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☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31,
2025
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number:
001-34719
S&W SEED CO
MPANY
(Exact Name of Registrant as Specified in Its Charter)
Nevada
27-1275784
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
2101 Ken Pratt Blvd
,
Suite 201
,
Longmont
,
CO
80501
(Address of Principal Executive Offices)
(Zip Code)
(
720
)
506-9191
(Registrant's Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share
SANW
The
Nasdaq
Capital Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Yes
☐
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Yes
☐
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large, accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes
☒
No
The number of shares outstanding of common stock of the registrant as of May 12, 2025 was
2,146,806
.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to: statements concerning our loan agreements, including our ability to comply with and/or secure refinancing for such loan agreements; the potential effects of global macroeconomic events on our business; the plans, strategies and objectives of management for our future operations, including our expectations for new product introductions during fiscal 2025; our implementation of our strategic review (which includes our plans to reduce annual operating expenses); our partnership with Shell and its role in enabling us to reduce our operating expenses and sharpen our focus on key growth priorities; our ability to raise capital in the future; expected development, performance or market acceptance relating to our products or services or our ability to expand our grower or customer bases or to diversify our product offerings; future economic conditions or performance; our ability to retain key employees; and our assumptions, expectations and beliefs underlying any of the foregoing. These forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “designed,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations about future events. Such forward-looking statements are subject to risks, uncertainties and other important factors, including certain assumptions, that, if they never materialize or prove incorrect, could cause our actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Risks, uncertainties and assumptions include the following:
•
whether we are successful in implementing our strategies focused on growth opportunities, changes in our cost structure and improved financial performance;
•
whether we are able to maintain compliance with our current loan agreements, including to provide access to sufficient liquidity to pay our growers and suppliers;
•
geopolitical and macroeconomic events, such as global inflation, bank failures, changing U.S. and foreign trade policies, including increased trade restrictions or tariffs, supply chain disruptions, uncertain market conditions, the ongoing military conflict between Russia and Ukraine and related sanctions, and the extent to which they continue to disrupt the local and global economies, as well as our business and the businesses of our customers, distributors and suppliers;
•
changes in demand for our seed products, including Double Team
®
, our non-GMO herbicide tolerant sorghum solution;
•
whether we are able to develop and successfully launch additional trait technology products;
•
whether we are successful in commercializing our current and future trait technology products, including Double Team and Prussic Acid Free
TM
;
•
our plans for expansion of our business (including by expanding crop offerings and market share of existing offerings through acquisitions, partnerships, joint ventures and other strategic transactions) and our ability to successfully integrate acquisitions into our operations;
•
whether we continue to invest in research and development and whether such investment results in trait improvement across our crop categories;
•
the continued ability of our distributors and suppliers to have access to sufficient liquidity to fund their operations;
•
market trends and other factors affecting our financial condition or results of operations from period to period;
•
the impact of crop disease, severe weather conditions, such as drought or flooding, or natural disasters, such as earthquakes, on crop quality and yields and on our ability to grow, procure or export our products;
•
the impact of pricing of other crops that may influence what crops our growers elect to plant;
•
whether we are successful in aligning expense levels to revenue changes;
•
whether we are successful in monetizing camelina and our partnership with Shell provides its anticipated benefits;
•
the disposal of S&W Australia resulted in S&W Australia’s business no longer being conducted through us, which significantly reduced the scope of our overall worldwide operations and could have a material adverse effect on our business, financial position and results of operations;
•
the cost and other implications of pending or future legislation or court decisions and pending or future accounting pronouncements; and
•
other risks that are described herein and in the section titled “Risk Factors” contained in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, or the Annual Report, and that are otherwise described or updated from time to time in our filings with the Securities and Exchange Commission.
2
You are urged to carefully review the disclosures made concerning risks and uncertainties that may affect our business or operating results, which include, among others, those described above.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Many factors discussed in this Quarterly Report on Form 10-Q, some of which are beyond our control, will be important in determining our future performance. Consequently, these statements are inherently uncertain and actual results may differ materially from those that might be anticipated from the forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this Quarterly Report on Form 10-Q as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Furthermore, such forward-looking statements represent our views as of, and speak only as of, the date of this Quarterly Report on Form 10-Q, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. We undertake no obligation to publicly update any forward-looking statements, or to update the reasons why actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “the Company,” “S&W” and “S&W Seed” refer to S&W Seed Company and its subsidiaries or, as the context may require, S&W Seed Company only. Our fiscal year ends on June 30, and accordingly, the terms “fiscal 2025,” “fiscal 2024” and “fiscal 2023” in this Quarterly Report on Form 10-Q refer to the respective fiscal year ended June 30, 2025, 2024 and 2023, respectively, with corresponding meanings to any fiscal year reference beyond such dates. Trademarks, service marks and trade names of other companies appearing in this report are the property of their respective holders.
3
PART
I
FINANCIAL I
NFORMATION
Item 1. Financi
al Statements
S&W SEED COMPANY
CONDENSED CONSOLIDATED BA
LANCE SHEETS
(UNAUDITED)
ASSETS
As of March 31, 2025
As of June 30, 2024
CURRENT ASSETS
Cash and cash equivalents
$
354,497
$
286,508
Accounts receivable, net
11,411,618
14,636,722
Inventories, net
16,853,780
22,628,343
Prepaid expenses and other current assets
2,856,036
3,431,226
Current assets of discontinued operations
—
22,391,691
TOTAL CURRENT ASSETS
31,475,931
63,374,490
Property, plant and equipment, net
5,463,647
6,127,198
Intellectual property, net
10,469,290
20,265,618
Other intangibles, net
2,301,085
3,206,720
Right of use assets - operating leases
1,042,937
1,113,833
Equity method investments
17,440,148
19,694,209
Other assets
1,420,343
1,364,532
Non-current assets of discontinued operations
—
5,578,941
TOTAL ASSETS
$
69,613,381
$
120,725,541
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
8,971,330
$
3,255,928
Deferred revenue
2,212,530
832,283
Accrued expenses and other current liabilities
2,823,529
3,770,773
Current portion of working capital lines of credit, net
17,116,322
16,174,537
Current portion of long-term debt, net
283,533
315,304
Current liabilities of discontinued operations
—
44,893,499
TOTAL CURRENT LIABILITIES
31,407,244
69,242,324
Long-term debt, net, less current portion
4,537,930
4,721,849
Other non-current liabilities
690,892
800,620
Non-current liabilities of discontinued operations
—
929,623
TOTAL LIABILITIES
36,636,066
75,694,416
MEZZANINE EQUITY
Preferred stock, $
0.001
par value;
3,323
shares authorized;
1,695
issued and outstanding at March 31, 2025 and June 30, 2024
6,157,306
5,768,765
TOTAL MEZZANINE EQUITY
6,157,306
5,768,765
STOCKHOLDERS' EQUITY
Common stock, $
0.001
par value;
75,000,000
shares authorized;
2,146,448
issued and
2,145,132
outstanding at March 31, 2025;
2,282,704
issued and
2,281,388
outstanding at June 30, 2024
2,146
43,369
Treasury stock, at cost,
1,316
shares at March 31, 2025 and June 30, 2024
(
134,196
)
(
134,196
)
Additional paid-in capital
169,550,408
168,807,072
Accumulated deficit
(
142,605,637
)
(
122,090,479
)
Accumulated other comprehensive loss
(
34,420
)
(
7,405,114
)
Non-controlling interests
41,708
41,708
TOTAL STOCKHOLDERS' EQUITY
26,820,009
39,262,360
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
$
69,613,381
$
120,725,541
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4
S&W SEED COMPANY
CONDENSED CONSOLIDATED STATEM
ENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
Revenue
$
9,552,427
$
9,367,984
$
22,938,801
$
28,386,639
Cost of revenue (excluding depreciation and amortization shown separately below)
5,947,095
7,062,360
16,114,578
19,821,935
Gross profit
3,605,332
2,305,624
6,824,223
8,564,704
Operating expenses:
Selling, general and administrative expenses
2,955,365
3,960,684
11,645,402
12,357,152
Research and development expenses
734,521
767,210
2,308,927
2,269,692
Depreciation and amortization
578,047
815,807
2,088,851
2,441,191
Loss (gain) on disposal of property, plant and equipment
—
—
21,484
(
70,373
)
Total operating expenses
4,267,933
5,543,701
16,064,664
16,997,662
Loss from operations
(
662,601
)
(
3,238,077
)
(
9,240,441
)
(
8,432,958
)
Other expense (income):
Foreign currency loss
1,611
25,168
10,350
611
Interest expense - amortization of debt discount
241,375
367,624
955,190
1,071,686
Interest expense, net
657,042
740,347
2,249,157
2,250,914
Other income
(
23,629
)
(
50,476
)
(
1,806
)
(
147,370
)
Net loss from continuing operations before income taxes
(
1,539,000
)
(
4,320,740
)
(
12,453,332
)
(
11,608,799
)
Provision for (benefit from) income taxes
3,831
1,720
6,523
(
8,740
)
Net loss from continuing operations before equity in net earnings of affiliates
(
1,542,831
)
(
4,322,460
)
(
12,459,855
)
(
11,600,059
)
Equity in loss of equity method investee, net of tax
682,286
487,617
2,254,061
1,841,630
Net loss from continuing operations
(
2,225,117
)
(
4,810,077
)
(
14,713,916
)
(
13,441,689
)
Net loss from discontinued operations
(
10,917
)
(
667,409
)
(
5,412,701
)
(
4,486,760
)
Net loss
(
2,236,034
)
(
5,477,486
)
(
20,126,617
)
(
17,928,449
)
Loss (income) attributable to non-controlling interests
—
23,051
—
(
9,431
)
Net loss attributable to S&W Seed Company
$
(
2,236,034
)
$
(
5,500,537
)
$
(
20,126,617
)
$
(
17,919,018
)
Calculation of net loss per share:
Net loss attributable to S&W Seed Company
$
(
2,236,034
)
$
(
5,500,537
)
$
(
20,126,617
)
$
(
17,919,018
)
Dividends accrued for participating securities and accretion
(
129,176
)
(
123,359
)
(
388,541
)
(
367,835
)
Net loss attributable to common shareholders
$
(
2,365,210
)
$
(
5,623,896
)
$
(
20,515,158
)
$
(
18,286,853
)
Net loss per share from continuing operations, basic and diluted
$
(
1.04
)
$
(
2.11
)
$
(
6.57
)
$
(
5.92
)
Net loss per share from discontinued operations, basic and diluted
$
(
0.01
)
$
(
0.29
)
$
(
2.42
)
$
(
1.98
)
Net loss attributable to S&W Seed Company per common share, basic and diluted
$
(
1.04
)
$
(
2.41
)
$
(
8.98
)
$
(
7.89
)
Net loss attributable to common shareholders per common share, basic and diluted
$
(
1.10
)
$
(
2.47
)
$
(
9.16
)
$
(
8.05
)
Weighted average number of common shares outstanding, basic and diluted
2,144,517
2,279,736
2,240,381
2,270,416
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5
S&W SEED COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS
(UNAUDITED)
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
Net loss
$
(
2,236,034
)
$
(
5,477,486
)
$
(
20,126,617
)
$
(
17,928,449
)
Foreign currency translation adjustment, net of income taxes
5,538
(
578,482
)
(
203
)
(
422,847
)
Deconsolidation of subsidiary impact on currency translation adjustment, net of income taxes
—
—
7,370,897
—
Comprehensive loss
(
2,230,496
)
(
6,055,968
)
(
12,755,923
)
(
18,351,296
)
Comprehensive loss attributable to non-controlling interests
—
23,051
—
(
9,431
)
Comprehensive loss attributable to S&W Seed Company
$
(
2,230,496
)
$
(
6,079,019
)
$
(
12,755,923
)
$
(
18,341,865
)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6
S&W SEED COMPANY
