UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

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Definitive Proxy Statement

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Soliciting Material Pursuant to § 240.14a-11(c) or § 240.14a-2

ARCADIA BIOSCIENCES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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202 Cousteau Place, Suite 105

Davis, CA 95618

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held On Friday, January 19,Thursday, May 3, 2018

 

Dear Stockholders of Arcadia Biosciences, Inc.:

We are pleased to invite you to attend our Special Meeting of Stockholders to be held on Friday, January 19,Thursday, May 3, 2018 at 2:00 p.m. Pacific Time at the offices of Arcadia Biosciences, Inc., 202 Cousteau Place, Suite 105, California 95618 (the “Special Meeting ”)”). At the Special Meeting, we will ask you to consider the following proposal:proposals:

To approve an amendment to our amended and restated certificatefor purposes of incorporation to effect a reverse stock splitcomplying with NASDAQ Listing Rule 5635(d), the issuance by the Company of our shares of Common Stock atcommon stock pursuant to the terms of the private placement financing transaction (“Private Placement”) contemplated by a ratio not less than 10-to-1Securities Purchase Agreement, dated March 19, 2018 (the “Securities Purchase Agreement”), between the Company and not greater than 20-to-1, witheach of the exact ratioinvestors named therein, and the other documents and agreements related thereto, without giving effect to be set within that range at the discretion of our Board of Directors before January 31, 2018 without further approval or authorization of our stockholderscaps on issuing shares contained therein (the “Reverse Stock Split”NASDAQ 20% Issuance Proposal); and

To transact such other business that may properly come before the Special Meeting or any adjournment or postponement thereof.

We are proposing the Reverse Stock Split in order to facilitate the continued listing of our Common Stock on the Nasdaq Capital Market (the "Capital Market"). As we have previously disclosed to our stockholders, we believe that the Capital Market will delist our Common Stock if we are unable to maintain a closing bid price for our Common Stock at or in excess of $1.00 per share for at least 10 consecutive business days by February 12, 2018.

On February 14, 2017, we received a notification letter from The Nasdaq Stock Market LLC (“Nasdaq”)  indicating that for 30 consecutive business days our common stock did not maintain a minimum closing bid price of $1.00 (“Minimum Bid Price Requirement”) per share as required by Nasdaq Listing Rule 5450(a)(1) (“Rule”). On July 21, 2017, we transferred the listing of our common stock to the Capital Market, and as a result, the Company was afforded the remainder of the 180 day period, or until August 14, 2017, to regain compliance with the minimum $1 bid price per share requirement. As of August 14, 2017, we were still not in compliance with the minimum $1 bid price per share requirement. However, Nasdaq has determined that the Company has until February 12, 2018, to regain compliance with the Minimum Bid Price requirement. Although there can be no assurance, it is the Company's belief that the Reverse Stock Split will result in the minimum bid price of the Company's Common Stock to meet or exceed $1.00 per share for the required period of time.

After careful consideration, our Board of Directors has determined that the proposed amendment to our Restated Certificate implementing the Reverse Stock Split is fair to and in the best interests of the Company and its stockholders, and has recommended that you vote or give instruction to vote "FOR" approval of this proposal.

Our Board of Directors has fixed the close of business on December 15, 2017March 28, 2018 as the record date for the Special Meeting. StockholdersOnly stockholders of record as of December 15, 2017March 28, 2018 may vote at the Special Meeting or any postponements or adjournments of the meeting. This notice of special meeting, proxy statement, and form of proxy are being made available on or about December 28, 2017.____________ __, 2018.

Your vote is important. Whether or not you plan to attend the meeting in person, we would like for your shares to be represented. Please vote as soon as possible via the Internet, telephone, or mail.

 


Sincerely,

/s/ Matthew Plavan

Matthew T. Plavan

Chief Financial Officer & Corporate

Secretary

Davis, California

December 27, 2017__________ __, 2018

Whether or not you expect to participate in the Special Meeting, please vote via the Internet, by phone, or complete, date, sign and promptly return the accompanying proxy card or voting instruction card in the enclosed postage-paid envelope so that your shares may be represented at the Special Meeting.

 

 


 

PROXY STATEMENT

 

SPECIAL MEETING OF STOCKHOLDERS

To Be Held On Friday, January 19,Thursday, May 3, 2018

TABLE OF CONTENTS

 

 

Page

 

 

 

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR SPECIAL MEETING

 

2

 

 

NASDAQ 20% ISSUANCE PROPOSAL ONE: REVERSE STOCK SPLIT

 

610

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

11

12

 

 

 

OTHER MATTERS

 

1315

 

 

i


 

ARCADIA BIOSCIENCES, INC.

PROXY STATEMENT

FOR SPECIAL MEETING OF STOCKHOLDERS

To Be Held at 2:00 p.m. Pacific Time on Friday, January 19,Thursday, May 3, 2018

This proxy statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies by our Board of Directors (the “Board” or “Board of Directors”) for use at the special meeting of stockholders of Arcadia Biosciences, Inc., a Delaware corporation, and any postponements, adjournments or continuations thereof (the “Special Meeting”). The Special Meeting will be held on Friday, January 19,Thursday, May 3, 2018 at 2:00 p.m. Pacific Time at the offices of Arcadia Biosciences, Inc., 202 Cousteau Place, Suite 105, Davis, California 95618. References in this Proxy Statement to “we,” “us,” “our,” “the Company” or “Arcadia” refer to Arcadia Biosciences, Inc.

The Notice of Special Meeting, this Proxy Statement and form of proxy are first being mailed on or about December 27, 2017_________  __, 2018 to all stockholders entitled to vote at the Special Meeting.

Important Notice Regarding the Availability of Proxy Materials for the Special Stockholder Meeting To Be Held on May 3, 2018: The Notice of Special Meeting and Proxy Statement are also available at the following website: www.proxyvote.com .

THE INFORMATION PROVIDED IN THE “QUESTION AND ANSWER” FORMAT

BELOW IS FOR YOUR CONVENIENCE ONLY AND IS MERELY A SUMMARY OF

THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. YOU SHOULD

READ THIS ENTIRE PROXY STATEMENT CAREFULLY.


QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR SPECIAL MEETING

Q:

What items will be voted on at the Special Meeting?

A:

Stockholders will vote on the following items at the Special Meeting:

Toto approve an amendmentfor purposes of complying with NASDAQ Listing Rule 5635(d), the issuance by the Company of shares of common stock pursuant to our amendedthe terms of the private placement financing transaction (“Private Placement”) contemplated by a Securities Purchase Agreement, dated March 19, 2018 (the “Securities Purchase Agreement”), between the Company and restated certificateeach of incorporationthe investors named therein, and the other documents and agreements related thereto, without giving effect to effect a reverse stock split at a ratio not less than 10-to-1the caps on issuing shares contained therein (the “NASDAQ 20% Issuance Proposal”); and not greater than 20-to-1, with the exact ratio to be set within that range at the discretion of our Board of Directors before January 31, 2018 without further approval or authorization of our stockholders; and

Toto transact such other business that may properly come before the Special Meeting or any adjournment or postponement thereof.

Q:

How does the Board of Directors recommend I vote on these proposals?the proposal?

A:

The Board recommends a vote:

FOR the approval of the amendment to our amended and restated certificate of incorporation to effect a reverse stock split at a ratio not less than 10-to-1 and not greater than 20-to-1, with the exact ratio to be set within that range at the discretion of our Board of Directors before January 31, 2018 without further approval or authorization of our stockholders.NASDAQ 20% Issuance Proposal.

Q:

Who may vote at the Special Meeting?

A:

Stockholders of record as of the close of business on December 15, 2017March 28, 2018 (the “Record Date”) are entitled to receive notice of, to attend, and to vote at the Special Meeting. As of the Record Date, there were 42,683,0632,481,137 shares of Arcadia’s common stock issued and outstanding, held by 4745 holders of record. Each share of Arcadia’s common stock is entitled to one (1) vote on each matter.

Q:

What is the voting requirement to approve each of the proposal?

