We expect that that project to proceed in the coming quarters to build additional raw RiceBran availability as we had into 2016.

In order to further bolster our supply chain in the Mid South, we have reopen part of our Lake Charles, Louisiana facility to provide an additional 8,000 square feet of warehouse space for stabilize bran produce that remittal.

This has allowed us to take higher percentage, a bran doing milling and build the strategic inventory which has previously been limited by storage capacity and remittal.

These strategies have thus far enabled us to avoid any of the product storages we experienced last year, which led to decrease revenue and other – and order cancellation thus far USA segment in the second half of 2014.

While we believe these measures will provide sufficient additional stabilize brand to support our planned business growth for the remainder of 2015 and beyond. It remains unclear what the overall impact of the California drought may ultimately be for this year’s harvest and for the future years.

Turning to our Irgovel facility, we implement that a number of actions in Q2 in response to the continued economic and political turmoil in Brazil aimed at reducing costs in line with reduced raw bran availability levels in an effort to deliver positive cash flow from our Brazilian operations while this difficult environment persist.

Specifically we reduced staff [Indiscernible] total of 15% in May and June and make other operational changes there based on preliminary results allowed us to produce the positive cash flow last month in July. This is the first positive EBITDA result at Irgovel since we started the expansion project as planned.

You see that’s very positive encourage results. I’ll stop here and past the call over to Mark, to update us on sales..

Thank you, Robert. Our second quarter saw stronger results from several key existing customers, as well as first time order shipping to several new customers.

During the second quarter we manufactured approximately 3 million single serving nutritional zeal bottles as well as close to a 1 million single serving pouches from our new pouch and Stickpack [ph] line. Single serving functional beverages, is a large and growing business.

Consumers want convenience, ease of use and low shipping cost and our single serve bottles and signal serve pouches fill their need. RiceBran Technologies invested capital in early 2015 to expand capacity at both Dillion and Healthy Natural. We are beginning to see the benefits from those investments.

We continue to create formulas best on our proprietary and patented RiceBran raw materials that result in unique selling proposition to our customers. We are excited about the purchase orders we have received from new customers in nutria-cosmetics and look forward to building this aspect of our business in the future in both the U.S.

and key international markets. As we mentioned last quarter, a key strategic initiative in 2015 has been to increase our tradeshow participation and ingredient sampling program to potential new customers. During the first six months of 2015 we acquired 56 new customers, double the pace of 2014.

These new customers are a direct to that effort as well as our marketing program with Teak Media, which resulted in eight different unpaid media placements in major industry publication, including food business news, supplier innovations, Snack Food &Wholesales Bakery, Beverage Industry Magazine, Culinology Magazine.

The organic and non-GMO report the Clean Label Conference and Snack Food & Wholesale Bakery. These publications are genuinely interested in what we as a company are doing, highlighting our clean label and healthy natural raw materials. This effort has helped us highlight the introduction of our expanded line of ProRyza products.

Our ProRyza is a family of healthy natural products now consistent of five ingredients based on stabilized RiceBran in combination with our patented derivative products.

These include ProRyza platinum, a nutritional bulking agent target at the manufacturers of the protein powders and meal replacement shakes provides a crisp, a healthy RiceBran crisp extruded using our patented right fiber ingredient.

ProRyza Brew, a RiceBran ingredient design to in hence the hops flavor of bear and bring out extra flavor in coffees and teas. These three new ingredients complement our existing ProRyza P-35 RiceBran protein and its process stream partner ProRyza PF-20/50.

In addition to the increased presence at tradeshows and in marketing we have recently added three new sales reps to our team. Patrick [Indiscernible] comes from the food ingredient industry and there’s our new Vice President of sales for contract manufacturing and bulk ingredient blends.

Stan Adirondacks and Mark Hayes are Independent Sales Representatives that also joined the rest of our team. Our expanded team gives us solid representation in the food ingredient space as well as the contract manufacturing and sports nutrition market.

Our increased focus on sales and marketing supported by strong operational performance was key to achieving the best quarter in the U.S segment in the second quarter of 2015. At this time, I would like to pass the call back to John..

Thanks Mark, before taking questions I want t take a few minutes to amount to comment on one other recent significant event and to summarize our results and share where we see the headed in future.