CONDENSED CONSOLIDATED STATEMENTS
OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
(UNAUDITED)
Mezzanine Equity
Shareholders' Equity
Preferred Stock
Common Stock
Treasury Stock
Additional
Paid-In
Accumulated
Non-
controlling
Accumulated
Other
Comprehensive
Total
Stockholders'
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
Interests
Loss
Equity
Balance, December 31, 2023
1,695
$
5,518,624
2,279,845
$
43,317
(
1,316
)
$
(
134,196
)
$
168,270,300
$
(
104,595,765
)
$
34,638
$
(
6,832,156
)
$
56,786,138
Stock-based compensation
—
—
—
—
—
—
284,083
—
—
—
284,083
Series B detachable warrant
—
25,837
—
—
—
—
—
(
25,837
)
—
—
(
25,837
)
Accrued dividends on Series B convertible preferred stock
—
97,522
—
—
—
—
—
(
97,522
)
—
—
(
97,522
)
Net issuance to settle RSUs
—
—
1,207
23
—
—
(
2,644
)
—
—
—
(
2,621
)
Liquidation of subsidiary
—
—
—
—
—
—
(
10,798
)
330,091
—
—
319,293
Other comprehensive loss
—
—
—
—
—
—
—
—
—
(
578,482
)
(
578,482
)
Net (loss) income
—
—
—
—
—
—
—
(
5,500,537
)
23,051
—
(
5,477,486
)
Balance, March 31, 2024
1,695
$
5,641,983
2,281,052
$
43,340
(
1,316
)
$
(
134,196
)
$
168,540,941
$
(
109,889,570
)
$
57,689
$
(
7,410,638
)
$
51,207,566
Balance, December 31, 2024
1,695
$
6,028,130
2,140,519
$
2,139
(
1,316
)
$
(
134,196
)
$
169,334,593
$
(
140,240,427
)
$
41,708
$
(
39,958
)
$
28,963,859
Stock-based compensation
—
—
—
—
—
—
221,440
—
—
—
221,440
Series B detachable warrant
—
25,837
—
—
—
—
—
(
25,837
)
—
—
(
25,837
)
Accrued dividends on Series B convertible preferred stock
—
103,339
—
—
—
—
—
(
103,339
)
—
—
(
103,339
)
Net issuance to settle RSUs
—
—
5,929
7
—
—
(
5,625
)
—
—
—
(
5,618
)
Other comprehensive income
—
—
—
—
—
—
—
—
—
5,538
5,538
Net loss
—
—
—
—
—
—
—
(
2,236,034
)
—
—
(
2,236,034
)
Balance, March 31, 2025
1,695
$
6,157,306
2,146,448
$
2,146
(
1,316
)
$
(
134,196
)
$
169,550,408
$
(
142,605,637
)
$
41,708
$
(
34,420
)
$
26,820,009
Mezzanine Equity
Shareholders' Equity
Preferred Stock
Common Stock
Treasury Stock
Additional
Paid-In
Accumulated
Non-
controlling
Accumulated
Other
Comprehensive
Total
Stockholders'
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
Interests
Loss
Equity
Balance, June 30, 2023
1,695
$
5,274,148
2,263,369
$
43,004
(
1,316
)
$
(
134,196
)
$
167,768,104
$
(
91,932,808
)
$
67,120
$
(
6,987,791
)
$
68,823,433
Stock-based compensation
—
—
—
—
—
—
979,230
—
—
—
979,230
Series B detachable warrant
—
77,513
—
—
—
—
—
(
77,513
)
—
—
(
77,513
)
Accrued dividends on Series B convertible preferred stock
—
290,322
—
—
—
—
—
(
290,322
)
—
—
(
290,322
)
Net issuance to settle RSUs
—
—
17,683
336
—
—
(
29,783
)
—
—
—
(
29,447
)
Cash paid related to stock issuance costs
—
—
—
—
—
—
(
165,812
)
—
—
—
(
165,812
)
Liquidation of subsidiary
—
—
—
—
—
—
(
10,798
)
330,091
—
—
319,293
Other comprehensive loss
—
—
—
—
—
—
—
—
—
(
422,847
)
(
422,847
)
Net loss
—
—
—
—
—
—
—
(
17,919,018
)
(
9,431
)
—
(
17,928,449
)
Balance, March 31, 2024
1,695
$
5,641,983
2,281,052
$
43,340
(
1,316
)
$
(
134,196
)
$
168,540,941
$
(
109,889,570
)
$
57,689
$
(
7,410,638
)
$
51,207,566
Balance, June 30, 2024
1,695
$
5,768,765
2,282,704
$
43,369
(
1,316
)
$
(
134,196
)
$
168,807,072
$
(
122,090,479
)
$
41,708
$
(
7,405,114
)
39,262,360
Stock-based compensation
—
—
—
—
—
—
741,450
—
—
—
741,450
Cash paid to purchase common stock
—
—
(
200,000
)
(
200
)
—
—
(
29,800
)
—
—
—
(
30,000
)
Series B detachable warrant
—
77,513
—
—
—
—
—
(
77,513
)
—
—
(
77,513
)
Accrued dividends on Series B convertible preferred stock
—
311,028
—
—
—
—
—
(
311,028
)
—
—
(
311,028
)
Reverse stock split adjustment
—
—
—
(
41,115
)
—
—
41,115
—
—
—
—
Net issuance to settle RSUs
—
—
63,745
92
—
—
(
9,429
)
—
—
—
(
9,337
)
Deconsolidation of subsidiary
—
—
—
—
—
—
—
—
—
7,370,897
7,370,897
Other comprehensive loss
—
—
—
—
—
—
—
—
—
(
203
)
(
203
)
Net loss
—
—
—
—
—
—
—
(
20,126,617
)
—
—
(
20,126,617
)
Balance, March 31, 2025
1,695
$
6,157,306
2,146,448
$
2,146
(
1,316
)
$
(
134,196
)
$
169,550,408
$
(
142,605,637
)
$
41,708
$
(
34,420
)
$
26,820,009
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7
S&W SEED COMPANY
CONDENSED CONSOLIDATED STATEM
ENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended March 31,
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(
20,126,617
)
$
(
17,928,449
)
Net loss from discontinued operations
(
5,412,701
)
(
4,486,760
)
Net loss from continuing operations
(
14,713,916
)
(
13,441,689
)
Adjustments to reconcile net loss from operating activities to net
cash used in operating activities:
Stock-based compensation
741,450
953,140
Provision for credit losses
237,500
589,855
Inventory write-down
291,452
1,220,904
Depreciation and amortization
2,088,851
2,441,191
Loss (gain) on disposal of property, plant and equipment
21,484
(
70,373
)
Equity in loss of equity method investees, net of tax
2,254,061
1,841,630
Foreign currency transactions
10,350
1,331
Amortization of debt discount
955,190
1,071,686
Accretion of note receivable
—
(
153,110
)
Changes in:
Accounts receivable
2,987,093
5,737,336
Receivable from unconsolidated subsidiary
(
358,790
)
(
1,868,133
)
Inventories
(
468,683
)
19,735
Prepaid expenses and other current assets
1,158,886
1,346,391
Other non-current assets
(
258,909
)
(
3,266
)
Accounts payable
5,731,350
(
3,039,829
)
Payable to unconsolidated subsidiary
187,430
(
2,436,777
)
Deferred revenue
1,380,247
2,037,398
Accrued expenses and other current liabilities
(
1,165,447
)
(
215,116
)
Other non-current liabilities
7,353
(
124
)
Net cash provided by (used in) operating activities from continuing operations
1,086,952
(
3,967,820
)
Net cash used in operating activities from discontinuing operations
(
1,434,917
)
(
1,614,002
)
Net cash used in operating activities
(
347,965
)
(
5,581,822
)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of business interest
—
6,000,000
Additions to property, plant and equipment
(
207,942
)
(
288,999
)
Proceeds from disposal of property, plant and equipment
39,300
136,588
Net cash (used in) provided by investing activities from continuing operations
(
168,642
)
5,847,589
Net cash provided by (used in) investing activities from discontinuing operations
25,079
(
50,242
)
Net cash (used in) provided by investing activities
(
143,563
)
5,797,347
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (repayments) of lines of credit, net
837,128
(
4,855,733
)
Borrowings of long-term debt
—
78,215
Repayments of long-term debt
(
300,178
)
(
30,851
)
Payments of debt issuance costs
(
1,354,265
)
(
166,156
)
Cash paid to purchase common stock
(
30,000
)
—
Net proceeds from sale of common stock
—
(
165,812
)
Taxes paid related to net share settlements of stock-based compensation awards
(
9,337
)
(
29,447
)
Net cash used in financing activities from continuing operations
(
856,652
)
(
5,169,784
)
Net cash provided by financing activities from discontinued operations
1,409,838
1,726,779
Net cash provided by (used in) financing activities
553,186
(
3,443,005
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
6,331
(
304
)
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
67,989
(
3,227,784
)
CASH AND CASH EQUIVALENTS, beginning of the period
286,508
3,398,793
CASH AND CASH EQUIVALENTS, end of period
$
354,497
$
171,009
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest
$
2,293,126
$
3,107,100
Income taxes
25
22,225
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
8
S&W SEED COMPANY
NOTES TO
C
ONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
1 - GENERAL
S&W Seed Company, or the Company, is a global multi-crop, middle-market agricultural company that is principally engaged in breeding, growing, processing and selling agricultural seeds. The Company operates seed cleaning and processing facilities in Texas, with its seed products primarily grown under contract by farmers. The Company is currently focused on growing sales of its proprietary and traited products, specifically through the expansion of Double Team
®
for forage and grain sorghum products and new trait introductions, including the second generation of Double Team and Prussic Acid Free
TM
, improving profit margins through pricing and operational efficiencies, and developing the camelina market via a partnership formed in fiscal 2023. The Company's vision is to empower the farming community with superior sorghum germplasm and innovative traits.
S&W Australia
On July 24, 2024, the Company's wholly-owned subsidiary S&W Seed Company Australia Pty Ltd., or S&W Australia, adopted a voluntary plan of administration based on its determination that S&W Australia was likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001. As a result of the voluntary administration process, effective July 24, 2024, the Company no longer controlled S&W Australia for accounting purposes and as such, S&W Australia was deconsolidated from the Company's financial statements as of July 24, 2024.
On October 11, 2024, creditors of S&W Australia approved a proposed Deed of Company Arrangement, or DOCA, pursuant to which, among other things, the outstanding shares of S&W Australia would be transferred to Avior Asset Management No. 3 Pty Ltd. In order to facilitate the satisfaction of certain conditions to the effectiveness of the DOCA, on November 22, 2024, the Company entered into (i) a Business Transfer Agreement, (ii) a Transitional Services Deed, and (iii) a Deed of Settlement and Release with S&W Australia. The Company also entered into a Deed of Release of U.S. Corporate Guarantee with National Australia Bank Limited, or NAB, which released the Company from all liability under S&W Australia's finance agreement with NAB, and obtained a release of certain applicable liens from CIBC Bank USA, or CIBC.
Business Transfer Agreement
Under the Business Transfer Agreement, the Company transferred certain intellectual property rights related to alfalfa and white clover seeds necessary for S&W Australia’s continued operations, or the IP Rights, with a carrying value of $
9.7
million, along with certain related inventory valued at approximately $
6.0
million, to S&W Australia. Pursuant to the agreement, S&W Australia granted the Company a non-exclusive, non-transferable, royalty-bearing license to the IP Rights for the sale of products in the United States, Mexico, Canada, Central America, and South America for a term of five years. S&W Australia is entitled to receive a royalty in the mid-single digits from the Company on gross revenue generated from the licensed IP Rights.
Transitional Services Deed
Under the Transitional Services Deed, the Company agreed to continue providing certain services it has generally provided to S&W Australia on a temporary basis to support the transition of services from the Company to S&W Australia. Each party will be responsible for its own transition costs. The services provided per the Transitional Services Deed will terminate between February 22, 2025 and August 31, 2025, unless terminated earlier pursuant to its terms.
Deed of Settlement and Release
Under the Deed of Settlement and Release, in consideration for the Company’s (i) transfers under the Business Transfer Agreement, (ii) services rendered under the Transitional Services Deed and (iii) certain other payments, S&W Australia released the Company from all its net intercompany liabilities and obligations owed to S&W Australia, which equated to a net liability of $
15.3
million as of November 22, 2024.
Deed of Release of U.S. Corporate Guarantee
Under the Deed of Release of U.S. Corporate Guarantee, NAB released the Company from all liability under S&W Australia's finance agreement with NAB, which was guaranteed by the Company up to a maximum of AUD $
15.0
million, or the Parent Guarantee. The fair value of this guarantee as of September 30, 2024 was $
5.0
million, which the Company had recorded in its Condensed Consolidated Balance Sheets.
Lien Release
Pursuant to the Company’s Amended CIBC Loan Agreement, CIBC obtained a security interest in the Company’s assets. In connection with the execution of the agreements listed above, CIBC consented to the transfer of, and released its security interests in, the assets of the Company to be transferred to S&W Australia pursuant to the Business Transfer Agreement as described above.
9
Discontinued Operations
As discussed in Note 3 - Discontinued Operations, effective July 24, 2024, the Company no longer controlled S&W Australia for accounting purposes and as such, deconsolidated this subsidiary. This met the criteria to be accounted for as a discontinued operation as required by Accounting Standards Codification, or ASC, 205-20,
Discontinued Operations
. Accordingly, the financial results of S&W Australia are reported as discontinued operations in the accompanying unaudited Condensed Consolidated Statements of Operations for all periods presented. Consistent with ASC 205-20,
Discontinued Operations
, because the sale of S&W Australia was completed on November 22, 2024, the Company will continue presenting the discontinued operations for comparative periods. The gain or loss recognized from the sale is reconciled in Note 3 - Discontinued Operations.
