The Phoenix, Arizona-based company reported sales were down to $ 1,987,000 from $3,773,000 for the same quarter in 2006. At the same time, loss from operations grew to $2,009,000 from the previous sum of $259,000. The company - which has been expanding its strategy beyond only focusing on the humanitarian potential for its products to also include the mainstream food sector - attributes the revenue shortfall to $2.6m of product orders not yet included in the revenues. "The shortfall in revenues was primarily attributable to $2.6 million of purchase orders for product that we produced for three new customers, for which we did not recognize revenues for reasons including the timing of the acceptance of delivery by the customers and product labels not being completed by the third party co-packer," said Nutracea president and CEO, Brad Edson. "We anticipate that this revenue will be recognized in the second quarter." The manufacturer intends to use its ingredient's growth potential in the mainstream functional food industry to support its humanitarian aims of bringing a cost efficient ingredient to the developing world. Stabilized rice bran is a rich source of vitamins, minerals, and antioxidants that is normally discarded during rice processing. To this end, Nutracea has been expanding facilities in North America for domestic supply of rice bran. The company is developing plants in Montana and Louisiana to boost capacity from 1,800 tons per year to 2,700 tons per year. "On the international front, we continue to conduct high-level discussions with various potential partners and believe the Company is in a strong financial position to advance these discussions into definitive agreements some time this year," said company COO Leo Gingras. The company recently announced the signing of a distribution agreement with Mexican group FX Morales, whose customers include multinationals Grupo Gamesa (Frito Lay, Pepsico, Quaker, Gatorade) Grupo Bimbo, Grupo Maseca, Kellogg, Nestle, Kraft, Unilever and Bristol Myers Squibb. "The first quarter timing issue was unfortunate, although not indicative of any shortage of demand for our product," said Edson. "In fact, we are seeing tremendous demand for our products from the large food companies and others that eagerly await the availability of supply of stabilized rice bran from our future plants to satisfy the burgeoning demand."