A:

The approval of the amendment to the Certificate of Incorporation to effect the reverse split requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock present or represented by proxy and entitled to vote. Abstentions and broker non-votes will havevote on the same effect asmatter is required to approve the NASDAQ 20% Issuance Proposal.  In addition, for NASDAQ purposes, the NASDAQ 20% Issuance Proposal requires approval by a vote “against”majority of the proposal. With respect to this proposal, if a stockholder is a beneficial owner of shares heldvotes cast at the meeting, provided that the investors in street name, such stockholder’s bank, broker or other nominee willthe Private Placement shall not be permittedentitled to vote such stockholder’seither the 300,752 shares onowned by them or the approval of300,752 shares underlying warrants owned by them, which are the amendmentshares and warrants to purchase our Certificate of Incorporationcommon stock that were issued to the investors pursuant to a Securities Purchase Agreement.  

If you mark your proxy as “Abstain” on the NASDAQ 20% Issuance Proposal, or if you give specific instructions that no vote be cast on any specific matter, the shares represented by that proxy will not be voted on that matter, but will count in determining whether a quorum is present.  Broker non-votes have no effect toward the vote total for the NASDAQ 20% Issuance Proposal.  Abstentions will have the effect of an AGAINST vote on the NASDAQ 20% Issuance Proposal because abstentions are considered shares entitled to vote on this proposal.  With respect to the NASDAQ 20% Issuance Proposal, if a stockholder is a beneficial owner of shares held in street name, such stockholder’s bank, broker or other nominee will not be permitted to vote such stockholder’s shares on the approval of the NASDAQ 20% Issuance Proposal unless the bank or broker receives voting instructions from such stockholder.

Q:

How many shares must be present or represented to conduct business at the Special Meeting?

A:

At the Special Meeting, the presence in person or by proxy of a majority of the aggregate voting power of the stock issued and outstanding and entitled to vote at the Special Meeting is required for the Special Meeting to proceed. If you have returned valid proxy instructions or attend the Special Meeting in person, your shares of Common Stockcommon stock will be counted for the purpose of determining whether there is a quorum, even if you wish to abstain from voting on some or all matters at the meeting.


Q:

If I am a stockholder of record of Arcadia’s shares, how do I vote?

A:

If you are a stockholder of record, there are four ways to vote:

In person. You may vote in person at the Special Meeting. The Company will give you a ballot when you arrive.

Via the Internet. You may vote by proxy via the Internet by following the instructions found on the proxy card.


By Telephone. You may vote by proxy by calling the toll-free number found on the proxy card.

By Telephone . You may vote by proxy by calling the toll-free number found on the proxy card.

By Mail .Mail. You may vote by proxy by filling out the proxy card and returning it in the envelope provided. If you vote by mail, your proxy card must be received by January 18,May 2, 2018.

Please note that the Internet and telephone voting facilities will close at 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on January 18,May 2, 2018.

Q:

If I am a beneficial owner of shares held in street name, how do I vote?

A:

If you are a beneficial owner of shares held in street name, you should have received from your broker, bank, trustee or other nominee instructions on how to vote or instruct the broker to vote your shares, which are generally contained in a “vote instruction form” sent by the broker, bank, trustee or other nominee. Please follow their instructions carefully. Street name stockholders generally may vote by one of the following methods:

In person . If you wish to vote in person at the Special Meeting, you must obtain a legal proxy from the organization that holds your shares. Please contact that organization for instructions regarding obtaining a legal proxy to you by your broker, bank, trustee, or other nominee.

Via the Internet . You may vote by proxy via the Internet by following the instruction form provided to you by your broker, bank, trustee, or other nominee.

By Telephone . You may vote by proxy by calling the toll-free number found on the vote instruction form provided to you by your broker, bank, trustee, or other nominee.

By Mail . You may vote by proxy by filling out the vote instruction form and returning it in the envelope provided to you by your broker, bank, trustee, or other nominee.

Q:

What is the difference between a stockholder of record and a beneficial owner of shares held in street name?

A:

Stockholder of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC (“AST”), you are considered the stockholder of record with respect to those shares, and the Notice or these proxy materials were sent directly to you by Arcadia.

Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the “beneficial owner” of shares held in “street name,” and the Notice or these proxy materials were forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Special Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account.

Q:

How may my brokerage firm or other intermediary vote my shares if I fail to provide timely directions?

A:

Brokerage firms and other intermediaries holding shares of our common stock in street name for their customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker will not have discretion to vote on the proposal to amend and restate the Certificate of Incorporation,NASDAQ 20% Issuance Proposal, which is a “non-routine” matter, absent direction from you, resulting in broker non-votes.


Q:

Can I change my vote or revoke my proxy?

A:

You may change your vote or revoke your proxy at any time prior to the taking of the vote at the Special Meeting.

If you are the stockholder of record, you may change your vote by (1) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (2) providing a written notice of revocation to Arcadia’s Corporate Secretary at Arcadia Biosciences, Inc., 202 Cousteau Place, Suite 105, Davis, CA 95618 prior to your shares being voted, or (3) attending the Special Meeting and voting in person. Attendance at the Special Meeting will not cause your previously granted proxy to be revoked unless you specifically so request or vote in person at the Special Meeting.


For shares you hold beneficially in street name, you generally may change your vote by submitting new voting instructions to your broker, bank, trustee, or nominee following the instructions they provided, or, if you have obtained a legal proxy from your broker, bank, trustee, or nominee giving you the right to vote your shares, by attending the Special Meeting and voting in person.

Q:

Can I attend the meeting in person?

A:

You are invited to attend the Special Meeting if you are a registered stockholder or a street name stockholder as of December 15, 2017,March 28, 2018, the Record Date. In order to enter the Special Meeting, you must present a form of photo identification acceptable to us, such as a valid driver’s license or passport. If you hold your shares beneficially in street name, you will need to provide proof of stock ownership as of the Record Date. Please note that since a street name stockholder is not the stockholder of record, you may not vote your shares in person at the Special Meeting unless you follow your broker’s procedures for obtaining a legal proxy. Please be aware that attendance at the Special Meeting will not, by itself, revoke a proxy.

Q:

If I submit a proxy, how will it be voted?

A:

When proxies are properly dated, executed, and returned, the shares represented by such proxies will be voted at the Special Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, the shares will be voted in accordance with the recommendations of our Board of Directors as described above. If any matters not described in the Proxy Statement are properly presented at the Special Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Special Meeting is postponed or adjourned, the proxy holders can vote your shares on the new meeting date as well, unless you have revoked your proxy instructions, as described below under “Can I change my vote or revoke my proxy?”

Q:

How are proxies solicited for the Special Meeting?

A:

Our Board of Directors is soliciting proxies for use at the Special Meeting. All expenses associated with this solicitation will be borne by us. We may, on request, reimburse brokers or other nominees for reasonable expenses that they incur in sending our proxy materials to you if a broker, bank, or other nominee holds shares of our common stock on your behalf. In addition, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Our directors and employees will not be paid any additional compensation for soliciting proxies.

Q:

What should I do if I get more than one proxy or voting instruction card?

A:

Stockholders may receive more than one set of voting materials, including multiple copies of the proxy materials and multiple Notices, proxy cards, or voting instruction cards. For example, stockholders who hold shares in more than one brokerage account may receive separate sets of proxy materials for each brokerage account in which shares are held. Stockholders of record whose shares are registered in more than one name will receive more than one set of proxy materials or one Notice. You should vote in accordance with all of the proxy cards and voting instruction cards you receive relating to our Special Meeting to ensure that all of your shares are counted.


Q:

I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?

A:

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process is commonly referred to as “householding.”


Brokers with account holders who are Arcadia stockholders may be householding our proxy materials. A single set of proxy materials may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you notify your broker or Arcadia that you no longer wish to participate in householding.

If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, you may (1) notify your broker, (2) direct your written request to: Investor Relations, Arcadia Biosciences, Inc., 202 Cousteau Place, Suite 105, Davis, CA 95618 or (3) contact our Investor Relations department by email at ir@arcadiabio.com or by telephone at (530) 750-7191. Stockholders who receive multiple copies of the proxy statement or annual report at their address and would like to request householding of their communications should contact their broker. In addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the Proxy Statement to a stockholder at a shared address to which a single copy of the documents was delivered.

Q:

What if I have questions about my Arcadia shares or need to change my mailing address?

A:

You may contact our transfer agent, AST, by telephone at (800) 937-5449 (U.S.) or (718) 921-8124 (outside the U.S.), or by email at info@astfinancial.com, if you have questions about your Arcadia shares or need to change your mailing address.

Q:

Who will tabulate the votes?

A:

Matthew Plavan, Arcadia’s Chief Financial Officer, will serve as the Inspector of Elections and will tabulate the votes at the Special Meeting.