All amounts and disclosure included in the accompanying notes to the Condensed Consolidated Financial Statements reflect only the Company's continuing operations unless otherwise noted.
Strategic Review
On January 13, 2025, the Company announced that its board of directors, or Board, commenced a process to explore and evaluate various strategic alternatives that may be available to S&W in an effort to enhance shareholder value. The Company is considering a broad range of potential opportunities, including, among others, a sale of the Company, a merger with another strategic partner, a recapitalization or continued execution of the Company's attractive long-term business plan. There are no assurances the review process will result in the Company pursuing any transaction or any other strategic outcome, nor is there a timetable for completion of this process.
Reverse Stock Split
A reverse stock split of all issued and outstanding shares of the Company's common stock, at a ratio of
1-for-19
, or the Reverse Stock Split, was implemented at 5:00 p.m. Eastern Time on October 17, 2024. The Company has retroactively adjusted all share amounts and per share data herein to give effect to the Reverse Stock Split. Refer to Note 11 - Equity for additional information on the Reverse Stock Split.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair statement of the Company’s condensed consolidated balance sheets, statements of operations, comprehensive loss, cash flows and mezzanine equity and stockholders’ equity for the periods presented. Operating results for the periods presented are not necessarily indicative of the results to be expected for the full year ending June 30, 2025. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles, or GAAP, have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024, as filed with the Securities and Exchange Commission, or SEC, on November 1, 2024.
The Company has reportable segments that correspond with its operating model, management structure, and internal reporting reviewed by its Chief Operating Decision Maker, Mark Herrmann, the Company's President and Chief Executive Officer. The Company's Chief Operating Decision Maker allocates resources and assesses performance based on these segments. Effective with the loss of control of S&W Australia on July 24, 2024, this was reduced to two operating segments, each its own reportable segment, Americas and International. The Company previously had one additional operating and reportable segment, AUSDOM, which related to the Australian domestic business and was included in discontinued operations for the nine months ended March 31, 2025 and is presented as such for all periods in this report. Refer to Note 10 - Business Segments for additional information regarding the Company's reportable segments.
Certain prior period information has been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in the financial statements. In the Annual Report on Form 10-K for the year ended June 30, 2024 filed with this SEC on November 1, 2024, this included the recoverability of long-lived assets and inventory valuation. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and certain intangible assets as well as valuing stock-based compensation. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows.
The Company believes the estimates and assumptions underlying the accompanying Condensed Consolidated Financial Statements are reasonable and supportable based on the information available at the time the financial statements were prepared. However, certain adverse geopolitical and macroeconomic events, such as the ongoing conflict between Ukraine and Russia and related sanctions, changing U.S. and foreign trade policies, including increased trade restrictions or tariffs, and uncertain market conditions, including higher inflation
10
and supply chain disruptions, have, among other things, negatively impacted the global economy, created significant volatility and disruption of financial markets, and significantly increased economic and demand uncertainty. These factors make many of the estimates and assumptions reflected in these Condensed Consolidated
Financial Statements inherently less certain. Therefore, actual results may ultimately differ from those estimates to a greater degree than historically.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Liquidity and Going Concern
The Company is not profitable and has recorded negative cash flows from operating activities for the last several years. For the nine months ended March 31, 2025, the Company reported a net loss from continuing operations of $
14.7
million and a net loss from discontinued operations of $
5.4
million, which included a $
5.2
million loss from the disposal of S&W Australia. The Company has an accumulated deficit of $
142.6
million as of March 31, 2025. As of March 31, 2025, the Company had cash on hand of $
0.4
million and positive working capital of $
0.1
million. The Company had $
1.6
million of unused availability from its working capital facility with ABL OPCO LLC, or Mountain Ridge, as of March 31, 2025. This facility, or the Mountain Ridge Credit Agreement, has a current maturity date of February 20, 2026.
The Mountain Ridge Credit Agreement
contains various financial covenants. Adverse geopolitical and macroeconomic events and other factors affecting the Company’s results of operations may increase the risk of the Company’s inability to comply with these covenants, which could result in acceleration of its repayment obligations and foreclosure on its pledged assets. As of March 31, 2025, the Company was in compliance with all covenants in the Mountain Ridge Credit Agreement. In April 2025, there were events of default, but the Company received a waiver for these defaults (refer to Note 15 - Subsequent Events for additional information). While the Company has obtained waivers for certain defaults and covenants of our credit facilities in the past, there can be no assurance it will be successful in meeting our covenants, avoiding future defaults, or securing future waivers and/or amendments from our lenders. If the Company is unsuccessful in doing so, it may need to reduce the scope of its operations, repay amounts owing to its lenders, finance its cash needs through a combination of equity and debt financings, enter into collaborations, strategic alliances and licensing arrangements, delay payments to its growers, sell certain assets or divest certain operations. These operating and liquidity factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.
Cost of Revenue
The Company records purchasing and receiving costs, inspection costs and warehousing costs in Cost of revenue. When the Company is required to pay for outward freight and/or the costs incurred to deliver products to its customers, the costs are included in Cost of revenue.
Cash and Cash Equivalents
For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three month
s or less to be cash and cash equivalents. At times, cash and cash equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation. Cash balances located outside of the United States may not be insured and totaled $
0.0
million on March 31, 2025 and June 30, 2024. Cash balances residing in the United States exceeding the Federal Deposit Insurance Corporation limit of $
250,000
totaled $
0.1
million and $
0.0
million on March 31, 2025 and June 30, 2024, respectively.
Accounts Receivable
The Company provides an allowance for credit losses equal to the estimated uncollectible amounts. Prior to July 1, 2023, that estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer’s trade accounts receivable. Effective July 1, 2023, in determining the Company's reserve for credit losses, receivables are assigned an expected loss based on historical information adjusted for forward-looking economic factors. The allowance for credit losses was $
0.4
million and $
0.5
million on March 31, 2025 and June 30, 2024, respectively.
Inventories
Inventories consist of seed and packaging materials.
Inventories are stated at the lower of cost or net realizable value, and an inventory reserve permanently reduces the cost basis of inventory. Inventories are valued as follows: Actual cost is used to value raw materials such as packaging materials, as well as goods in process. Costs for substantially all finished goods, which include the cost of carryover crops from the previous year, are valued at actual cost. Actual cost for finished goods includes plant conditioning and packaging costs, direct labor and raw materials and manufacturing overhead costs based on normal capacity. The Company records abnormal amounts of idle facility expense, freight, handling costs and
11
wasted material (spoilage) as current period charges and allocates fixed production overhead to the costs of finished goods based on the normal capacity of the production facilities.
Inventory is periodically reviewed to determine if it is marketable, obsolete or impaired. Inventory that is determined to be obsolete or impaired is written off to expense at the time the impairment is identified. Inventory quality is a function of germination percentage. Our experience has shown that our alfalfa seed quality tends to be stable under proper storage conditions; therefore, we do not view inventory obsolescence for alfalfa seed as a material concern. Hybrid crops (sorghum) seed quality may be affected by warehouse storage pests such as insects and rodents. The Company maintains a strict pest control program to mitigate risk and maximize hybrid seed quality.
Components of inventory are as follows:
As of March 31, 2025
As of June 30, 2024
Raw materials and supplies
$
1,110,091
$
1,324,087
Work in progress
4,882,761
2,305,572
Finished goods
10,860,928
18,998,684
Inventories, net
$
16,853,780
$
22,628,343
Property, Plant and Equipment
Property, plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset - periods of
5
to
35
years for buildings,
3
to
20
years for machinery and equipment,
7
to
10
years for leasehold improvements, and
2
to
5
years for vehicles.
Intangible Assets
Intangible assets acquired in business acquisitions are reported at their initial fair value less accumulated amortization. Intangible assets are amortized using the straight-line method over the estimated useful life of the asset. Periods of
10
to
30 years
for technology/IP/germplasm,
5
to
20
years for customer relationships and trade names, and
10
to
20 years
for other intangible assets.
Investments
The Company has one partnership resulting in a
34
% ownership interest in Vision Bioenergy Oilseeds LLC, or Vision Bioenergy. Following the initial recording of this investment, the Company assesses and records its share of equity earnings from the investment on a quarterly basis, resulting in the investment carrying value increasing or decreasing depending on whether a gain or loss is recorded.
In April 2025, the Company transferred
341
Vision Bioenergy membership units to
Equilon Enterprises LLC (dba Shell Oil Products, or Shell)
due to Shell covering the Company's portion of a capital call. Refer to Note 15 - Subsequent Events for additional information.
Research and Development Costs
The Company is engaged in ongoing research and development, or R&D, of proprietary seed varieties. All R&D costs must be charged to expense as incurred. Accordingly, internal R&D costs are expensed as incurred. Third-party R&D costs are expensed when the contracted work has been performed or as milestone results have been achieved. The costs associated with equipment or facilities acquired or constructed for R&D activities that have alternative future uses are capitalized and depreciated on a straight-line basis over the estimated useful life of the asset.
Income Taxes
Deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities, as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company’s effective tax rate for the three and nine months ended March 31, 2025 and 2024 ha
s been affected by the valuation allowance on the Company’s deferred tax assets.
Net Loss Per Common Share Data
The
Company computes earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. The Company's Series B Preferred Stock and related warrant, or Series B Warrant (see Note 14 - Series B Redeemable Convertible Preferred Stock of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC), are participating securities because holders of such shares have non-forfeitable dividend rights and participate in any undistributed earnings with common stock. Under the two-class method, total dividends provided to the holders of participating securities and undistributed earnings allocated to participating securities, are subtracted from net loss attributable to the Company in determining net loss attributable to common shareholders in the two-class earnings per share, or EPS, calculation. Accretion to the redemption value for the Series B Preferred Stock is also treated as a deemed
12
dividend
and subtracted from net loss attributable to shareholders. There were
no
undistributed earnings to allocate to the participating securities in the three and nine months ended March 31, 2025 and 2024.
The calculation of net loss per common share is shown in the table below:
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
Numerator:
Net loss from continuing operations
$
(
2,225,117
)
$
(
4,810,077
)
$
(
14,713,916
)
$
(
13,441,689
)
Net loss from discontinued operations
(
10,917
)
(
667,409
)
(
5,412,701
)
(
4,486,760
)
Net loss
(
2,236,034
)
(
5,477,486
)
(
20,126,617
)
(
17,928,449
)
Loss attributable to non-controlling interests
—
23,051
—
(
9,431
)
Net loss attributable to S&W Seed Company
(
2,236,034
)
(
5,500,537
)
(
20,126,617
)
(
17,919,018
)
Dividends accrued for participating securities
(
103,339
)
(
97,522
)
(
311,028
)
(
290,322
)
Accretion of Series B Preferred Stock redemption value
(
25,837
)
(
25,837
)
(
77,513
)
(
77,513
)
Numerator for net loss per common share - basic and diluted
$
(
2,365,210
)
$
(
5,623,896
)
$
(
20,515,158
)
$
(
18,286,853
)
Denominator:
Denominator for basic and diluted net loss per share - weighted average shares
2,144,517
2,279,736
2,240,381
2,270,416
Net loss per common share - basic and diluted
$
(
1.10
)
$
(
2.47
)
$
(
9.16
)
$
(
8.05
)
Anti-dilutive shares, which have been excluded from the computation of diluted loss per share, included
558,806
employee stock options,
72,063
restricted stock units,
89,211
shares issuable upon conversion of the Series B Convertible Preferred Stock, warrants to purchase
138,602
shares of common stock related to the MFP Loan Agreement (as defined below), and
29,440
warrants issued with the Company's Series B Convertible Preferred Stock. The terms and conditions of these securities are more fully described
in Note 13 - Equity-Based Compensation and Note 14 - Series B Redeemable Convertible Preferred Stock of the Notes to Consolidated Financial Statements included in the Compa
ny's Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC. For the three and nine months ended March 31, 2025 and 2024, all potentially dilutive shares were anti-dilutive and excluded from the calculation of diluted loss per share because net losses were recognized.
Concentrations
No
one customer accounted for more than
10
% of the Company's revenue for the three months ended March 31, 2025 and 2024. Additionally,
no
one customer accounted for more than
10
% of the Company's revenue for the nine months ended March 31, 2025 and 2024.
One
customer accounted for
13
% of the Company's accounts receivable as of March 31, 2025 and
one
customer accounted for
17
% and another customer accounted for an additional
16
% of the Company’s accounts receivable as of June 30, 2024.
Sales to international markets represented
9
% and
16
% of revenue during the three months ended March 31, 2025 and 2024, respectively. Sales to international markets represented
29
% and
43
% of revenue during the nine months ended March 31, 2025 and 2024, respectiv
ely.
The net book value of fixed assets located outside the United States w
as
0
% of total fixed assets on March 31, 2025 and June 30, 2024, respectively, from continuing operations
.
