NutraCea Announces Fourth Quarter and Full Year 2007 Financial Results

PHOENIX, March 17, 2008 /PRNewswire-FirstCall via COMTEX/ -- NutraCea (NTRZ) , a world leader in stabilized rice bran (SRB), nutrient research and technology, today announced financial results for the 2007 fourth quarter and full year ended December 31, 2007. Consolidated net revenues for the fourth quarter of 2007 rose to $5.6 million, compared with consolidated net revenues of $5.2 million for the fourth quarter of 2006. Net revenues for the fourth quarter of 2007 were in line with Company's guidance for the quarter.

Net loss for the 2007 fourth quarter was $(8.9) million, or $(0.07) per share, compared with net income of $778,000, or $0.01 per share for the same quarter last year. The net loss was primarily attributable to higher operating expenses, including one-time charges associated with specific non-recurring events; the treatment of goodwill and amortization; and non-cash expenses and consolidated variable interest expense associated with pending acquisitions.

Consolidated net revenues for the full year ended December 31, 2007 increased 23% to $22.2 million, compared with consolidated net revenues of $18.1 million for the prior year. The rise in consolidated net revenues was a result of a $7.4 million increase in sales of the Company's stabilized rice bran and derivative products, and an increase of $4.4 million in royalty and licensing fees, offset by a $7.7 million decrease in infomercial sales.

The Company reported a net loss for the full year 2007 of $(11.9) million, or $(0.09) per share, compared with net income of $1.6 million, or $0.02 per share for 2006. The increase in gross margins of $3.3 million for 2007 compared to 2006. This was offset by a $10.2 million increase in Selling, General, and Administrative ("SG&A") costs, $3.2 million allowances for bad debt expense, $1.0 million separation expense, $1.3 million impairment expense, an increase of $3.2 million in professional fees, and an increase in Research and Development (R&D) costs of $501,000. The SG&A increase was primarily due to higher strategic expenditures investments in personnel, infrastructure, and sales and marketing activities intended help the Company to meet anticipated future product demand.

Gross margins increased $3.3 million to $12.3 million in 2007, from $9 million in 2006. This increase was primarily due to a $4.4 million rise in licensing and royalty revenues offset by a 2% increase in cost of goods sold from $9.1 million (53% of sales) to $9.9 million (55% of sales) in the 12 months ended December 31, 2007 and 2006, respectively.

NutraCea's President and Chief Executive Officer, Brad Edson said, "Global demand for NutraCea's products is on the rise, and we moved aggressively in 2007 on many fronts in order to help position NutraCea to take advantage of current and future opportunities. We substantially expanded our production capacity and extended our international reach. We forged new research and development alliances, exploited new applications for our proprietary technologies and took measures to protect our intellectual property. We reinforced our leadership teams and relocated our corporate headquarters to improve efficiencies. We strengthened our balance sheet and paved the way to access the capital we require to fuel our future growth. At the same time, we continued to capitalize on opportunities in our three distribution channels, launched new products, secured new customers, negotiated new distribution agreements and penetrated new markets."

Mr. Edson concluded, "When we embarked on these initiatives, we recognized that we would give up short-term gains for the prospect of long-term profitability. But we believe that these efforts were necessary to position NutraCea to deliver improved shareholder value in the future. As a result of our efforts in 2007, we believe we are well positioned today to achieve that goal."

About NutraCea
NutraCea is a leader in stabilized rice bran nutrient research and dietary supplement development. Through its wholly owned subsidiary RiceX, the company manufactures and distributes products and food ingredients made from rice bran through its proprietary technology and processes. The Company has developed intellectual properties to create a range of proprietary product formulations, delivery systems and whole food nutrition products. NutraCea's proprietary technology enables the creation of food and nutrition products from rice bran, normally a wasted by-product of standard rice processing. In addition to its whole foods products, NutraCea develops families of health-promoting "nutraceuticals," including natural arthritic relief and cholesterol-lowering products. More information can be found in the Company's filings with the SEC at NutraCea's web site

Forward Looking Statements
This release contains forward-looking statements, including, but not limited to, statements regarding the anticipated future product demand, domestic and international expansion opportunities, new technology applications, the production output from NutraCea's facilities, and the market demand from new accounts for the materials to be produced at the new and existing facilities, all of which statements are subject to market risks, and the possibility that some or all of such matters may not be successful or may not proceed as anticipated. These statements are made based upon current expectations and actual results may differ from those projected due to a number of risks and uncertainties. The Company does not undertake to update forward-looking statements in this news release to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information. Assumptions and other information that could cause results to differ from those set forth in the forward-looking information can be found in the Company's filings with the Securities and Exchange Commission, including the company's most recent periodic report.

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