Q:

Where can I find the voting results of the Special Meeting?

A:

We will announce preliminary voting results at the Special Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Special Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the Special Meeting, we will file a Current Report on Form 8-K to publish preliminary results and will provide the final results in an amendment to this Current Report on Form 8-K as soon as they become available.

Q:

What is the deadline to propose actions for consideration at the 2018 Annual Meeting of Stockholders or to nominate individuals?

A:

Stockholder Proposals: Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual meeting of stockholders by submitting their proposals in writing to Arcadia’s Corporate Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for our 2018 Annual Meeting of Stockholders, the Corporate Secretary of Arcadia must receive the written proposal at our principal executive offices no later than December 27, 2017. If we hold our 2018 Annual Meeting of Stockholders more than 30 days before or after June 7, 2018 (the one-year anniversary date of the 2017 Annual Meeting of Stockholders), we will disclose the new deadline by which stockholders proposals must be received in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or under Item 5 of Part II of our earliest possible Quarterly Report on Form 10-Q or a Current Report on Form 8-K. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and related SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials.


PROPOSAL ONE—APPROVAL OF AN AMENDMENT TOProposals should be addressed to:

OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK AT A RATIO NOT LESS THAN 10-TO-1 AND NOT GREATER THAN 20-TO-1, WITH THE EXACT RATIO TO BE SET WITHIN THAT RANGE AT THE DISCRETION OF OUR BOARD OF DIRECTORS BEFORE JANUARY 31, 2018.Arcadia Biosciences, Inc.

GeneralAttn: Corporate Secretary

202 Cousteau Place, Suite 105

Davis, CA 95618

Our amended and restated bylaws also establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders but do not intend for the proposal to be included in our proxy statement. Our amended and restated bylaws provide that the only business that may be conducted at an annual meeting is business that is (1) pursuant to our proxy materials with respect to such meeting, (2) by or at the direction of our Board of Directors, or (3) by a stockholder (i) who is a stockholder of record at the time the stockholder provides proper written notice of the proposal which the stockholder seeks to present at our annual meeting and (ii) who has adoptedtimely complied in proper written form with the notice procedures set forth in our amended and is recommending that our stockholders approve proposed amendmentsrestated bylaws. In addition, for business to be properly brought before an annual meeting by a stockholder, such business must be a proper matter for stockholder action pursuant to our amended and restated certificatebylaws and applicable law. To be timely for our 2018 Annual Meeting of incorporation,Stockholders, the Corporate Secretary must receive the written notice at our principal executive offices:

not earlier than the close of business on February 7, 2018, and thereby authorize

not later than the close of business on March 9, 2018.

If we hold our 2018 Annual Meeting of Stockholders more than 30 days before or after June 7, 2018 (the one-year anniversary date of the 2017 Annual Meeting of Stockholders), then notice of a stockholder proposal that is not intended to be included in our proxy statement must be received by the Corporate Secretary at our principal executive offices not later than the close of business on the later of:

the 90th day prior to such annual meeting, and

the 10th day following the day on which public announcement of the date of such annual meeting is first made.

If a stockholder who has notified us of his, her, or its intention to present a proposal at an annual meeting does not appear to present his, her, or its proposal at such annual meeting, we are not required to present the proposal for a vote at such annual meeting.

Nomination of Director Candidates: A stockholder that wants to recommend a candidate for election to the Board should direct the recommendation in writing by letter to the Company, attention of Directors,the Corporate Secretary, at 202 Cousteau Place, Suite 105, Davis, CA 95618. The recommendation must include the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to selectserve, information regarding any relationships between the candidate and file one such amendmentthe Company, and evidence of the recommending stockholder’s ownership of Company stock. Such recommendations must also include a statement from the recommending stockholder in support of the candidate, particularly within the context of the criteria for Board membership.

In addition, our amended and restated bylaws permit eligible stockholders to effectnominate directors for election at an annual meeting of stockholders. To be eligible, a reverse stock splitstockholder must be a stockholder of record at the time the stockholder provides proper written notice of the proposed nomination. Nominations by eligible stockholders must also be in proper written form in compliance with our amended and restated bylaws as summarized below. In addition, the stockholder must give timely notice to our Corporate Secretary in accordance with our amended and restated bylaws, which, in general, require that the notice be received by our Corporate Secretary within the time periods described above under “Stockholder Proposals” for stockholder proposals that are not intended to be included in a proxy statement.

Availability of Bylaws: A copy of our outstandingamended and restated bylaws is available in the Investors section of our website at http://ir.arcadiabio.com under “Corporate Governance.” You may also contact the Corporate Secretary at the address given above for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. The bylaws, and not the foregoing summary, together with applicable law, control stockholder actions and nominations relating to our annual meetings.


OVERVIEW

Private Placement

On March 19, 2018, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional and accredited investors (“Purchasers”) for the sale of 300,752 shares of common stock. Holders of our common stock are being asked(“Shares”) and warrants to approve the proposal that Article IVpurchase a total of 300,752 shares (“Warrant Shares”) of our certificatecommon stock (“Purchaser Warrants”) for total consideration of incorporationapproximately $10,000,000 (“Private Placement”).  The initial price per Share equaled $33.25 (“Per Share Purchase Price”) and the initial per share exercise price of the Purchaser Warrants equaled $45.75 (“Exercise Price”).  The Per Share Purchase Price and the Exercise Price are subject to adjustment as described below.  The Warrants are immediately exercisable, subject to ownership limitations described below, and expire five years after the date of issuance.  On March 22, 2018, we issued the Shares and the Warrants.  The $10,000,000 purchase price paid by the Purchasers on March 22, 2018 represents the entire purchase that will be amended to effectpaid by the Purchasers for the Shares and the Warrants, even if additional Shares are issued and additional Warrant Shares become issuable following a reverse stock splitTriggering Event discussed below.

H.C. Wainwright & Co., LLC (“HCW”) served as the sole placement agent for the Private Placement.   We also issued HCW a warrant (the “HCW Warrant” and, together with the Purchaser Warrants, the “Warrants”) for the purchase of 15,038 shares of our common stock at an exercise price of $41.5625 per share and exercisable for a ratioperiod of five years following its issuance pursuant to the terms of our letter agreement with HCW.  

The Per Share Purchase Price of the Shares, the Exercise Price of the Purchaser Warrants and the number of Warrant Shares are subject to adjustment based on the volume weighted average price for the three trading days (the “VWAP Calculation”) immediately following each of the following events (“Triggering Events”): (i) the date that a registration statement covering the resale of the Shares issued in the range of 1:10 to 1:20, such ratio to be determinedPrivate Placement has been declared effective by the SEC, (ii) if a registration statement covering all Shares issued in the discretionPrivate Placement is not declared effective, then the date that the Shares can be sold under Rule 144 under the Securities Act of 1933, as amended, and (iii) if later than the dates set forth in item (i) and (ii), then the date that our Boardstockholders approve the NASDAQ 20% Issuance Proposal.  Following a Triggering Event, the Per Share Purchase Price for the Shares shall automatically be reduced, if applicable, to 80% of Directors. Pursuantthe VWAP Calculation, and we shall be required to issue to the lawPurchasers additional Shares to reflect the adjustment to the Per Share Purchase Price so that the total number of Shares that will be issued pursuant to the Securities Purchase Agreement equals $10,000,000, divided by the Per Share Purchase Price, as adjusted; provided that the Per Share Purchase Price shall not be reduced to less than $8.322 per Share and shall not be adjusted upward.   In addition, following a Triggering Event, the Exercise Price of the StatePurchaser Warrants shall automatically be reduced, if applicable, to 110% of Delaware, our statethe VWAP Calculation; provided, that in no event will the Exercise Price for the Purchaser Warrants be reduced to less than $8.322 or increased as a result of incorporation,an adjustment.  In the Boardevent, the Exercise Price of Directors must adopt any amendment to our certificate of incorporation and submit the amendment to stockholders for their approval. The form of proposed amendment to our certificate of incorporation to effectPurchaser Warrants is adjusted, then the reverse stock split is attached as Appendix A to this proxy statement.