Fair Value of Financial Instruments
The Company discloses assets and liabilities that are recognized and measured at fair value, presented in a three-tier fair value hierarchy, as follows:
•
Level 1. Observable inputs such as quoted prices in active markets;
•
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
•
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The carrying value of cash and cash equivalents, accounts payable, short-term and all long-term borrowings, as reflected in the condensed consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments or interest rates commensurate with market rates. There have been no changes in operations and/or credit characteristics since the date of issuance that could impact the relationship between interest rate and market rates.
As the Company lost control and deconsolidated S&W Australia as a result from the voluntary administration process, the Company recognized a liability for the fair value of the Parent Guarantee per ASC 460,
Guarantees
.
The Company assessed the fair value of the
13
Parent
Guarantee as of July 24, 2024 and elected to record the guarantee at fair value at each reporting date, with any changes in fair value being recorded as a gain or loss in the Company's Condensed Consolidated Statements of Operations. The Company obtained an independent valuation, assigning probabilities under various scenarios and applying estimated recovery and discount rates, which resulted in a $
5.0
million liability being recorded for the Parent Guarantee under Bank guarantee on the Company's Condensed Consolidated Balance Sheets as of July 24, 2024 and September 30, 2024. The Company determined the fair value of the Parent Guarantee based on a scenario analysis, which included a discount rate ranging between
25.4
% and
35.4
% as of July 24, 2024 and
25.5
% and
35.5
% as of September 30, 2024, and a weighted average recovery rate of
57.8
% as of July 24, 2024 and September 30, 2024. As the Company was released of the Parent Guarantee on November 22, 2024, it removed this liability from its Condensed Consolidated Balance Sheets.
In conjunction with the Vision Bioenergy partnership transaction, the Company received a one-time option, or Purchase Option, exercisable at any time on or before the fifth anniversary of the closing of the partnership transaction, to repurchase a
6
% membership interest from Shell. The option repurchase prices range between approximately $
7.1
and $
12.0
million, depending on the date on which such purchase is completed. The Purchase Option was valued at $
0.7
million using a lattice option valuation model. The valuation model incorporated significant, unobservable inputs including a discounted cash flow model based on management projections of future Vision Bioenergy results and an estimate of the current per share value of Vision Bioenergy shares. In the model, the estimate of the current per share value was discounted to account for lack of control and marketability, which were considered to be part of the unit of account given the restrictions of the limited liability com
pany agreement that governs the ownership rights of the members. Other unobservable inputs included the risk-free rates and the estimated future stock volatility based on the historical stock price volatilities of other market participants. A full fair value analysis will be performed at each fiscal year-end or when there is an indication that there may be an impairment to the valuation. Management will estimate and adjust the balance for interim periods. A full fair value analysis will be performed whenever there is a potential indicator of impairment to the valuation. No indicators have been identified for the three months ended March 31, 2025 to suggest any material change in the fair value of the purchase option.
Quantitative information about Level 3 fair value measurement is as follows:
Fair Value as of March 31, 2025
Valuation Technique
Unobservable Input
Range
Purchase Option
$
695,000
Option Model
Risk-free rate
3.8
% -
4.9
%
Stock price volatility
60
% -
65
%
Lack of control premium
13
%
Lack of marketability premium
30
%
Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows as of March 31, 2025 and June 30, 2024:
Fair Value Measurements as of March 31, 2025:
Level 1
Level 2
Level 3
Vision Bioenergy interest purchase option
$
—
$
—
$
695,000
Total
$
—
$
—
$
695,000
Fair Value Measurements as of June 30, 2024:
Level 1
Level 2
Level 3
Vision Bioenergy interest purchase option
$
—
$
—
$
695,000
Total
$
—
$
—
$
695,000
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) -
Improvements to Reportable Segment Disclosures
, or ASU 2023-07, which requires an enhanced disclosure of segments on an annual and interim basis, including the title of the chief operating decision maker, significant segment expenses, and the composition of other segment items for each segment's reported profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and adoption of ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this standard.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) -
Improvements to Income Tax Disclosures, or ASU 2023-09
, expanding the disclosures requirement for income taxes primarily by requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and adoption of ASU 2023-09 can be applied prospectively or retrospectively. The Company is currently evaluating the impact of this standard.
We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our condensed consolidated statements of operations, comprehensive income, balance sheets, or cash flows.
14
NOTE 3 - DISCONTINUED OPERATIONS
On July 24, 2024, S&W Australia adopted a voluntary plan of administration based on its determination that it was likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001. As a result of the voluntary plan of administration, the Company no longer controlled S&W Australia for accounting purposes and as such, S&W Australia was deconsolidated as of July 24, 2024. The expectation at the time was that the Company would not regain control of S&W Australia at the conclusion of the voluntary administration process. This represented a strategic shift given that S&W Australia constituted a material component of the Company's operations, including as one of the Company's reportable segments, AUSDOM, and a material part of another reportable segment, International, for the year ended June 30, 2024. This met the criteria to be accounted for as a discontinued operation as of July 24, 2024 under ASC 205-20,
Discontinued Operations
.
S&W Australia's entry into voluntary administration constituted a reconsideration event, requiring the Company to reassess S&W Australia's status as a Variable Interest Entity, or VIE. The Company deconsolidated the entity because it no longer has the power to direct the activities that most significantly impact the S&W Australia's economic performance. As the Company lost control of but retained its ownership shares in S&W Australia effective July 24, 2024, it met the criteria to be classified as a VIE under ASC 810,
Consolidation
, with the investment not having any value. The Company was providing limited services and support
to S&W Australia as they went through the voluntary administration process, which did not result in a material amount, being less than $
0.1
million for the nine months ended March 31, 2025. When the sale of S&W Australia occurred on November 22, 2024, the only services the Company provided to S&W Australia are what is stipulated
in the executed Transitional Services Deed.
Consistent with ASC 205-20,
Discontinued Operations
, because the sale of the subsidiary was completed on November 22, 2024, the Company will continue presenting the discontinued operations for comparative periods. The consideration exchanged, as agreed to per the November 22, 2024 agreements specified in Note 2 - Summary of Significant Accounting Policies, included the release of
all the Company's net liabilities and obligations owed to S&W Australia totaling $
15.3
million and the
release of the $
5.0
million bank guarantee
initially recorded as a liability during the three months ended September 30, 2024, partially offset by the Company transferring intangibles assets with a carrying value of $
9.7
million, inventory with a carrying value of $
6.0
million to S&W Australia on November 22, 2024, and recognizing a liability for $
0.1
million related to services provided per the Transitional Services Deed, or TSA Liability. The $
5.0
million ban
k guarantee was recorded as a liability on July 24, 2024, contributing towards the loss recognized during the three months ended September 30, 2024, and following guidance in ASC 460,
Guarantees
, the Company reversed this when it was fully released from liability under the bank guarantee in connection with the executed agreement on November 22, 2024.
This resulted in a gain from the disposal of the subsidiary as follows:
Consideration
Net payables retired
$
15,337,620
Bank guarantee released
5,000,000
Intangible assets transferred
(
9,680,861
)
Inventory transferred
(
5,951,796
)
TSA Liability
(
123,166
)
Gain on disposal of subsidiary
$
4,581,797
Accordingly,
the operating results of the discontinued operations for the three and nine months ended March 31, 2025 and 2024 are presented in the Condensed Consolidated Statements of Operations within Net loss from discontinued operations. For the nine months ended March 31, 2025, this includes S&W Australia activity from July 1, 2024 through July 24, 2024, the date the Company no longer controlled and
15
deconsolidated
S&W Australia. A reconciliation to Net loss from discontinued operations for the three and nine months ended March 31, 2025 and 2024 is as follows:
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
Revenue
$
—
$
8,956,651
$
842,545
$
17,235,271
Cost of revenue (excluding depreciation and amortization shown separately below)
—
6,232,975
572,862
12,470,238
Gross profit
—
2,723,676
269,683
4,765,033
Operating expenses
Selling, general and administrative expenses
—
1,675,604
276,096
4,958,638
Research and development expenses
—
169,158
50,713
747,835
Depreciation and amortization
—
260,424
47,660
780,081
Loss (gain) on disposal of property, plant and equipment
—
11,065
25,696
(
20,252
)
Total operating expenses
—
2,116,251
400,165
6,466,302
Income (loss) from operations
—
607,425
(
130,482
)
(
1,701,269
)
Other (income) expense
Loss on disposal of subsidiary
10,917
—
5,246,456
—
Foreign currency loss (gain)
—
521,913
(
120,878
)
1,162,956
Interest expense - amortization of debt discount
—
98,406
6,799
295,934
Interest expense, net
—
656,217
149,842
1,889,409
Net loss from discontinued operations before income taxes
(
10,917
)
(
669,111
)
(
5,412,701
)
(
5,049,568
)
Benefit from income taxes from discontinued operations
—
(
100,536
)
—
(
845,854
)
Net loss from discontinued operations before equity in net earnings of affiliates
(
10,917
)
(
568,575
)
(
5,412,701
)
(
4,203,714
)
Equity in loss of equity method investee, net of tax, from discontinued operations
—
98,834
—
283,046
Net loss from discontinued operations
$
(
10,917
)
$
(
667,409
)
$
(
5,412,701
)
$
(
4,486,760
)
The following table presents assets and liabilities of discontinued operations as of June 30, 2024:
ASSETS
As of June 30, 2024
CURRENT ASSETS
Cash and cash equivalents
$
7,506
Accounts receivable, net
6,228,502
Inventories, net
15,478,760
Prepaid expenses and other current assets
676,923
CURRENT ASSETS OF DISCONTINUED OPERATIONS
22,391,691
NON-CURRENT ASSETS
Property, plant and equipment, net
3,540,075
Intangibles, net
576,669
Right of use assets - operating leases
1,134,985
Other assets
327,212
NON-CURRENT ASSETS OF DISCONTINUED OPERATIONS
5,578,941
TOTAL ASSETS OF DISCONTINUED OPERATIONS
$
27,970,632
LIABILITIES
CURRENT LIABILITIES
Accounts payable
$
10,235,898
Deferred revenue
40,456
Accrued expenses and other current liabilities
3,123,721
Current portion of working capital lines of credit, net
27,549,620
Current portion of long-term debt, net
3,943,804
CURRENT LIABILITIES OF DISCONTINUED OPERATIONS
44,893,499
Long-term debt, net, less current portion
151,387
Other non-current liabilities
778,236
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS
929,623
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS
$
45,823,122
The Company recorded a loss on the disposal of S&W Australia of $
9.8
million on July 24, 2024, which is included within Net loss from discontinued operations in the Condensed Consolidated Statements of Operations for the nine months ended March 31, 2025. In accordance with ASC 810,
Consolidation
, the recorded loss was measured as the excess liabilities over assets in S&W Australia's ledger as of July 24, 2024, less all currency translation adjustments related to S&W Australia, as all unrealized gains and losses must be realized upon deconsolidation. The Company also recognized the fair value of the Parent Guarantee as of September 30, 2024 as a liability, with the offset going to Loss on disposal of subsidiary.
Below is a reconciliation of the loss on disposal of S&W Australia as of July 24, 2024:
As of July 24, 2024
Realization of currency translation adjustments from accumulated other comprehensive loss
$
7,289,430
Recognition of bank guarantee
5,000,000
S&W Australia total assets
43,168,611
S&W Australia total liabilities
(
45,629,788
)
Loss on disposal of subsidiary
$
9,828,253
16
A reconciliation of S&W Australia total assets and total liabilities as of July 24, 2024 is as follows:
As of July 24, 2024
CURRENT ASSETS
Cash and cash equivalents
$
85,876
Accounts receivable, net
6,311,994
Receivable from unconsolidated subsidiary
15,549,595
Inventories, net
15,274,546
Prepaid expenses and other current assets
666,509
TOTAL CURRENT ASSETS
37,888,520
Property, plant and equipment, net
3,322,273
Other intangibles, net
554,850
Right of use assets - operating leases
1,093,946
Other assets
309,022
TOTAL ASSETS
$
43,168,611
CURRENT LIABILITIES
Accounts payable
$
9,150,910
Payable to unconsolidated subsidiary
520,213
Deferred revenue
33,047
Accrued expenses and other current liabilities
2,947,985
Current portion of working capital lines of credit, net
28,263,338
Current portion of long-term debt, net
3,828,839
TOTAL CURRENT LIABILITIES
44,744,332
Long-term debt, net, less current portion
127,288
Other non-current liabilities
758,168
TOTAL LIABILITIES
$
45,629,788
NOTE 4 - LEASES
The Company leases office and laboratory space, research plots and equipment used in connection with its operations under various operating and finance leases.