Some you may have seen that concurrent with the filing of our form 10-K this afternoon we also filed Form 10-K noticing several material changes to our agreements with our partner in Brazil Alothon Group.

As you’ll see in the 8-K we advanced an additional $200 million to Irgovel in Q2 and anticipation of recovering the $1.9 million that’s sits in escrow account in the bank in San Francisco/ In exchange for advancing those funds we were able to agree several important changes to our contracts as outlined in the 8-K, some of the key changes include the elimination of Alapanza [ph] accruing yield on its equity investment you may recall that as 4%, 8% toggle.

A reduction in Alothon’s exit preference from 2.3 times your investment to two times your investment, to time they are investment and extension to January 1 of 2018, a valid times for sales rights, and increased payout flexibility, in the event of a strategic transaction.

There were other significant concessions as well and you can find full details in the executed documents attached to the Form 8-K that was filed today. Alothon has been a great partner to our company for difficult period in Brazil and continues to work together to our team to achieve financial performance; we all know it’s possible at Irogovel.

Regarding our operating results, you’re all aware, we’ve faced some dramatic and foreseen headwinds over the past year including the persistent California drought and the parade of horribles in Brazil.

We responded to the short term challenges with the tactical initiative described on this call, while maintaining, our strategic focus to ensure that we’re well position to grow profitably when the economy turns around.

This focused approach should allow us to reach out what we see – allowed us to reach what we see it’s a major inflection point in our business by achieving strong positive adjusted EBITDA. And on the USA segment as well as positive consolidated adjusted EBITDA for the quarter for the first time.

We will not provide formal financial guidance for the remainder of 2015 due to these significant uncertainties related to the expected, continued, deterioration of Brazil’s economy and currency. You may have notices that Moody’s downgraded Brazil to DA2 today near junk status.

Never the less based on their progress we already make and achieving positive EBITDA, given on July, we believe we can continue to improve performance in our Brazil segment despite the current macroeconomic challenges.

In our USA segment we expect the slower sales to traditional package consumer goods companies to continue to be offset by positive improvements in functional food sales.

While the combined impact of these two opposing trends may result in a somewhat slower revenue growth trajectory than originally plan, we expect positive net revenue growth to produce continued improvement in gross profit dollars and adjusted EBIT as we move into 2p16.

In summery we share technical and strategic business plans and initiatives beg, bit to deliver improved performance. We’re on course to improve on last year s top line performance when we position base to achieve sustain, consolidated positive adjusted EBITA as we move into two 2016. That concludes our prepared remarks.

Operator, at this time please open the call for question.

Note, that we’ll limit callers to one initial question and one follow-up?.

[Operator Instructions] We have a question from the line of Anthony Vendetti with Maxim Group. Please proceed with your question..

Thank you. Just a couple of quick questions.

Did you actually given the FX adjustment for the quarter?.

Anthony, I’m not – let me try to answer your question, we didn’t – its obviously included in the Q and the various filings, but the negative impact on U.S. dollar revenues for the quarter US$1.7 million, so instead of moving from 4.5 to 6.2 we’re stuck at 4.5..

So the 35 increase that we experience in local currency revenue was fully offset by a 35% devaluation of the currency?.

Okay.

Is there a press release with the full financial stuff or the Q coming out soon, is that what we expect on that?.

Every think has been filed and issued. The Q is filed, the press release with those details is file on the 8-K related to the renegotiation of contract terms with Alothon is also filed. We’ve also put the adjusted EBITDA calculation up on the website as we always do..

Awesome. All right. So, largely as mark was talking about some of the new end products, you have products in Stage I, Stage II, Stage III. As we look out John over the next couple of years.

Right now, I assume animal feed is still about two-thirds of your revenues, can you talk about what the opportunity is to more into more of these higher margin Stage III products.

And share with us a little bit the strategy to do that and how do you see sort of in round numbers the percentage of business breaking out animal feed to all the way down the line to begin stage nutri-cosmetic product at the end stage products such as the end state products..

Sure. Anthony, if you -- when I join the Company, little more than five years ago, the business was predominantly animal feed with a smaller position of human ingredient.