By approving this proposal, stockholders will approve a series of amendments to our certificate of incorporation pursuant to which any wholetotal number of outstandingWarrant Shares that will be issuable upon exercise of the Purchaser Warrants shall be increased so that the total exercise price payable to exercise the Purchaser Warrants after the adjustment is equal to the total exercise price payable to exercise the Purchaser Warrants before such adjustment.  The per share exercise price of the HCW Warrant and the number of shares between and including ten and twenty would be combined into one share of our common stock and authorize our Boardissuable upon exercise of Directorsthe HCW Warrant are not subject to file only one such amendment, as determined by our Board of Directors inadjustment based upon the manner described herein, and to abandon each amendment not selected by our Board of Directors. Our Board of Directors believes thatVWAP Calculation.

Until stockholder approval of amendments granting our Board of Directors this discretion, rather than approval of a specified reverse stock split ratio, provides our Board of Directors with maximum flexibility to react to then-current market conditions and, therefore, is inobtained, the best interests of the Company and its stockholders. The Board of Directors may effect only one reverse stock split as a result of this authorization. The Board may also elect not to do any reverse split. The Board’s decision as to whether and when to effect the reverse stock split will be based on atotal number of factors, including market conditions, existingShares that are issuable pursuant to the Securities Purchase Agreement, plus and expected trading prices forthe total number of shares of our common stock that are issuable upon exercise of the Warrants, shall not exceed 19.99% of the number of shares of our common stock outstanding immediately before the closing of the Private Placement.

Pursuant to the Securities Purchase Agreement, the Purchasers have the right to participate on a pro-rata basis, in up to 50% of the aggregate of any subsequent equity or debt offerings by us, on identical terms and conditions as set forth in such subsequent offerings for twelve months following the Effective Date (as defined in the Securities Purchase Agreement).


The securities issued pursuant to the Securities Purchase Agreement were issued under the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and the continued listing requirementsrules and regulation promulgated thereunder, including Regulation D.

Before the closing of the Private Placement, and as a condition to such closing, certain of our large stockholders entered into voting agreements with the Purchasers.  As of immediately prior to the closing of the Private Placement, the stockholders executing voting agreements owned approximately 73% of our total issued and outstanding common stock.  Pursuant to the voting agreements, the signatories thereto have agreed to vote all shares of our common stock owned by them in favor of the NASDAQ Capital Market. Although our stockholders may approve20% Issuance Proposal.

Impact of the reverse stock split, we will not effect the reverse stock split if the Board of Directors does not deem it to beVWAP Calculation on Shares Issued in the best interestsPrivate Placement

The table below sets forth, based upon various assumed VWAP Calculation prices, (i) the total number of Shares that will become issuable pursuant to the Securities Purchase Agreement, (ii) the total number of Warrant Shares that will become issuable upon exercise of the CompanyPurchaser Warrants and its stockholders. The reverse stock split, if authorized pursuant to this resolution and if deemed by(iii) the Board of Directors to be in the best interests of the Company and its stockholders, will be effected, if at all, by January 31, 2018

The proposed amendment to our amended and restated certificate of incorporation to effect the reverse stock split will not change thetotal number of authorized shares of common stock, or the par value of common stock.  As of the date of this proxy statement, we do not have any current plans, arrangements or understandings relating to the issuance of any additional shares of authorizedour common stock that will become available followingissuable to the reverse stock split.

Purpose and BackgroundPurchasers pursuant to the Private Placement, which is a sum of the Reverse Stock Splitsecond and third columns.  The table below assumes that the NASDAQ 20% Issuance Proposal will be approved by the stockholders and has been prepared without regard to any applicable beneficial ownership limitation caps. The table below does not include the HCW Warrants because their exercise prices will not change in connection with the Triggering Events.

VWAP Calculation Price (1)

Total Number of Shares Issuable Pursuant to Securities Purchase Agreement (2)

Total Number of Shares Issuable Pursuant to the Purchaser Warrants (3)(4)

Total Number of Shares Issuable in the Private Placement (4)

         $50.00

300,752

300,752

601,504

         $40.00

312,500

312,714

625,214

         $30.00

416,667

416,952

833,619

         $20.00

625,000

625,427

1,250,427

         $10.00

1,201,635 (5)

1,250,855

2,452,490

         $  5.00

1,201,635 (5)

1,653,377 (5)

2,855,012

(1)

The lowest VWAP Calculation determined for all Triggering Events will be the VWAP Calculation that will be used to determine the total number of Shares and Warrant Shares that are issuable to the Purchasers.

(2)

The Per Share Purchase Price for purpose of this calculation will equal the higher of (i) lower of (a) 80% of the VWAP Calculation Price and (b) the Per Share Purchase Price in effect before the Triggering Event and (ii) $8.322.

(3)

The Exercise Price of the Warrants for purpose of this calculation will equal the higher of (i) the lower of (a) 110% of the VWAP Calculation Price and (b) the Warrant Exercise Price in effect before the Triggering Event and (ii) $8.322.

(4)

Assumes the exercise for cash of all of the Warrants held by such Purchaser, irrespective of limitation on exercise.

(5)

The minimum Per Share Purchase Price and Exercise Price of $8.322, and not the VWAP Calculation price, will determine the number of Shares and Warrant Shares that are issuable at these VWAP Calculation prices.

Registration Rights

In connection with the Private Placement, we entered into a registration rights agreement (the “Registration Rights Agreement”) in which we agreed to file with the SEC on or prior to March 30, 2018, a registration statement covering the resale by the Purchasers of up to 1,201,634 Shares and up to 1,653,378 Warrant Shares issuable upon exercise of the Purchaser Warrants.  We have also agreed to use our reasonable best efforts to have the registration statement declared effective by the SEC by April 23, 2018 (or until May 23, 2018 in the event of a full review by the SEC).


The Registration Rights Agreement provides, among other things, that in the event (i) we do not file the registration statement within the prescribed time period, (ii) the SEC does not declare effective the registration statement for all the Shares and Warrant Shares that are issuable pursuant to the Private Placement within the prescribed time period or (iii) the registration statement ceases to be effective under certain circumstances, we will pay to the holders on the occurrence of each such event and for each month thereafter until the applicable event is cured, an amount in cash equal to 2% of the aggregate amount invested (or outstanding, as specified in greater detail in the Registration Rights Agreement) by the holders in the Private Placement for each monthly period (prorated for any period of less than a month) during which such registration statement was not effective, subject to a cap of 12% of the aggregate amount invested.

On November 20, 2017,March 23, 2018, we filed with the BoardSEC a Current Report on Form 8-K (“Form 8-K”) that described the terms of Directors approved the proposal authorizingPrivate Placement.  We filed as exhibits 4.1, 10.1 and 10.2 to the reverseForm 8-K the form of Purchaser Warrant, the Securities Purchase Agreement and the form of Registration Rights Agreement.  We refer you to the Form 8-K and the exhibits thereto for a further description of the Private Placement.  

NASDAQ Rule 5635(d)

NASDAQ Rule 5635(d) requires stockholder approval prior to an issuance of securities in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by a company of common stock splitequal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book and market value of our common stock as of the time of execution of the definitive agreement with respect to such transaction. The provisions in (i) the Securities Purchase Agreement that prevent the issuance of Shares if such issuance will result in such holders beneficially owning in excess of 19.99% of our common stock (the “Beneficial Ownership Limitation”) prior to stockholder approval and (ii) the Warrants that prevent exercise of the Warrants prior to stockholder approval to the extent the issuance of Warrant Shares pursuant to such exercise, when combined with the issuances of Shares pursuant to the Securities Agreement, would be in excess of the Beneficial Ownership Limitation, are both required under NASDAQ Rule 5635(d). We are seeking stockholder approval for the following reasons:

the Boardsale and issuance of Directors believes that effecting the reverse stock split could be an effective means of regaining compliancesuch Shares and Warrant Shares in connection with the Minimum Bid Price Requirement for continued listingPrivate Placement pursuant to NASDAQ Rule 5635(d) without regard to the Beneficial Ownership Limitation.