The components of lease assets and liabilities as of March 31, 2025 and June 30, 2024 are as follows:
Leases
Balance Sheet Classification:
As of March 31, 2025
As of June 30, 2024
Assets:
Right of use assets - finance leases
$
924,704
$
1,086,667
Accumulated amortization - finance leases
(
540,409
)
(
499,275
)
Right of use assets - finance leases, net
Other assets
384,295
587,392
Right of use assets
- operating leases
Right of use assets - operating leases
1,042,937
1,113,833
Total lease assets
$
1,427,232
$
1,701,225
Liabilities:
Current lease liabilities - finance leases
Current portion of long-term debt, net
$
312,007
$
314,980
Current lease liabilities - operating leases
Accrued expenses and other current liabilities
434,617
380,492
Long-term portion of lease liabilities -
finance leases
Long-term debt, net, less current portion
104,863
303,395
Long-term portion of lease liabilities -
operating leases
Other non-current liabilities
690,892
800,620
Total lease liabilities
$
1,542,379
$
1,799,487
The components of lease cost are as follows:
Three Months Ended
March 31,
Nine Months Ended
March 31,
Lease cost:
Income Statement Classification:
2025
2024
2025
2024
Operating lease cost
Cost of revenue
$
60,766
$
60,766
$
182,299
$
215,994
Operating lease cost
Selling, general and administrative expenses
25,993
36,542
85,013
109,627
Operating lease cost
Research and development expenses
34,144
26,585
76,763
100,854
Finance lease cost
Depreciation and amortization
82,361
88,817
247,449
246,603
Finance lease cost
Interest expense, net
11,556
18,151
41,309
48,328
Total lease costs
$
214,820
$
230,861
$
632,833
$
721,406
17
Maturities of lease liabilities as of March 31, 2025, are as follows:
Fiscal Year
Operating Leases
Finance Leases
Remainder of 2025
$
146,039
$
88,036
2026
476,628
303,920
2027
337,622
54,943
2028
255,599
—
2029
56,967
—
Total lease payments
1,272,855
446,899
Less: Interest
(
147,346
)
(
30,029
)
Present value of lease liabilities
$
1,125,509
$
416,870
The following are the weighted average assumptions used for lease term and discount rate and supplemental cash flow information related to leases as of March 31, 2025:
As of March 31, 2025
Operating lease remaining lease term
2.8
years
Operating lease discount rate
7.41
%
Finance lease remaining lease term
1.2
years
Finance lease discount rate
9.43
%
Cash paid for operating leases
$
342,044
Cash paid for finance leases
$
297,547
NOTE 5 - REVENUE RECOGNITION
The Company derives its revenue primarily from the sale of seed products to seed distributors. From time to time, the Company utilizes excess capacity to provide conditioning, treating and packaging services to other seed producers. The Company also derives service revenue from Vision Bioenergy by providing administrative services under a service level agreement.
Revenue from seed product sales is recognized at the point in time at which control of the product is transferred to the customer. Generally, this occurs upon shipment of the product. Pricing for such transactions is negotiated and determined at the time the contracts are signed. We have elected the practical expedient that allows us to account for shipping and handling activities as a fulfillment cost, and we accrue those costs when the related revenue is recognized.
The Company has certain contracts with customers that offer a limited right of return on certain branded products through the end of the current sales year (September through August). The products must be in an unopened and undamaged state and must be resalable in the sole opinion of the Company to qualify for a refund. The Company uses a historical returns percentage to estimate the refund liability and records a reduction of revenue in the period in which revenue is recognized.
ADAMA Collaboration Agreement
The Company has an amended collaboration agreement, or the Amended Collaboration Agreement, with Makhteshim Agan of North America, Inc., or ADAMA, dated February 26, 2024, for the development and commercialization of the Double Team Sorghum Weed Control System, or DT, which is comprised of ADAMA’s ACCase herbicide used in concert with the Company’s ACCase tolerant ATS Sorghum product, Double Team Sorghum Cropping Solution. Although the DT product is designed to be used as a system, the Company sells only the Double Team sorghum seed portion of the system and recognizes the revenue consistent with its sales of other seed products.
Under the Amended Collaboration Agreement, the Company will only label and promote ATS Sorghum products with ADAMA herbicides, while ADAMA will not sell ACCase herbicides for use on competing ATS Sorghum products. Further, all DT related trademarks are jointly owned by the Company and ADAMA, and each company grants the other a royalty-free license to use these DT related trademarks. The costs of breeding, trait introgression, variety evaluation, performing quality assurance activities and obtaining seed registrations will be borne by the Company while the cost of development, performance evaluation, performing quality assurance activities and obtaining chemical registrations will be borne by ADAMA. The parties have agreed to share all other costs, except those associated with marketing communications.
Double Team sorghum seed sales were $
3.3
million and $
3.4
million for the three months ended March 31, 2025 and 2024, respectively. Double Team sorghum seed sales were $
5.1
million and $
7.9
million for the nine months ended March 31, 2025 and 2024, respectively.
18
Payment Terms and Related Balance Sheet Accounts
Accounts receivable represent amounts that are payable to the Company by its customers subject only to the passage of time. Payment
terms on invoices are generally
30
to
180
days for export customers and end of sales season (October 31st) for branded products sold within the United States. As the period between the transfer of goods and/or services to the customer and receipt of payment is less than
one year
, the Company does not separately account for a financing component in its contracts with customers.
The Company had $
0.1
million and $
0.2
million in unbilled receivables as of March 31, 2025 and June 30, 2024, respectively, which related to its service level agreement with Vision Bioenergy, as the Company bills Vision Bioenergy on a quarterly basis.
Losses on accounts receivable and unbilled receivables are recognized using a forward-looking approach. The Company considers current and expected future economic conditions as well as the performance of borrowers to determine the allowance for credit losses. During the three months ended March 31, 2025 and 2024, the Company recognized bad debt expense of $
0.0
million and $
0.1
million, respectively, associated with impaired accounts receivable. During the nine months ended March 31, 2025 and 2024, the Company recognized a provision for credit losses of $
0.2
million and $
0.6
million, respectively, associated with impaired accounts receivable.
Deferred revenue represents payments received from customers in advance of completion of the Company's performance obligation. During the nine months ended March 31, 2025 and 2024, the Company recognized $
0.5
million and $
0.4
million of revenue, respectively, that was included in the deferred balance as of June 30, 2024 and 2023, respectively.
Disaggregation of Revenue
The Company disaggregates revenue by type of contract and by destination country. The following table shows revenue from external sources by type of contract:
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
Seed sales:
Sorghum
$
7,732,892
$
7,844,083
$
12,136,359
$
17,088,393
Alfalfa
1,498,215
1,276,018
9,940,271
10,662,750
Other
180,564
54,905
429,810
59,070
Services
140,756
192,978
432,361
576,426
Total revenue
$
9,552,427
$
9,367,984
$
22,938,801
$
28,386,639
The following tables show revenue and percentage of revenue from external sources by destination country:
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
United States
$
8,660,317
91
%
$
7,877,056
84
%
$
16,395,669
71
%
$
16,136,306
57
%
Libya
—
0
%
—
0
%
1,295,550
6
%
1,755,000
6
%
Mexico
95,000
1
%
272,790
3
%
1,147,781
5
%
3,740,502
13
%
Sudan
—
0
%
—
0
%
807,530
4
%
1,267,933
4
%
South Africa
—
0
%
(
27,932
)
0
%
534,120
3
%
1,167,621
4
%
Egypt
—
0
%
—
0
%
496,360
2
%
348,000
1
%
Argentina
160,200
2
%
152,180
2
%
310,969
1
%
187,580
1
%
Uganda
—
0
%
—
0
%
299,640
1
%
329,935
1
%
Morocco
—
0
%
—
0
%
287,994
1
%
—
0
%
Japan
245,504
2
%
156,845
2
%
245,670
1
%
157,104
1
%
Saudi Arabia
—
0
%
—
0
%
—
0
%
1,997,553
7
%
Other
391,406
4
%
937,045
9
%
1,117,518
5
%
1,299,105
5
%
Total revenue
$
9,552,427
100
%
$
9,367,984
100
%
$
22,938,801
100
%
$
28,386,639
100
%
19
NOTE 6 – INTANGIBLE ASSETS
Intangible assets consist of the following:
Balance at June 30, 2024
Nine Months Ended March 31, 2025
Balance at March 31, 2025
Gross Carrying Amount
Accumulated Amortization
Net
Disposal
Amortization
Gross Carrying Amount
Accumulated Amortization
Net
Intellectual property
$
33,325,737
$
(
13,060,119
)
$
20,265,618
$
(
9,068,039
)
$
(
728,289
)
$
13,491,466
$
(
3,022,176
)
$
10,469,290
Trade name
1,831,928
(
1,178,972
)
652,956
(
612,822
)
(
34,923
)
232,329
(
227,118
)
5,211
Customer relationships
1,596,653
(
1,019,623
)
577,030
—
(
67,805
)
1,596,653
(
1,087,428
)
509,225
GI customer list
121,786
(
93,131
)
28,655
—
(
5,373
)
121,786
(
98,504
)
23,282
Supply agreement
1,512,667
(
888,692
)
623,975
—
(
56,725
)
1,512,667
(
945,417
)
567,250
Grower relationships
2,343,977
(
1,223,208
)
1,120,769
—
(
77,154
)
2,343,977
(
1,300,362
)
1,043,615
Internal use software
677,776
(
474,441
)
203,335
—
(
50,833
)
677,776
(
525,274
)
152,502
$
41,410,524
$
(
17,938,186
)
$
23,472,338
$
(
9,680,861
)
$
(
1,021,102
)
$
19,976,654
$
(
7,206,279
)
$
12,770,375
As outlined further in Note 3 - Discontinued Operations, the sale of S&W Australia on November 22, 2024 resulted in the Company transferring intangible assets with a carrying value of $
9.7
million to S&W Australia as consideration provided in this transaction. Of this amount, $
9.1
million related to intellectual property and $
0.6
million related to trade names.
Amortizatio
n expense totaled $
0.2
million and $
0.5
million for the three months ended March 31, 2025 and 2024, respectively. Amortization expense totaled $
1.0
million and $
1.4
million for th
e nine months ended March 31, 2025 and 2024, respectively.
Estimated aggregate remaining amortization is as follows:
Remainder of 2025
2026
2027
2028
2029
Thereafter
Amortization expense
$
229,337
$
900,605
$
849,721
$
795,496
$
785,319
$
9,209,897
NOTE 7 - PROPERTY, PLANT AND EQUIPMENT
Components of property, plant and equipment were as follows:
As of March 31, 2025
As of June 30, 2024
Land and improvements
$
586,849
$
586,849
Buildings and improvements
2,365,835
2,371,565
Machinery and equipment
8,784,859
8,621,280
Vehicles
642,929
648,836
Leasehold improvements
473,307
552,810
Construction in progress
—
28,453
Total property, plant and equipment
12,853,779
12,809,793
Less: accumulated depreciation
(
7,390,132
)
(
6,682,595
)
Property, plant and equipment, net
$
5,463,647
$
6,127,198
Depreciation expense totaled $
0.3
million for the three months ended March 31, 2025 and 2024. Depreciation expense totaled $
0.8
million for the nine months ended March 31, 2025 and 2024.
20
NOte 8 - investments
Shell Partnership
The terms and conditions of the Contribution and Membership Interest Purchase Agreement, or Purchase Agreement, with Shell relating to the February 6, 2023 partnership for the development and production of sustainable biofuel feedstocks through Vision Bioenergy are presented in Note 7 - Investments to t
he Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024. No new activity occurred during the nine months ended March 31, 2025. Activity in the period consisted of the recording of the Company's
34
% share of Vision Bioenergy's loss for the period, which is recorded to Equity in loss of equity method investees, net of tax in the Condensed Consolidated Statements of Operations.