Since then we have been migrating the business the month refer the first couple of years was converted feed to food, not to say, we’re getting out of the animal nutrition business because it’s actually very important to run larger quantities of product across the plans for absorption of overheads, but as we have migrated the business first converting feed to food and then over the course of last couple of years, converting human food ingredient to first functional food ingredients and then with the acquisition of healthy natural, to package functional foods.

What we’ve seen is major change in mix. And of course, if you look at the build-up animal nutrition, lowest margin, family, human ingredient next functional food, significant step up and package functional food even a bigger step-up. There’s a chart on one of the presentations we did.

I got to say, at the market conference, this time the front page of our website and it describe the evolution just from 2013 to 2014, you can see major change in mix. But if you look today, as we go into 2015 animal nutrition represent, I’m looking across the table of health 12%.

In our 10-Q if I will recall correctly, I believe in the USA segment that the human nutrition revenues represent 80 something percent of USA second revenues?.

Yes. So there’s two pieces in the mix shift. Anthony, one is on the USA segment. We’ve change that mix dramatically from 86% to 87%, 12% to 13%, 14%, right.

And down in Brazil however we still have a large portion of the product going to animal nutrition and one of the things you may recall is that some of the money we put into Brazil was to build a new animal nutrition facility and this spring we launched our whole line of higher quality, higher priced nutrition products in Brazil that have been very well receipt.

So if we look across the business U.S. and Brazil and I apologize that I haven’t done this mapping, I’m try to do with my head right now. But I’m going to say we’re probably 70, 30, 75, 25 with the 70 or 75 being on the human ingredient side including oil at Brazil and the 25% by to 30% being animal nutrition.

If you think about the animal nutrition component in Brazil coupled with the animal nutrition component, we need – don’t actually look, thanks you read that way Anthony. So, I can get back to your with the real number..

Yes. That’s helpful..

It’s roughly where we sort of..

And maybe just a follow up on some of these end products, what’s the maybe expected in nutri-cosmetics in that line. What’s the expected contribution of growth? Is it too early say as you moving in there or how are can you talk about we’ve discussed getting some of the Stage III in energy bars or other serials or other end products like that.

Just an update on how that’s going?.

Yes. So, let me talk about both of things briefly.

On the nutri-cosmetic side, of course the cosmetics market is a higher dollar value market and it has significant margin opportunities, so market that fairs, I don’t want to quote percentage here, Anthony, but I will tell you that the nutria-cosmetics piece will be the highest margin piece of the business by a good stretch.

And so if you look at, there’s a chart page 12 or 13 in that [Indiscernible] presentation, we did get some indicative margin ranges for product families. We did not include nutri-cosmetics in that chart. So add another layer on the top of that chart which becomes nutri-cosmetics at a higher initial margins. It’s a very attractive business for us.

We’re excited about the launch. We mentioned last time that we additional test orders coming in from a very large small footprint retailer that has about 4000 stores across the U.S.

and we’re just launching right now production orders into that 10% of the stores Marc with the expectation that will roll out to the rest as we get into the first quarter of next year..

All right. Great. Thank you very much..

Anthony [ph] what I think is important is to remember that and I always look at everything from a sales standpoint but when I got to talk to a customer or when one of the members of our team go to talk to a customer we’re looking for a message or a hook [ph] that interested them.

And RiceBran Technologies has these great, great ingredients and through proprietary technology in terms of what we produce. And so when we talk about nutri-cosmetics we are talking about RiceBran oil and we are talking about our facility in Brazil, that’s a unique story that not many people offer.

Same with functional foods, when we talk about functional foods we’re talking about our RiceBran derivatives as a key component to the functional foods.

And that’s why I have always been so bullish about the combination of what we have here at RiceBran technologies because the uniqueness of our raw materials is the hook that establishes the interest from the customer..

Okay, I’ll hop back in the queue. Thanks..

[Operator Instructions] It appears there are no further questions at this time. I would like to turn it back to management for closing comments..

Perfect, okay.

While we appreciate everyone joining the call, we are not satisfied with where we are but we are pleased to have produced our consolidated EBITDA positive quarter and everyone on the management and sales marketing operating teams at the company here is very, very focused on continuing to drive growth in profitable sales and increased margin.

We appreciate the support and we look forward to talking to you at the end of next quarter. Thanks very much..

Thank you, ladies and gentlemen. This concludes today’s teleconference. You may now disconnect your lines at this time. Thank you for your participation..