Consequences if Stockholder Approval is Not Obtained

If we do not obtain approval of the NASDAQ 20% Issuance Proposal at the Special Meeting, we are obligated under the Securities Purchase Agreement to call a stockholder meeting every four months thereafter to seek approval of the NASDAQ 20% Issuance Proposal from our stockholders until the earlier of the date such approval is obtained or the Warrants are no longer outstanding.  In addition, so long as any Warrants are outstanding, we may not issue any capital stock or equity instruments in a capital raising transaction until we obtain stockholder approval of the NASDAQ 20% Issuance Proposal.  If we do not obtain stockholder approval, the maximum number of shares that will be issuable pursuant to the Private Placement will not exceed 431,401 shares, which equals 19.99% of the number of outstanding shares of our common stock on the NASDAQ Capital Market;March 22, 2018.


the Board of Directors believes that continued listing on the NASDAQ Capital Market provides overall credibility to an investment in our stock, given the stringent listing and disclosure requirements of the NASDAQ Capital Market. Notably, some trading firms discourage investors from investing in lower priced stocks that are traded in the over-the-counter market because they are not held to the same stringent standards. Increasing visibility of our stock among a larger pool of potential investors could result in higher trading volumes after positive newsflow. Such increases in visibility and liquidity could also help facilitate future financings; and

PROPOSAL 1

NASDAQ 20% ISSUANCE PROPOSAL

Description of Proposal

We are seeking stockholder approval as required by NASDAQ Rule 5635(d) (as described above) to enable the Boardus to issue a number of Directors believes that a highershares our common stock price, which may be achieved through a reverse stock split, could help generate investor interest in the Company and help attract, retain, and motivate employees.

If our stockholders approve this proposal, our Board of Directors will determine, in its discretion, whether and when to file a Certificate of Amendment to our Amended and Restated Certificate of Formation in the form of Annex A to this Proxy Statementconnection with the SecretaryPrivate Placement that exceeds 20% of Stateour outstanding common stock before the Private Placement, which shares include the shares that are issued pursuant to the Securities Purchase Agreement and the shares that are issuable upon exercise of the State of Delaware to effect the Reverse Stock Split.Warrants. The Reverse Stock Split, if implemented, would not change the number of authorized shares of our Common Stock. common stock that could be issued pursuant to the Securities Purchase Agreement, the Warrants and our agreement with the HCW consist of:

Up to a maximum of 1,201,634 shares of common stock that could be issued pursuant to the Securities Purchase Agreement;

Up to a maximum of 1,653,378 shares of common stock that could be issuable upon exercise of Purchaser Warrants; and

15,038 shares of common stock issuable upon exercise of the HCW Warrants.

Related Parties

Except for the sale and issuance of the Shares and the Warrants, the participants in the Private Placement have not had any insignificant changesmaterial relationship with us within the past three years, other than HCW, which served as the placement agent for the Private Placement and for whom we issued the HCW Warrant.  As compensation for serving as placement agent for the Private Placement, we issued the HCW Warrant, paid to HCW a fee of $700,000 and reimbursed HCW’s related expenses

Vote Required

The affirmative vote of the holders of a majority of the shares of our common stock present in person or represented by proxy and entitled to vote on the matter, excluding shares acquired in the Private Placement under the Securities Purchase Agreement, is necessary under NASDAQ Marketplace Rule 5635(e)(4) to approve the NASDAQ 20% Issuance Proposal. Broker non-votes will not affect whether this proposal is approved, but abstentions will have the same effect as a resultvote against the proposal.

In accordance with applicable NASDAQ Marketplace Rules, holders of the treatment300,752 shares of fractionalour common stock purchased in the Private Placement are not entitled to vote such shares each stockholder will hold on the same percentageNASDAQ 20% Issuance Proposal.

Prior to the closing of Common Stock outstandingthe Private Placement, and as a condition to such closing, certain of our large stockholders entered into voting agreements with the Purchasers. As of immediately prior to the Reverse Stock Split asclosing of the Private Placement, the stockholders executing the voting agreements owned approximately 73% of our total issued and outstanding common stock. Pursuant to the voting agreement, the stockholder did immediately priorsignatories agreed to the Reverse Stock Split.

Certain Risks Associated with the Reverse Stock Split

There can be no assurance that the market price per sharevote all shares of our Common Stock after common stock owned by them in favor of the Reverse Stock Split (the "New Shares")NASDAQ 20% Issuance Proposal.

Potential Effects of this Proposal

The issuance of the shares of our common stock which are the subject of the NASDAQ 20% Issuance Proposal will rise or remain constantresult in proportion to the reductionan increase in the number of shares of our Common Stock outstanding before the Reverse Stock Split (the "Old Shares") or maintain a high enough per share trading price to maintain the Capital Market listing in the future.

The market price of our Common Stock will also be based on our performance and other factors, some of which are unrelated to the number of sharescommon stock outstanding. These factors include the status of the market for our Common Stock at the time, our reported results of operations in future periods, and general economic, market and industry conditions. Accordingly, the market price of our Common Stock may not be sustainable at the direct arithmetic result of the Reverse Stock Split.

Principal Effects of the Reverse Stock Split Amendments

Corporate Matters. If approved and effected, the Reverse Stock Split would have the following effects:

the Old Shares owned by a stockholder would be converted automatically into the New Shares and beginning at the effective time of the Reverse Stock Split (the "Effective Time"), each certificate representing Old Shares will be deemed for all corporate purposes to evidence ownership of New Shares;

the number of shares of our Common Stock issued and outstanding will be reduced proportionately based on the Reverse Stock Split ratio;

based on the Reverse Stock Split ratio, proportionate adjustments will be made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options and warrants to purchase shares of our Common Stock, whichThis will result in approximately the same aggregate exercise price being required to be paid upon exercise of such options and warrants after the Reverse Stock Split as immediately before the Reverse Stock Split; and

After the effectiveness of the Reverse Stock Split, our Common Stock will have a new CUSIP number, which is used to identify our equity securities, and stock certificates with the older CUSIP number will need to be exchanged for certificates with the new CUSIP number by following the procedures described below.


The following table contains approximate information relatingdecrease to the numberrespective ownership and voting percentage interests of authorized and outstanding common stock followingstockholders prior to the Reverse Stock Split at certain ratios based on share information as of December 8, 2017:

Common Stock

 

Pre-Split

 

10:1

 

15:1

 

20:1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Authorized

 

 

150,000,000

 

 

150,000,000

 

 

150,000,000

 

 

150,000,000

 

Outstanding

 

 

42,683,063

 

 

4,268,306

 

 

2,845,538

 

 

2,134,153

 

Reserved for future issuance pursuant to employee benefit plans

 

 

1,385,385

 

 

138,539

 

 

92,359

 

 

69,269

 

Reserved for future issuance pursuant to outstanding options

 

 

5,910,347

 

 

591,035

 

 

394,023

 

 

295,517

 

Reserved for future issuance pursuant to outstanding warrants

 

 

1,336,894

 

 

133,689

 

 

89,126

 

 

66,845

 

Authorized but unissued and unreserved

 

 

98,684,311

 

 

144,868,431

 

 

146,578,954

 

 

147,434,216

 

Beneficial Holders of Common Stock (i.e. stockholders who hold in street name)

Upon the implementation of the Reverse Stock Split, we intend to treat shares held by stockholders through a bank, broker, custodian or other nominee in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers, custodians or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in street name. However, these banks, brokers, custodians or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. Stockholders who hold sharesPrivate Placement. The market value of our Common Stock with a bank, broker, custodian or other nomineeCompany and who have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees.

Registered "Book-Entry" Holders of Common Stock (i.e. stockholders that are registered on the transfer agent's books and records but do not hold stock certificates)

Certain of our registered holders of Common Stockfuture earnings may hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders do not have stock certificates evidencing their ownership of the Common Stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts. Stockholders who hold shares electronically in book-entry form with the transfer agent will not need to take action (the exchange will be automatic) to receive whole New Shares, subject to adjustment for treatment of fractional shares.

Holders of Certificated Shares of Common Stock

Stockholders holding shares of our Common Stock in certificated form will be sent a transmittal letter by our transfer agent after the Effective Time. The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its certificate(s) representing shares of our pre-Reverse Stock Split Common Stock (the "Old Certificates") to the transfer agent in exchange for certificates representing the appropriate number of whole shares of post-Reverse Stock Split Common Stock (the "New Certificates"). No New Certificates will be issued to a stockholder until such stockholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. No stockholder will be required to pay a transfer or other fee to exchange his, her or its Old Certificates. Stockholders will then receive a New Certificate(s) representing the number of whole shares of Common Stock that they are entitled to as a result of the Reverse Stock Split, subject to the treatment of fractional shares described below. Until surrendered, we will deem outstanding Old Certificates held by stockholders to be cancelled and only to represent the number of whole shares of post-Reverse Stock Split Common Stock to which these stockholders are entitled, subject to the treatment of fractional shares. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates. If an Old Certificate has a restrictive legend on the back of the Old Certificate(s), the New Certificate will be issued with the same restrictive legends that are on the back of the Old Certificate(s).reduced.