The summarized unaudited balance sheet presented below reflects the financial information of Vision Bioenergy as of March 31, 2025 and June 30, 2024:
As of March 31, 2025 (Unaudited)
As of June 30, 2024 (Unaudited)
Cash
$
4,087,504
$
6,327,459
Other current assets
7,547,526
3,138,627
Fixed assets
17,404,708
17,866,091
Intangible assets
17,687,354
19,624,187
Goodwill
11,564,157
11,564,157
Other assets
121,349
235,613
TOTAL ASSETS
$
58,412,598
$
58,756,134
Current liabilities
$
3,903,146
$
1,485,283
Long-term liabilities
41,262
133,070
Equity
54,468,190
57,137,781
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
58,412,598
$
58,756,134
The summarized unaudited income statement presented below reflects the financial information of Vision Bioenergy for the three and nine months ended March 31, 2025 and 2024:
Three Months Ended March 31,
Nine Months Ended March 31,
2025 (Unaudited)
2024 (Unaudited)
2025 (Unaudited)
2024 (Unaudited)
Revenue
$
256,425
$
254,808
$
524,545
$
1,440,643
Gross profit (loss)
167,897
(
21,718
)
(
386,708
)
(
1,680
)
Loss from operations
(
2,093,852
)
(
2,181,599
)
(
6,752,578
)
(
6,409,108
)
Net loss
(
2,056,378
)
(
2,112,219
)
(
6,629,591
)
(
6,224,371
)
The following summarizes the carrying amount of the Company's equity method investments reflected in the Condensed Consolidated Balance Sheets:
As of March 31, 2025
As of June 30, 2024
Carrying Amount
Economic Interest
Carrying Amount
Economic Interest
Vision Bioenergy
$
17,440,148
34
%
$
19,694,209
34
%
Total equity method investments
$
17,440,148
$
19,694,209
For the nine months
ended March 31, 2025, the following activity occurred in the Company's equity method investments:
Vision Bioenergy
Carrying amount at June 30, 2024
$
19,694,209
Equity in loss of equity method investment
(
2,254,061
)
Carrying amount at March 31, 2025
$
17,440,148
21
NOTE 9 - DEBT
Total debt outstanding is presented on the Company's Condensed Consolidated Balance Sheets as follows:
As of March 31, 2025
As of June 30, 2024
Current portion of working capital lines of credit
Mountain Ridge
$
17,116,322
$
—
CIBC
—
16,279,194
Debt issuance costs
—
(
104,657
)
Total working capital lines of credit, net
$
17,116,322
$
16,174,537
Current portion of long-term debt
Finance leases
$
312,007
$
314,980
Vehicle loans - Ford Credit
78,054
106,852
Debt issuance costs
(
106,528
)
(
106,528
)
Total current portion, net
$
283,533
$
315,304
Long-term debt, less current portion
Finance leases
$
104,863
$
303,395
Vehicle loans - Ford Credit
156,707
222,063
Secured real estate note - AgAmerica
4,300,000
4,300,000
Debt issuance costs
(
23,640
)
(
103,609
)
Total long-term portion, net
$
4,537,930
$
4,721,849
Total debt, net
$
4,821,463
$
5,037,153
Mountain Ridge Credit Agreement
On
December 19, 2024
, the Company entered into a Credit and Security Agreement, or the Mountain Ridge Credit Agreement, with Mountain Ridge, as administrative agent, and the lenders party thereto. The Mountain Ridge Credit Agreement provides for a senior secured credit facility of up to $
25.0
million, or the Mountain Ridge Credit
Facility, which matures on
February 20, 2026
, provided, how
ever, that if on or prior to
December 22, 2025
, the maturity date of the term loan agreement entered into on June 20, 2023 between the Company and AgAmerica Lending LLC, or AgAmerica,
is extended to a maturity date on or after
March 19, 2028
, the maturity date under the Mountain Ridge Credit Agreement will be
December 19, 2027
, or the Mountain Ridge Maturity Date.
The initial advance under the Mountain Ridge Credit Facility was used to repay in full the Company’s obligations to CIBC pursuant to the Amended and Restated Loan and Security Agreement with CIBC, dated March 22, 2023, as amended, or the CIBC Loan Agreement. Future advances under the Mountain Ridge Credit Facility may be used to finance the Company’s ongoing working capital requirements and other general corporate purposes.
Availability of funds under the Mountain Ridge Credit Facility is subject to a borrowing base equal to the sum of (i) up to
95
% of eligible letters of credit, plus (ii) up to
70
% of eligible accounts (
provided
, that the maximum amount of eligible accounts that constitute (y) seasonal domestic accounts
(after giving effect to the advance rate) which may be included as part of this component of the borrowing base shall not exceed (1) during the calendar months of October, November, December, and January, $
3.0
million, (2) during the calendar month of February, $
4.0
million, (C) during the calendar months of March, July, August, and September, $
5.0
million, or (3) during the calendar months of April, May, and June, $
6.0
million, or (z) eligible insured foreign accounts (after giving effect to the advance rate) which may be included as part of this component of the borrowing base shall not exceed $
3.5
million); plus (iii) the lesser of (y) the product of
50
% multiplied by the net orderly liquidation value of eligible inventory, and (z) $
10.0
million, in each case ((i), (ii) and (iii)), as more fully set forth in the Mountain Ridge Credit Agreement and subject to lender reserves that Mountain Ridge may establish from time to time in its discretion, determined in good faith.
Loan advances under the Mountain Ridge Credit Facility bear interest at a rate per annum based on one-month term SOFR
plus
an applicable
margin
of
8.0
%. The interest rate under the Mountain Ridge Credit Facility as of March 31, 2025 w
as
12.32
%. The
Company’s obligations under the Mountain Ridge Credit Agreement are secured by a first priority security interest in substantially all of the Company’s assets (subject to certain exceptions), including intellectual property.
The Mountain Ridge Credit Agreement
contains certain customary representations and warranties, events of default, and affirmative and negative covenants, including limitations with respect to debt, liens, fundamental changes, asset sales, restricted payments, investments and transactions with affiliates, all subject to certain exceptions. Amounts due under the Mountain Ridge Credit Agreement
may be accelerated upon an event of default, as defined in the Mountain Ridge Credit Agreement, such as failure to pay amounts owed thereunder when due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject in some cases to cure periods. Additionally, upon the occurrence and during the continuance of an event of default, Mountain Ridge may elect to increase the existing interest rate on all of the Company’s outstanding obligations by
2.0
% per annum.
All amounts outstanding under the Mountain Ridge Credit Agreement, including, but not limited to, accrued and unpaid principal and interest due under the Mountain Ridge Credit Facility, will be due and payable in full on the Mountain Ridge Maturity Date.
22
As of March 31, 2025, the Company was in compliance with all financial covenants contained in the Mountain Ridge Credit Agreement. As of March 31, 2025, there was approximately $
1.6
million of unused availability on the Mountain Ridge Credit Facility, which had an available borrowing base of $
18.8
million.
The Company had $
1.1
million in debt issuance costs associated with the Mountain Ridge facility, which was capitalized as an asset within Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. As of March 31, 2025, $
0.3
million has been amortized with the remaining balance to be amortized over the remaining life of the facility.
On May 9, 2025, the Company entered into an amendment to the Mountain Ridge Credit Agreement. Refer to Note 15 - Subsequent Events for additional information.
CIBC Loan Agreement
On
December 26, 2019
, the Company entered into the CIBC Loan Agreement with CIBC, which originally provided for a $
35.0
million credit facility, or the CIBC Credit Facility. As described in Note 8 - Debt to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ende
d June 30, 2024, the CIBC Loan Agreement was subsequently amended on several occasions, including on March 22, 2023, when the Company entered into the Amended CIBC Loan Agreement. During the nine months ended March 31, 2025, the Amended CIBC Loan Agreement was amended as follows:
•
On July 3, 2024, the Company entered into a Third Amendment to the Amended and Restated Loan and Security Agreement, or the Third Amendment, with CIBC, which amended the Amended CIBC Loan Agreement, by and among the Company, as borrower, and CIBC, as administrative agent and sole lead arranger. The Third Amendment, effective as of July 1, 2024, among other things:
o
subject to the satisfaction of certain post-closing covenants, extended the maturity date from
August 31, 2024
to
October 31, 2024
, or the Maturity Date;
o
modified the maximum loan commitment under the Amended CIBC Loan Agreement to (i) $
20.0
million from July 1, 2024 through July 31, 2024, (ii) $
18.5
million from August 1, 2024 through September 1, 2024, (iii) $
17.5
million from September 2, 2024 through September 15, 2024, (iv) $
15.0
million from September 16, 2024 through October 9, 2024, and (v) $
13.0
million from October 10, 2024 through the Maturity Date;
o
modified the eligible inventory sublimit under the Amended CIBC Loan Agreement from $
5.0
million from July 1, 2024 through August 31, 2024 to (i) $
8.5
million from July 1, 2024 through July 14, 2024, (ii) $
7.5
million from July 15, 2024 through August 14, 2024, (iii) $
7.0
million from August 15, 2024 through September 15, 2024, (iv) $
6.5
million from September 16, 2024 through September 29, 2024, and (v) $
5.0
million from September 30, 2024 through the Maturity Date;
o
added certain post-closing covenants which, should the Company not comply with the amended terms, shall constitute an immediate event of default under the Amended CIBC Loan Agreement;
o
added a fee of $
15,000
payable by the Company to CIBC on the date of the Third Amendment;
o
added a fee of $
10,000
payable by the Company to CIBC monthly beginning July 1, 2024, and payable only if the eligible inventory sublimit is greater than $
5.0
million; and
o
added a fee of $
25,000
payable by the Company to CIBC on October 1, 2024, and payable only if the Company does not repay the obligations under the Amended CIBC Loan Agreement in full by September 30, 2024.
•
On October 31, 2024, the Company entered into a Fourth Amendment to the Amended and Restated Loan and Security Agreement with CIBC, or the Fourth Amendment, which amended the Amended CIBC Loan Agreement by and among the Company, as borrower, and CIBC, as administrative agent and sole lead arranger. The Fourth Amendment, effective as of October 31, 2024, among other things:
o
extended the maturity date from
October 31, 2024
to
November 30, 2024
, contingent upon the Company's delivery to CIBC of an amended letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, and for the benefit of CIBC, that expires no earlier than December 31, 2024, which was delivered on November 8, 2024; and
o
provided for a fee of $
25,000
payable by the Company to CIBC on the date of the Fourth Amendment.
•
On November 29, the Company entered into a Fifth Amendment to the Amended and Restated Loan and Security Agreement with CIBC, or the Fifth Amendment, which amended the Amended CIBC Loan Agreement by and among the Company, as borrower, and CIBC, as administrative agent and sole lead arranger. The CIBC Amendment, effective as of November 29, 2024, among other things:
23
o
extended the maturity date from
November 30, 2024
to
December 13, 2024
, on the condition that the Company delivers to CIBC an amended letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, and for the benefit of CIBC, that expires no earlier than January 13, 2025; and
o
provided for a fee of $
40,000
payable by the Company to CIBC on the date of the CIBC Amendment.
Except as modified by the Third Amendment, Fourth Amendment and Fifth Amendment, all terms and conditions of the Amended CIBC Loan Agreement remained in full force and effect until the loan was paid off on December 19, 2024.
Effective September 16, 2024, and until the loan was paid in full on December 19, 2024,
the revolving loan outstanding under the Amended CIBC Loan Agreement (as amended by the Third Amendment) exceeded the total revolving loan commitment thereunder, which constituted an event of default under the Amended CIBC Loan Agreement. On September 18, 2024, the Company received a reservation of rights letter from CIBC asserting the existence of such event of default, increasing the interest rate applicable to the loans by
2.0
% per annum (which is the default rate under the Amended CIBC Loan Agreement), where it remained until the loan was paid off on December 19, 2024.
AgAmerica Note
As described in Note 8 - Debt to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024, the Company entered into a term loan agreement, or the AgAmerica Loan Agreement, with
AgAmerica on
June 20, 2023
pursuant to which AgAmerica issued a term loan of $
4.3
million to the Company and, as security therefor, the Company granted to AgAmerica a mortgage on approximately
31
acres of land located in Lubbock and Moore Counties, Texas, and certain personal property thereon. No changes to this agreement have occurred during
the nine months ended March 31, 2025. Per the agreement, interest will accrue at a rate per annum equal to
4.85
% plus the Term
SOFR Rate
, defined as the forward-looking term rate based on the secured overnight financing rate, or SOFR, computed based on the actual number of days elapsed divided by a 360-day year. The annual interest rate as of March 31, 2025 was
9.26
%. Interest payments are due quarterly in arrears, commencing on June 20, 2023, and on the last day of each quarter thereafter, unless otherwise accelerated in accordance with the terms of the AgAmerica Loan Agreement.
The AgAmerica Loan Agreement contains certain customary representations and warranties, events of default, and affirmative and negative covenants, including (among others) limitations with respect to liens, fundamental changes, asset sales and formation and acquisition of subsidiaries, subject to certain exceptions. Upon the occurrence of an event of default, and subject to certain cure periods, AgAmerica may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the AgAmerica Loan Agreement, as applicable, provided that in the event of bankruptcy, all such amounts shall automatically become due and payable. Due to the delayed filing of the Annual Report on Form 10-K for the year ended June 30, 2024, the Company was not in compliance with the reporting requirements per the AgAmerica Loan Agreement; however, a waiver was received from AgAmerica for such non-compliance, executed on November 1, 2024. The Company is in compliance with all reporting requirements as of the date of this filing.
MFP Loan Agreement
On September 22, 2022, the Company’s largest stockholder, MFP, provided a letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, with an initial face amount of $
9.0
million for the benefit of CIBC, or the MFP Letter of Credit, as additional collateral to support the Company’s obligations under the CIBC Loan Agreement.
Concurrently, on September 22, 2022, the Company entered into a Subordinate Loan and Security Agreement with MFP, or the MFP Loan Agreement, pursuant to which any draw CIBC may make on the MFP Letter of Credit will be deemed to be a term loan advance made by MFP to the Company. The MFP Loan Agreement initially provided for up to $
9.0
million of term loan advances. In connection with the Company’s entry into the Amended CIBC Loan Agreement, the MFP Letter of Credit was amended to increase the maximum amount of term loan advances to $
13.0
million and extend the maturity date to
September 30, 2024
.