STOCKHOLDERS SHOULD NOT DISCARD OR DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.

Fractional Shares. No scrip or fractional certificates will beIn addition, as described above under “Registration Rights,” we have agreed to register the securities issued in connection with the Reverse Stock Split. Fractional shares will be roundedPrivate Placement, which could include up to the next whole share. The Company will issue one full New Share to any stockholder who would have been entitled to receive a fractional share as a resulttotal of the process. Each stockholder will hold the same percentage of the outstanding Common Stock immediately following the Reverse Stock Split as that stockholder did immediately prior to the Reverse Stock Split, except for minor adjustment as a result of the additional shares that will need to be issued as a result of the treatment of fractional shares.

Odd Lots. If approved and effected, the Reverse Stock Split will result in some stockholders owning "odd lots" of less than 100 shares of our Common Stock. Brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in "round lots" of even multiples of 100 shares.

Authorized Shares. Upon the completion of the Reverse Stock Split Amendments, the number of authorized shares of our Common Stock will not be reduced and will be equal to 150,000,000 shares.  Authorized but unissued Common Stock will be available for future issuance, and we may issue such shares in financings or otherwise. If we issue additional shares, the ownership interest of holders of our Common Stock may be diluted. We have no present plan, agreement or understanding to issue any of our authorized but unissued shares of Common Stock if the Reverse Stock Split is effected.

Potential Anti-Takeover Effect.  Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board of Directors or contemplating a tender offer or other transaction for the combination of the Company with another company), the Reverse Stock Split proposal is not being proposed in response to any effort of which we are aware to accumulate2,855,012 shares of our common stock,consisting of a maximum of 1,201,634 Shares that could become issuable pursuant to the Securities Purchase Agreement and 1,653,378 Warrant Shares that could become issuable upon exercise of Purchaser Warrants. The release of up to 2,855,012 freely traded shares onto the market, or obtain controlthe perception that such shares will or could come onto the market, could have an adverse effect on the trading price of our stock.

We have broad discretion to use the net proceeds to us from the sale of such shares, including the proceeds received upon exercise of the Company, nor is it partWarrants, and you will be relying solely on the judgment of a plan by management to recommend a series of similar amendments to theour Board of Directors and stockholders. Other thanmanagement regarding the Reverse Stock Split proposal, the Boardapplication of Directors does not currently contemplate recommending the adoption of any other actions that could be construed to affect the ability of third parties to take over or change controlthese proceeds. Our use of the Company.proceeds may not improve our operating results or increase the value of your investment.

Stock Incentive PlanFor your consideration of .  Upon completionthe NASDAQ 20% Issuance Proposal, a description of the Reverse Stock Split,material terms of the numberPrivate Placement is set forth in this proxy statement to provide you with basic information concerning the Private Placement. However, the description above is not a substitute for reviewing the full text of shares of our Common Stock subjectthe referenced documents, which were attached as exhibits to our equity incentive plans,Current Report on Form 8-K as well as the number of shares and exercise prices subject to outstanding options, shall be appropriately adjusted.

Accounting Matters. The Reverse Stock Split will not affect the par value of our Common Stock. As a result, as of the effective time of the Reverse Stock Split, the stated capital on our balance sheet attributable to Common Stock will be reduced proportionately based on the Reverse Stock Split ratio, and the additional paid-in capital account will be creditedfiled with the amount by which the stated capital is reduced. The per share net income or loss and net book value of our Common Stock for past financial periods will be conformed accordingly.

Certain U.S. Federal Income Tax Consequences of the Reverse Stock Split

The following is a summary of certain material federal income tax consequences of the Reverse Stock Split. This summary does not purport to be a complete discussion of all of the possible federal income tax consequences and is included for general information only. Further, it does not address any state, local or foreign income or other tax consequences. Also, it does not address the tax consequences to holders that are subject to special tax rules, such as banks, insurance companies, regulated investment companies, personal holding companies, foreign entities, nonresident alien individuals, broker-dealers and tax-exempt entities. The discussion is basedSEC on the provisions of the United States federal income tax law as of the date hereof, which is subject to change retroactively as well as prospectively. This summary also assumes that the Old Shares were, and the New Shares will be, held as a "capital asset," as defined in the Internal Revenue Code of 1986, as amended ( i.e., generally, property held for investment). The tax treatment of a stockholder may vary depending upon the particular facts and circumstances of such stockholder. Each stockholder is urged to consult with such stockholder's own tax advisor with respect to the tax consequences of the reverse stock split.


No gain or loss should be recognized by a stockholder upon such stockholder's exchange of Old Shares for New Shares pursuant to the Reverse Stock Split. The aggregate tax basis of the New Shares received in the Reverse Stock Split will be the same as the stockholder's aggregate tax basis in the Old Shares exchanged therefore. The stockholder's holding period for the New Shares will include the period during which the stockholder held the Old Shares surrendered in the Reverse Stock Split.

Our view regarding the tax consequences of the Reverse Stock Split is not binding on the Internal Revenue Service or the courts. Accordingly, each stockholder should consult with his or her own tax advisor with respect to all of the potential tax consequences to him or her of the reverse stock split.

No Appraisal or Dissenters' Rights

Under Delaware Law, our stockholders are not entitled to appraisal or dissenters' rights with respect to the Reverse Stock Split Amendments, and we will not independently provide stockholders with any such right.

Interests of Certain Persons in the Proposal

Certain of our officers and directors have an interest in the proposal as a result of their ownership of shares of our Common Stock. However, we do not believe that our officers or directors have interests in the proposal that are different from or greater than those of any of our other stockholders.

If the Proposal is Not Approved

If the Proposal is not approved, we will be unable to maintain the listing of our Common Stock on the Capital Market, which could adversely affect the liquidity and marketability of our Common Stock.

Required Vote

The affirmative vote of holders of a majority of the outstanding shares of our Common Stock is required to approve and adopt the Proposal.March 23, 2018.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"“FOR” THE AMENDMENTAPPROVAL OF THE ISSUANCE OF COMMON STOCK ISSUABLE PURSUANT TO THE AMENDEDPRIVATE PLACEMENT, INCLUDING SHARES ISSUED PURSUANT TO THE SECURITIES PURCHASE AGREEMENT, SHARES ISSUED UPON EXERCISE OF THE PURCHASER WARRANTS AND RESTATED CERTIFICATESHARES ISSUED UPON EXERCISE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT AT A RATIO NOT LESS THAN 10-TO-1 AND NOT GREATER THAN 20-TO-1, WITH THE EXACT RATIO TO BE SET WITHIN THAT RANGE AT THE DISCRETION OF OUR BOARD OF DIRECTORS BEFORE JANUARY 31, 2018.HCW WARRANTS.


SECURITY OWNERSHIP OF CERTAIN BEBNEFICIALENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our common stock as of December 8, 2017March 28, 2018 by:

 

(1)

each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock;

 

(2)

each of our named executive officers as of December 31, 2016;2017;

 

(3)

each of our directors; and

 

(4)

all of our executive officers and directors as a group.

We have determined beneficial ownership in accordance with the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially own, subject to community property laws where applicable. To our knowledge, no person or entity, except as set forth below, is the beneficial owner of more than 5% of the voting power of our common stock as of the close of business on December 8, 2017.March 28, 2018.

Under SEC rules, the calculation of the number of shares of our common stock beneficially owned by a person and the percentage ownership of that person includes both outstanding shares of our common stock then owned as well as any shares of our common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of December 8, 2017.March 28, 2018.  Shares subject to those options or warrants for a particular person are not included as outstanding, however, for the purpose of computing the percentage ownership of any other person. We have based percentage ownership of our common stock on 42,683,063March 28, 2018 shares of our common stock outstanding as of December 8, 2017.March 28, 2018.  We have based percentage ownership of our common stock on 2,481,137 shares of our common stock outstanding as of March 28, 2018.


Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Arcadia Biosciences, Inc., 202 Cousteau Place, Suite 105, Davis, CA 95618.

 

Name of Beneficial Owner

 

Number of Shares

Beneficially Owned

 

 

Percent of Shares

Outstanding

 

Named Executive Officers and Directors:

 

 

 

 

 

 

 

 

Rajendra Ketkar(1)

 

 

328,098

 

 

 

*

 

Matthew Plavan(2)

 

 

177,084

 

 

 

*

 

Kevin Comcowich(3)

 

 

15,970

 

 

*

 

Uday Garg(4)

 

 

10,213,763

 

 

 

23.3

%

Eric J. Rey(5)

 

 

1,166,784

 

 

 

2.7

%

Gregory D. Waller

 

 

 

 

*

 

Amy Yoder

 

 

 

 

*

 

Mark W. Wong(6)

 

 

9,500

 

 

 

*

 

Roger Salameh(7)

 

 

40,419

 

 

 

*

 

Vic C. Knauf, Ph.D.(8)

 

 

460,979

 

 

 

1.1

%

Wendy S. Neal(9)

 

 

3,750

 

 

 

*

 

All current executive officers and directors as a group (8 persons)(10)

 

 

12,069,103

 

 

 

27.2

%

5% Stockholders:

 

 

 

 

 

 

 

 

Moral Compass Corporation(11)

 

 

22,515,364

 

 

 

52.8

%

4835 E. Exeter Blvd.

Phoenix, AZ 85018

 

 

 

 

 

 

 

 

Mandala Agribusiness Fund(4)

 

 

10,195,651

 

 

 

23.3

%

c/o GFin Corporate Services Ltd.,

9th Floor, Orange Tower,

Cybercity, Ebene, Mauritius

 

 

 

 

 

 

 

 

Name of Beneficial Owner

 

Number of Shares

Beneficially Owned

 

 

Percent of Shares

Outstanding

 

Named Executive Officers and Directors:

 

 

 

 

 

 

 

 

Rajendra Ketkar(1)

 

 

18,734

 

 

 

*

 

Zhongjin Lu(2)

 

 

6,854

 

 

 

*

 

Matthew Plavan(3)

 

 

10,413

 

 

*

 

Kevin Comcowich(4)

 

 

799

 

 

 

*

 

Uday Garg(5)

 

 

510,691

 

 

 

20.1

%

Eric J. Rey(6)

 

 

32,085

 

 

1.3

%

Gregory D. Waller

 

 

 

 

*

 

Amy Yoder

 

 

 

 

 

*

 

All current executive officers and directors as a group (9 persons)(7)

 

 

579,576

 

 

 

22.3

%

5% Stockholders:

 

 

 

 

 

 

 

 

Moral Compass Corporation(8)

 

 

1,125,769

 

 

 

45.4

%

4835 E. Exeter Blvd.

Phoenix, AZ 85018

 

 

 

 

 

 

 

 

Mandala Agribusiness Fund(5)

 

 

509,785

 

 

 

20.1

%

c/o Sanne Maritius,

IFS Court, Bank Street, TwentyEight

Cybercity, Ebene, Mauritius

 

 

 

 

 

 

 

 

Hudson Bay Master Fund Ltd.(9)

 

 

258,946

 

 

 

9.99

%

777 Third Avenue, 30th Floor

New York, NY 10017

Attention:  Yoav Roth

 

 

 

 

 

 

 

 

Sabby Volatility Warrant Master Fund, Ltd. (10)

 

 

258,946

 

 

 

9.99

%

c/o Ogier Fiduciary Services (Cayman) Limited,

89 Nexus Way, Camana Bay,

Grand Cayman KY1-9007, Cayman Islands

 

 

 

 

 

 

 

 

 

*

Represents beneficial ownership of less than 1% of the outstanding shares of our common stock.


(1)

Mr. Ketkar is our current President and Chief Executive Officer and a member of our Board of Directors. Beneficial ownership consists of 328,09818,734 shares of common stock issuable pursuant to stock options exercisable within 60 days after December 8, 2017.March 28, 2018.

(2)

Dr. Lu is our current Vice President of Product Development.  Beneficial ownership includes (i) 558 shares of common stock and (ii) 6,296 shares of common stock issuable pursuant to stock options exercisable within 60 days after March 28, 2018.

(3)

Mr. Plavan is our current Chief Financial Officer. Beneficial ownership consists of 177,08410,413 shares of common stock issuable pursuant to stock options exercisable within 60 days after December 8, 2017.March 28, 2018.

(3)(4)

Mr. Comcowich is the current chair of our Board of Directors. Beneficial ownership consists of 15,970799 shares of common stock issuable pursuant to stock options exercisable within 60 days after December 8, 2017.March 28, 2018.

(4)(5)

Beneficial ownership information is based on information for Mandala Agribusiness Fund (“MAF”). Also included are 18,112906 shares of common stock issuable pursuant to stock options exercisable within 60 days after December 8, 2017,March 28, 2018, which Mr. Garg received as a member of our Board of Directors. The board of directors of MAF has shared voting and dispositive power over (i) 8,705,808435,291 shares of common stock owned by Mandala Agribusiness Co-Investments I Ltd. (“MACIL”), (ii) 375,00018,750 shares of common stock owned by Mandala Capital AG Limited (“MCAL”), and (iii) 1,114,84355,744 shares of common stock issuable pursuant to warrants held by MACIL that are currently exercisable. Mr. Garg is the managing director and a member of the board of directors of MACIL. Mr. Garg, Tej Gujadhur, and Sheokumar Gujadhur are members of the board of directors of MAF.

(5)(6)

Mr. Rey serves as a member of our Board of Directors and previously served as our President and Chief Executive Officer. Beneficial ownership consists of (i) 146,6807,335 shares of common stock and (ii) 1,020,10424,750 shares of common stock issuable pursuant to stock options exercisable within 60 days after December 8, 2017.

(6)

Mr. Wong served as our Acting President and Chief Executive Officer from January 12, 2016 to February 10, 2016 and as a member of our Board of Directors.  Beneficial ownership consists of 9,500 shares of common stock.March 28, 2018.

(7)

Mr. Salameh served as our Interim President and Chief Executive Officer from February 11, 2016 to May 23, 2016. His beneficial ownership, which includes shares and options held by his spouse, consists of (i) 17,397 shares of common stock and (ii) 23,022 shares of common stock issuable pursuant to stock options exercisable within 60 days after December 8, 2017.

(8)

Mr. Knauf served as our Chief Scientific Officer until his retirement on December 31, 2016 and served as a member of our Board of Directors until June 7, 2017.  His beneficialBeneficial ownership consists of (i) 47,134461,934 shares of common stock (ii) 408 shares of common stock issuable pursuant to a warrant that is currently exercisable, and (iii) 413,437shares of common stock issuable pursuant to stock options exercisable within 60 days after December 8, 2017.

(9)

Ms. Neal served as our Chief Legal Officer until her separation from the Company on February 3, 2017.  Her beneficial ownership consists of 3,750 shares of common stock.

(10)

Beneficial ownership consists of (i) 9,238,642 shares of common stock (ii) 1,114,84355,744 shares of common stock issuable pursuant to exercisable warrants, and (iii) 1,715,61861,898 shares of common stock subject to options exercisable within 60 days after December 8, 2017,March 28, 2018, in each case beneficially owned by our current executive officers and directors.


(11)(8)

Beneficial ownership is based on information contained in a Schedule 13D amendment filed on March 10, 20179, 2018 by Moral Compass Corporation (“MCC”). This schedule indicates that, as of March 10, 2017,9, 2018, MCC had sole voting and sole dispositive power over 22,515,3641,125,769 shares of our common stock. MCC is owned by the John G. Sperling 2012 Irrevocable Trusts No. 1, 2 and 3 (collectively, the “Sperling Trusts”). Ms.Darby Shupp, Terri Bishop, and Peter Sperling together serve as trustees of the Sperling Trusts and have shared voting and investment power of the shares held by MCC.

(9)

The ownership of Hudson Bay Master Fund Ltd. is subject to a 9.99% ownership blocker, pursuant to which shares of our common stock may not be issued, whether pursuant to the Securities Purchase Agreement or Warrants, to the extent such issuance would cause Hudson Bay Master Fund Ltd. to beneficially own more than 9.99% of our outstanding common stock.  The share ownership numbers and percentages for Hudson Bay Master Fund Ltd. in the table above reflect this 9.99% blocker.  As of the March 28, 2018, Hudson Bay Master Fund Ltd. owns 150,376 outstanding shares of our common stock and a Warrant to purchase 150,376 shares of our common stock.  To the extent Proposal 1 is approved, the number of Shares of our common stock that will become issuable to Hudson Bay Master Fund Ltd. will increase as described above in this proxy statement. Hudson Bay Capital Management, L.P., the investment manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities. Sander Gerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management, L.P. Each of Hudson Bay Master Fund Ltd. and Sander Gerber disclaims beneficial ownership over these securities.