On July 16, 2024, the Company entered into a Fourth Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Fourth Amendment, amending the MFP Loan Agreement to (i) extend the maturity date of the letter of credit to
November 30, 2024
and (ii) extend the maturity date of the MFP Loan Agreement to
May 31, 2025
.
On October 31, 2024, the Company entered into a Fifth Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Fifth Amendment, further amending the MFP Loan Agreement to extend the maturity date of the letter of credit to
March 31, 2025
.
On November 27, 2024, the Company entered into a Sixth Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Sixth Amendment, further amending the MFP Loan Agreement to extend the maturity date of the letter of credit to
January 31, 2025
in order to satisfy the Fifth Amendment condition for CIBC as discussed above.
In connection with the Company’s entry into the Mountain Ridge Credit Agreement, MFP provided a letter of credit, issued by JPMorgan Chase Bank, N.A. for the account of MFP, with a face amount equal to $
13.0
million
for the benefit of Mountain Ridge, or the Second MFP Letter of Credit, as collateral to support the Company’s obligations under the Mountain Ridge Credit Agreement. In addition, the
24
Second
MFP Letter of Credit constitutes an eligible letter of credit under the Mountain Ridge Credit Agreement and, therefore, provides the Company with borrowing base credit under the Mountain Ridge Credit Facility.
Concurrently with the Company’s entry into the Mountain Ridge Credit Agreement, on December 19, 2024, the Company entered into a Seventh Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Seventh Amendment, further amending the MFP Loan Agreement to reflect the payoff of the CIBC Loan Agreement and cancellation of the amended letter of credit previously issued by JPMorgan Chase Bank, N.A. for the account of MFP, for the benefit of CIBC, as additional collateral to support the Company’s obligations under the CIBC Loan Agreement, and to reflect and facilitate the issuance of the Second MFP Letter of Credit. The MFP Seventh Amendment also extended the maturity date of the MFP Loan Agreement to
July 31, 2028
and the letter of credit to
January 31, 2028
. Except as modified by these amendments, all terms and conditions of the MFP Loan Agreement remain in full force and effect.
Pursuant to the amended MFP Loan Agreement, the Company accrues a cash fee to be paid to MFP equal to
4.25
% per annum on all amounts remaining undrawn under the Second MFP Letter of Credit. In the event any term advances are deemed made under the MFP Loan Agreement, such advances will bear interest at a rate per annum equal to term SOFR (with a floor of
1.25
%) plus
9.25
%,
50
% of which will be payable in cash on the last day of each fiscal quarter and
50
% of which will accrue as payment in kind interest payable on the maturity date, unless, with respect to any quarterly payment date, the Company elects to pay such interest in cash.
As of March 31, 2025,
no
amounts were outstanding. The MFP Loan Agreement, as amended, includes customary affirmative and negative covenants and events of default and is secured by substantially all of the Company’s assets and is subordinated to the Mountain Ridge Credit Agreement. Upon the occurrence and during the continuance of an event of default, MFP may declare all outstanding obligations under the MFP Loan Agreement immediately due and payable and take such other actions as set forth in the MFP Loan Agreement.
Maturities of Long-Term Debt
The annual maturities of long-term debt, excluding
finance lease liabilities, are as follows:
Fiscal Year
Amount
Remainder of 2025
$
23,774
2026
4,395,096
2027
95,096
2028
20,795
Total
$
4,534,761
NOTE 10 - BUSINESS SEGMENTS
Segment Reporting
Prior to the voluntary administration of S&W Australia, the Company had three operating and reportable segments that corresponded with its operating model, management structure, and internal reporting reviewed by its Chief Operating Decision Maker, Mark Herrmann, the Company's President and Chief Executive Officer. Effective with the loss of control of S&W Australia on July 24, 2024, this was reduced to
two
operating and reportable segments, Americas and International. The Company's Chief Operating Decision Maker currently allocates resources and assesses performance based on these two segments, with the key performance metric utilized being Gross profit.
Americas
: Consists of operations in the United States that results in sales across North and South America. Revenue in the Americas segment is largely made up of sorghum and alfalfa products.
International
: Consists of operations in the United States that results in sales to countries outside of North and South America. Revenue in the International segment is largely alfalfa products in addition to some sorghum products. A large concentration of these sales went to the Middle East and North Africa region.
As presented in the table below, Other consists of intercompany activity with S&W Australia. This has historically been eliminated; however, with the deconsolidation of this subsidiary, the activity is no longer eliminated on a prospective basis as of July 24, 2024.
25
Below is a summary of business activity by segment, including the significant segment expenses, that is reviewed by the Company's Chief Operating Decision Maker for the three and nine months ended March 31, 2025 and 2024:
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
Revenue
Americas
$
8,822,813
$
8,404,205
$
18,028,481
$
20,406,388
International
729,614
963,779
4,819,615
7,980,251
Other
—
—
90,705
—
Revenue
9,552,427
9,367,984
22,938,801
28,386,639
Gross profit (excluding depreciation and amortization)
Americas
3,473,174
2,464,517
6,115,670
6,773,708
International
132,158
(
158,893
)
906,337
1,790,996
Other
—
—
(
197,784
)
—
Gross profit (excluding depreciation and amortization)
$
3,605,332
$
2,305,624
$
6,824,223
$
8,564,704
The Company does not allocate Other (income) expense, Equity in loss of equity method investees, net of tax, or Assets by segment as these are not provided to its Chief Operating Decision Maker.
NOTE 11 – EQUITY
Reverse Stock Split
At the Company's special meeting of stockholders held on September 26, 2024, or the Special Meeting, the Company's stockholders approved, pursuant to Nevada Revised Statutes, or NRS, 78.2055, a reverse stock split of the Company's common stock at a ratio in the range of
1-for-5
to
1-for-20
, with such ratio to be determined in the discretion of the Board and with such reverse stock split to be effected at such time and date as determined by the Board in its sole discretion (but in no event later than January 31, 2025). Following the Special Meeting, on October 4, 2024, the Board unanimously approved, pursuant to NRS 78.2055, a reverse stock split of all issued and outstanding shares of our common stock, at a ratio of
1-for-19
, or the Reverse Stock Split. The Reverse Stock Split was implemented at 5:00 p.m. Eastern Time on October 17, 2024, or the Effective Time.
The terms of the Reverse Stock Split are such that every 19 shares of the Company’s issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in par value per share.
As a result of the Reverse Stock Split, proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all then outstanding stock options, restricted stock units and warrants, which resulted in a proportional decrease in the number of shares of the Company's common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock units and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants. In addition, the number of shares reserved for issuance under the Company's equity compensation plans immediately prior to the Effective Time was reduced proportionately.
No fractional shares were issued in connection with the Reverse Stock Split. Stockholders of record were issued one whole share of common stock in exchange for any fractional interest that such stockholder would have otherwise received as a result of the Reverse Stock Split. The Reverse Stock Split affected all stockholders of record proportionately and did not affect any stockholder’s percentage ownership of the Company’s common stock, except to the extent that the Reverse Stock Split resulted in any stockholder owning an additional share.
The Company's common stock began trading on a split-adjusted basis commencing upon market opening on The Nasdaq Capital Market on October 18, 2024.
MFP Warrants
On September 22, 2022, the Company entered into a Subordinate Loan and Security Agreement, or the MFP Loan Agreement, with MFP, pursuant to which any draw CIBC may make on the MFP Letter of Credit will be deemed to be a term loan advance made by MFP to the Company (see Note 9 - Debt). Pursuant to the terms and conditions of the MFP Loan Agreement and subsequent amendments on October 28, 2022, December 22, 2022 and March 22, 2023, warrants to purchase a total of
138,602
shares of the Company’s common stock were issued to MFP in fiscal 2023. All warrants will expire
five years
from the date of issuance and have exercise prices ranging from $
30.40
- $
40.85
per
share. The stated purchase prices of all of the MFP Warrants are subject to adjustment in connection with any stock dividends and splits, distributions with respect to common stock and certain fundamental transactions as described in the MFP Warrant. The MFP Warrants were valued using the Black-Scholes-Merton model as of the respective issue dates and recorded as financial commitment assets within Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The MFP Warrants financial
26
commitment
assets were amortized on a straight-line basis over the period from their initial issue dates through the end of the related MFP Letter of Credit commitment periods, which was initially September 30, 2024 until subsequently extended. As such, these were fully amortized as of September 30, 2024. During the nine months ended March 31, 2025 and 2024, $
0.2
million and $
0.6
million, respectively, was amortized as interest expense.
MFP is the Company’s largest shareholder. One of the Company’s directors, Alexander C. Matina, was Portfolio Manager of MFP Investors LLC, the general partner of MFP, until December 31, 2023, at which point he transitioned to an advisor role for MFP Investors LLC. Mr. Matina continues to serve on the Board.
Stock Purchase from MFP
On December 19, 2024, the Company entered into a Stock Purchase Agreement with MFP, or the Stock Purchase Agreement. Pursuant to the Stock Purchase Agreement, the Company repurchased
200,000
shares of the Company’s common stock, or the Repurchased Shares, directly from MFP in a private, non-underwritten transaction. The Repurchased Shares were retired and restored to the status of authorized but unissued shares of the Company.
Pursuant to the Stock Purchase Agreement, the Company granted MFP the right to designate one (1) individual, who shall be a representative of MFP reasonably acceptable to the Company, to attend all meetings (whether in person, telephonic or otherwise) of the Board in a non-voting, observer capacity, subject to certain exceptions. MFP has not designated a representative as of March 31, 2025.
NOTE 12 - EQUITY-BASED COMPENSATION
Stock Options
The Company utilizes a Black-Scholes-Merton option pricing model, which includes assumptions regarding the risk-free interest rate, dividend yield, life of the award, and the volatility of the Company's common stock to estimate the fair value of employee
options grants.
Weighted-average assumptions used in the Black-Scholes-Merton model are set forth below for the periods indicated:
As of March 31,
2025
2024
Risk free rate
4.1
% -
4.3
%
4.2
% -
4.8
%
Dividend yield
—
—
Volatility
80.7
%-
81.5
%
70.3
%-
70.6
%
Forfeiture rate
9.5
%
10.2
%
During the nine months ended March 31, 2025, the Company granted options to purchase
310,192
shares of its common stock to certain of its directors, members of the executive management team, other employees, and non-employee service providers at exercise prices ranging from $
2.30
- $
7.75
per share. These options vest in quarterly periods over
three years
and expire
ten years
from the date of grant.
A summary of stock option activity for the nine months ended March 31, 2025 is presented below:
Number of
Options
Weighted -
Average
Exercise
Price
Per Share
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at June 30, 2024
279,709
$
20.65
6.8
$
—
Granted
310,192
2.91
—
—
Exercised
—
—
—
—
Canceled/forfeited/expired
(
31,095
)
26.17
—
—
Outstanding at March 31, 2025
558,806
$
19.77
8.0
1,285,923
Options vested and exercisable at March 31, 2025
252,347
$
39.35
6.1
$
107,132
Options vested and expected to vest at March 31, 2025
557,337
$
19.81
8.0
$
1,283,181
On March 31, 2025, the Company had $
0.6
million of unrecognized stock compensation expense, net of estimated forfeitures, related to the options under the S&W Seed Company 2019 Equity Incentive Plan, or 2019 Plan, which will be recognized over the weighted average remaining service period of
2.4
years. The Company settles employee st
ock option exercises with newly issued shares of common stock.
Restricted Stock Units
During the nine months ended March 31, 2025 and 2024, the Company issued
74,386
and
62,931
restricted
stock units, respectively, to its directors, certain members of the executive management team, other employees, and non-employee service providers. The restricted stock
27
units
have varying vesting periods ranging from immediate vesting to quarterly or annual installments over
one
to
three years
. The fair value of the awards granted during the nine months ended March 31, 2025 and 2024 totaled $
0.5
million and $
0.7
million, respectively, and was based on the closing stock price on the date of grants.
A summary of activity related to non-vested restricted stock units is presented below:
Number of
Nonvested
Restricted Stock
Units
Weighted-Average
Grant Date Fair
Value
Weighted-Average
Remaining
Vesting Period
(Years)
Nonvested restricted units outstanding at June 30, 2024
64,602
$
11.40
1.2
Granted
74,386
11.35
1.0
Vested
(
65,137
)
10.14
—
Forfeited
(
1,790
)
-
—
Nonvested restricted units outstanding at March 31, 2025
72,061
$
6.85
1.0
On March 31, 2025, the Company had $
0.4
million of unrecognized stock compensation expense related to the restricted stock units, which will be recognized over the weighted average remaining service period of
1.0
years.