(10)

The ownership of Sabby Volatility Warrant Master Fund, Ltd. is subject to a 9.99% ownership blocker, pursuant to which shares of our common stock may not be issued, whether pursuant to the Securities Purchase Agreement or Warrants, to the extent such issuance would cause Sabby Volatility Warrant Master Fund, Ltd. to beneficially own more than 9.99% of our outstanding common stock.  The share ownership numbers and percentages for Sabby Volatility Warrant Master Fund, Ltd. in the table above reflect this 9.99% blocker.  As of the March 28, 2018, Sabby Volatility Warrant Master Fund, Ltd. owns 150,376 outstanding shares of our common stock and a Warrant to purchase 150,376 shares of our common stock.  To the extent Proposal 1 is approved, the number of Shares of our common stock that will become issuable to Sabby Volatility Warrant Master Fund, Ltd. will increase as described above in this proxy statement. Sabby Management, LLC serves as the investment manager of Sabby Volatility Warrant Master Fund, Ltd. Hal Mintz is the manager of Sabby Management, LLC and has voting and investment control of the securities held by Sabby Volatility Warrant Master Fund, Ltd.  Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities beneficially owned by Sabby Volatility Warrant Master Fund, Ltd., except to the extent of their respective pecuniary interest therein.


OTHER MATTERS

The Board of Directors does not know of any other matters to be presented at the Special Meeting. If any additional matters are properly presented or otherwise allowed to be considered at the Special Meeting, the persons named in the enclosed proxy will have discretion to vote shares they represent in accordance with their own judgment on such matters.

It is important that your shares be represented at the meeting, regardless of the number of shares that you hold. You are, therefore, urged to submit your proxy or voting instructions at your earliest convenience.

BY ORDER OF THE BOARD OF DIRECTORS

Davis, California

December 27, 2017



APPENDIX A

CERTIFICATE OF AMENDMENT

TO THE

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

ARCADIA BIOSCIENCES, INC.

Arcadia Biosciences, Inc., a corporation organized under and existing under the laws of the State of Delaware (the “Corporation”), certifies that:

FIRST:  The name of the Corporation is Arcadia Biosciences, Inc.

SECOND:  The Board of Directors of the Corporation, acting in accordance with the provisions of Sections 141 and 242 of the Delaware General Corporation Law, adopted resolutions to amend Article IV of the Amended and Restated Certificate of Incorporation of the Corporation to read in its entirety as follows:

ARTICLE IV

A.    Classes of Stock.  The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.”  The total number of shares which the Corporation is authorized to issue is One Hundred and Seventy Million (170,000,000) shares, consisting of One Hundred and Fifty Million (150,000,000) shares of Common Stock, par value $0.001 per share, and Twenty Million (20,000,000) shares of Preferred Stock, par value $0.001 per share.

Upon the filing and effectiveness (the "Effective Time") of this Certificate of Amendment pursuant to the General Corporation Law of the State of Delaware, each ____*[to be in a range from 10:1 to 20:1] shares of the corporation's Common Stock issued and outstanding immediately prior to the Effective Time shall, automatically and without any action on the part of the respective holders thereof, be reclassified and combined into one (1) validly issued, fully paid and non-assessable share of Common Stock, subject to the treatment of fractional share interests described below (the "Reverse Stock Split").  No fractional shares of Common Stock shall be issued as a result of the Reverse Stock Split. Fractional shares will be rounded up to the next whole share.  The corporation will issue one full share of the post Reverse Stock Split Common Stock to any stockholder who would have been entitled to receive a fractional share as a result of the process. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (an "Old Certificate") shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above."

THIRD:  This Certificate of Amendment to the Amended and Restated Certificate of Incorporation was submitted to the stockholders of the Corporation and was duly approved by the required vote of stockholders of the Corporation in accordance with Sections 222 and 242 of the Delaware General Corporation Law.

IN WITNESS WHEREOF, said Certificate of Amendment to the Amended and Restated Certificate of Incorporation has been duly executed by its authorized officer on JanuaryApril __, 2018.

ARCADIA BIOSCIENCES, INC.

By:

Rajendra Ketkar

President and Chief Executive Officer

WITHIN BOX] Date Signature (Joint Owners) Date v1.1

2018

 

 


ARCADIA BIOSCIENCES, INC. 202 COUSTEAU PLACE SUITE 105 DAVIS, CA 95618

VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E35015-S66109 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY ARCADIA BIOSCIENCES, INC. The Board of Directors recommends you vote FOR the following proposal: For Against Abstain 1. To approve an amendment to our amended and restated certificate of incorporation to effect a reverse stock split at a ratio not less than 10-to-1 and not greater than 20-to-1, with the exact ratio to be set within that range at the discretion of our Board of Directors before January 31, 2018 without further approval or authorization of our stockholders. caps on issuing shares contained therein (the "NASDAQ 20% Issuance Proposal"). NOTE: The proxies are authorized to vote in their discretion upon such other business as may properly come before the Special Meeting or any adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateTo vote, mark blocks below in blue or black ink as follows: keep this portion for your records detatch and return this portion only

 


 

Directions to the Special Meeting of Stockholders to be held on January 19, 2018 at Arcadia Biosciences, Inc. 202 Cousteau Place, Suite 105, Davis, California 95618 Directions from the East (San Francisco): • Take I-80 West toward Davis • Take the Mace Boulevard exit, EXIT 75 • Turn right onto Mace Boulevard • Turn left on Second Street • Turn right on Cousteau Place • Arcadia Biosciences is located at the corner of Second Street and Cousteau Place in the PG&E building • Free parking is available in the adjacent parking lot Directions from the North (Sacramento International Airport): • Drive north on Airport Boulevard • Take I-5 North toward Redding • Take the County Road 102 exit, EXIT 536 • Turn left onto County Road 102 • Turn right on East Covell Boulevard • At the next block, turn left on L Street • L Street veers to the left and becomes Second Street • Turn left at Cousteau Place • Arcadia Biosciences is located at the corner of Second Street and Cousteau Place in the PG&E building • Free parking is available in the adjacent parking lot Directions from the North (Sacramento International Airport): • Take I-80 East toward Sacramento • Take the Chiles Road exit in Davis, EXIT 75 • Turn left on Chiles Road, and stay in the left lane • Turn left on Mace Boulevard and proceed north over the freeway • Turn left on Second Street • Turn right on Cousteau Place • Arcadia Biosciences is located at the corner of Second Street and Cousteau Place in the PG&E building • Free parking is available in the adjacent parking lot Important Notice Regarding the Availability of Proxy Materials for the Special Meeting To Be Held on January 19, 2018: The Notice and Proxy Statement is available at www.proxyvote.com. E35016-S66109 ARCADIA BIOSCIENCES, INC. Special Meeting of Stockholders January 19, 2018 2:00 P.M. PST This proxy is solicited by the Board of Directors The undersigned stockholder(s) hereby appoint(s) Kevin Comcowich and Matthew T. Plavan, or either of them, as proxies, each having full power of substitution, to vote all of the shares of common stock of, Arcadia Biosciences, Inc., that the undersigned stockholder(s) is/are entitled to vote at the Special Meeting of Stockholders to be held on January 19, 2018, at 2:00 P.M. PST, at the offices of Arcadia Biosciences, Inc., 202 Cousteau Place, Suite 105, Davis, California 95618, and any adjournment or postponement thereof, on all matters set forth on the reverse side and in his discretion upon such other matters as may properly come before the Special Meeting. The undersigned hereby acknowledge(s) receipt of the Notice of Special Meeting and Proxy Statement, dated December 27, 2017. The undersigned hereby expressly revoke(s) any and all proxies heretofore given or executed by the undersigned with respect to the shares of stock represented by this proxy and, by filing this proxy with the Secretary of Arcadia Biosciences, Inc., give(s) notice of such revocation. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Our Board of Directors recommends that you vote FOR the approval of an amendment to our amended and restated certificate of incorporation to effect a reverse stock split at a ratio not less than 10-to-1 and not greater than 20-to-1, with the exact ratio to be set within that range at the discretion of our Board of Directors before January 31, 2018, without further approval or authorization of our stockholders. This proxy may be revoked at any time prior to the time it is voted. Continued and to be signed on reverse side