Stock-based Compensation Expense
Stock-based compensation expense recorded for grants of stock options, restricted stock grants and restricted stock units for the three months ended March 31, 2025 and 2024 totaled
$
0.2
million and $
0.3
million, respectively. Stock-based compensation expense recorded for grants of stock options, restricted stock grants and restricted stock units for the nine months ended March 31, 2025 and 2024 totaled
$
0.7
million and $
1.0
million, respectively.
On March 31, 2025, there w
ere
205,994
share
s available under the 2019 Plan for future grants and awards.
NOTE 13 – SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK
The terms and conditions of the Company’s Series B Redeemable Convertible Preferred Stock and accompanying warrant are presented in Note 14 - Series B Redeemable Convertible Preferred Stock to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024.
No
issuances or conversions of Series B Redeemable Convertible Preferred Stock occurred during the nine months ended March 31, 2025. Activity in the period consisted of accrual of dividends and accretion of the discount on the warrants.
The following summarizes changes to the Series B Convertible Preferred Stock:
Balance at June 30, 2024
$
5,768,765
Dividends accrued
311,028
Accretion of discount for warrants
77,513
Balance at March 31, 2025
$
6,157,306
28
NO
TE 14 - NON-CASH ACTIVITIES FOR STATEMENTS OF CASH FLOWS
The below table represents supplemental information to the Company’s condensed consolidated statements of cash flows for non-cash activities during the nine months ended March 31, 2025 and 2024, respectively, for continuing operations, unless otherwise specified:
Nine Months Ended March 31,
2025
2024
Non-cash investing activities:
ROU assets financed by lease liabilities and lease modifications and reassessments
$
255,808
$
1,081,430
Considerations with Avior for transfer of interest in S&W Australia (discontinued operations):
Settlement of net payables due to S&W Australia
15,336,849
—
Contribution of intangible assets
(
9,680,861
)
—
Contribution of inventory
(
5,940,878
)
—
Non-cash financing activities:
Dividends accrued for participating securities
311,028
290,322
Accretion of discount for Series B preferred stock warrants
77,513
77,513
NOTE 15 - SUBSEQUENT EVENTS
Vision Bioenergy Capital Call
On September 17, 2024, Vision Bioenergy issued a capital call notice in the amount of $
6.0
million to the Company and Shell. Based on the Company's and Shell's membership interest in Vision Bioenergy of
34.0
% and
66.0
%, respectively, the Company was required to pay $
2.0
million and Shell was required to pay $
4.0
million on or before January 3, 2025. Vision Bioenergy received payment from Shell in December 2024. On January 30, 2025, the Company, Vision Bioenergy and Shell entered into an agreement that allowed the Company until April 15, 2025 to pay its portion of the capital call. The agreement also provided that, in the event the Company did not pay its share by April 15, 2025, Shell had the immediate option to fund the Company's portion. If Shell elected to cover the Company's portion
of the capital call, the Company was required to promptly transfer to Shell
341
membership units in Vision Bioenergy, representing a
3.4
% membership interest. The Company did not fund its portion of the capital call by April 15, 2025 and Shell elected to fund the Company's $
2.0
million portion of the capital call. In turn, the Company transferred
341
Vision Bioenergy membership units to Shell. Effective April 23, 2025, the Company's membership interest was reduced to
30.6
% while Shell's membership interest increased to
69.4
%.
Mountain Ridge Amendment
On May 9, 2025, the Company entered into Amendment No. 1 and Waiver to the Mountain Ridge Credit Agreement, or the Mountain Ridge Amendment, which amended the Mountain Ridge Credit Agreement by and among the Company, as borrower, and Mountain Ridge, as administrative agent and sole lead arranger. The Mountain Ridge Amendment, among other things:
•
waived existing events of default, which included:
o
the Company's failure to immediately prepay the obligations in an aggregate amount equal to the amount by which the outstanding balance exceeded the available borrowing base reflected in the certification delivered by the Company to Mountain Ridge on April 9, 2025; and
o
the Company's failure to cause S&W Holdings Australia Pty Ltd, an Australian private limited company, to be dissolved by April 18, 2025. S&W Holdings Australia Pty Ltd must now be dissolved by July 31, 2025. Failure by the Company to do so will constitute an event of default; and
•
revised the covenant calculation definition of "EBITDA", with effectiveness retroactive to December 31, 2024, to add two new add-backs (clauses (7) and (8) of the definition of "EBITDA") as follows:
o
"EBITDA" means, for any fiscal period, net income (or loss) for that period adjusted to exclude each of the following for that period (all calculated on a consolidated basis for the Loan Parties): (1) interest expense, (2) non-cash amortization of debt discount, (3) taxes, (4) depreciation and amortization, (5) non-cash stock based compensation, (6) non-cash foreign currency loss, (7) non-cash gains or losses on sales of fixed assets or discontinued or disposed of operations, including the discontinuation or disposition of a subsidiary or line of business, in each case to the extent
29
such sale or disposition is permitted hereunder, and (8) non-cash gains or losses attributable to the Company's equity investment in Vision Bioenergy to the extent such investment is accounted for by the equity method of accounting (provided, that to the extent any non-cash item added back to EBITDA in any period pursuant to any of the foregoing clauses results in a cash payment in such period or a subsequent period, such cash payment shall result in a reduction of EBITDA in the period when such payment is made).
Except as modified by the Mountain Ridge Amendment, all terms and conditions of the Mountain Ridge Credit Agreement remain in full force and effect.
30
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
You should read the following discussion of our financial condition and results of operations in conjunction with our Condensed Consolidated Financial Statements and the related notes included in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements as referred to under the heading “Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Factors that could cause or contribute to these differences include those discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, particularly in Part I, Item 1A., “Risk Factors.”
Strategic Review
We have maintained our strategic path for operations and future growth in sorghum while continuing to execute and refine our key centers of value for our alfalfa business. With grower adoption of our Double Team sorghum solution accelerating since its fiscal 2022 launch and the continued technological development of our traited forage and grain sorghum products in fiscal 2025, including the introduction of two new traits - the second generation of Double Team and Prussic Acid Free - we believe we are in a unique position to be the leading technology provider of this important global crop.
We have continued to align our cost structure to support our key centers of value in order to drive the business towards profitability. We have reduced obsolescence costs through improved life cycle management and SKU optimization efforts with the reduction of low margin forage lines and seed treatment offerings. We continue to recognize improvement in our seed cost position as additional operational efficiency plans are implemented and guided by best-in-class cost standards.
In fiscal 2025, we are launching a new business model for many of our private label customers focused on licensing our product for them to sell. There are multiple components, including a production agreement, germplasm agreement and trait agreement, where applicable. The production agreement will provide customers with their requested, high quality seed, while the germplasm and trait agreements will only allow us to collect revenue based on when the customer sells their product, which is treated as a royalty. We believe that by switching to this strategy, we will not only be more aligned with our competitors, but also provide our customers with more flexibility and control over their costs.
On January 13, 2025, we announced that our board of directors, or Board, commenced a process to explore and evaluate various strategic alternatives that may be available to us in an effort to enhance shareholder value. We expect to consider a broad range of potential opportunities, including, among others, a sale of the Company, a merger with another strategic partner, a recapitalization or continued execution of our attractive long-term business plan. There are no assurances the review process will result in us pursuing any transaction or any other strategic outcome, nor is there a timetable for completion of this process.
Voluntary Administration Process Involving S&W Australia
On July 24, 2024, our wholly-owned subsidiary S&W Seed Company Australia Pty Ltd., or S&W Australia, adopted a voluntary plan of administration based on its determination that S&W Australia was likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001. As a result of the voluntary administration process, effective July 24, 2024, we no longer controlled S&W Australia for accounting purposes, resulting in S&W Australia being deconsolidated from our financial statements as of July 24, 2024.
On October 11, 2024, creditors of S&W Australia approved a proposed Deed of Company Arrangement, or DOCA, pursuant to which, among other things, our outstanding shares of S&W Australia would be transferred to Avior Asset Management No. 3 Pty Ltd. In order to facilitate the satisfaction of certain conditions to the effectiveness of the DOCA, on November 22, 2024, we entered into (i) a Business Transfer Agreement, (ii) a Transitional Services Deed, and (iii) a Deed of Settlement and Release with S&W Australia. The Company also entered into a Deed of Release of U.S. Corporate Guarantee with National Australia Bank Limited, or NAB, and obtained a release of certain applicable liens from CIBC Bank USA, or CIBC.
Business Transfer Agreement
Under the Business Transfer Agreement, we transferred certain intellectual property rights related to alfalfa and white clover seeds necessary for S&W Australia’s continued operations, or the IP Rights, with a carrying value of $9.7 million, along with certain related inventory valued at approximately $6.0 million, to S&W Australia. Pursuant to the agreement, S&W Australia granted us a non-exclusive, non-transferable, royalty-bearing license to the IP Rights for the sale of products in the United States, Mexico, Canada, Central America, and South America for a term of five years. S&W Australia is entitled to receive a royalty in the mid-single digits from us on gross revenue generated from the licensed IP Rights.
Transitional Services Deed
Under the Transitional Services Deed, we agreed to continue providing certain services we have generally provided to S&W Australia on a temporary basis to support the transition of services from us to S&W Australia. Each party will be responsible for its own transition
31
costs. The services provided per the Transitional Services Deed will terminate between February 22, 2025 and August 31, 2025, unless terminated earlier pursuant to its terms.
Deed of Settlement and Release
Under the Deed of Settlement and Release, in consideration for our (i) transfers under the Business Transfer Agreement, (ii) services rendered under the Transitional Services Deed and (iii) certain other payments, S&W Australia released us from all our net intercompany liabilities and obligations owed to S&W Australia, which equated to a net liability of $15.3 million on November 22, 2024.
Deed of Release of U.S. Corporate Guarantee
Under the Deed of Release of U.S. Corporate Guarantee, NAB released us from all liability under S&W Australia's finance agreement with NAB, which was guaranteed by the Company up to a maximum of AUD $15.0 million, or the Parent Guarantee, related to the NAB Finance Agreement. The fair value of this guarantee as of September 30, 2024 was $5.0 million, which we recorded in our Condensed Consolidated Balance Sheets.
Lien Release
Pursuant to the Amended CIBC Loan Agreement, CIBC obtained a security interest in our assets. In connection with the execution of the agreements listed above, CIBC consented to the transfer of, and released its security interests in, the assets of ours to be transferred to S&W Australia pursuant to the Business Transfer Agreement as described above.
Reverse Stock Split
At a special meeting of stockholders held on September 26, 2024, our stockholders approved a reverse stock split of our common stock at a ratio in the range of 1-for-5 to 1-for-20, with such ratio to be determined in the discretion of our Board and on October 4, 2024 the Board unanimously approved a reverse stock split of all issued and outstanding shares of our common stock, at a ratio of 1-for-19, or the Reverse Stock Split. The Reverse Stock Split was implemented at 5:00 p.m. Eastern Time on October 17, 2024.
Our common stock began trading on a split-adjusted basis commencing upon market opening on The Nasdaq Capital Market on October 18, 2024. We have retroactively adjusted all share amounts and per share data herein to give effect to the Reverse Stock Split.
Global Economic Conditions
We are or may be subject to additional risks and uncertainties as a result of adverse geopolitical and macroeconomic events, such as the ongoing military conflict between Ukraine and Russia and related sanctions, changing U.S. and foreign trade policies, including increased trade restrictions or tariffs, uncertain market conditions, including higher inflation and supply chain disruptions, recent bank failures, and other global events, which have had and may continue to have an adverse impact on our business, operations and the markets and communities in which we, our partners and customers operate.
Following the invasion of Ukraine by Russia in early 2022, the U.S. and global financial markets experienced volatility, which has led to disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity globally. In response to the invasion, the United States, United Kingdom and European Union, along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future. The full economic and social impact of the sanctions imposed on Russia and possible future punitive measures that may be implemented, as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia and related sanctions, which could conceivably expand into the surrounding region, remains uncertain; however, both the conflict and related sanctions have resulted and could continue to result in disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity on acceptable terms, in both Europe and globally, and has introduced significant uncertainty into global markets.
The new U.S. administration has imposed tariffs on China, Mexico, and Canada, with the imposition on the latter two countries currently paused as of the date of this filing. Our business is directly impacted by these tariffs and/or their downstream effects, which have led or may lead to retaliatory tariffs being implemented by said countries, which could have a material adverse effect on our business. For example, China is a leading importer of sorghum produced in the United States and any retaliatory tariffs would adversely effect our margins and could lead to decreased sales. Additionally, sales of our products to Mexico could be impacted by tariffs or trade restrictions. At this time, we cannot predict whether, or to what extent, any tariffs may affect us or our business going forward.
Our product revenue is predicated on our ability to timely fulfill customer orders, which depends in large part upon the consistent availability and operation of shipping and distribution networks operated by third parties. Farmers typically have a limited window during which they can plant seed, and their buying decisions can be shaped by actual or perceived disruptions in our distribution and supply channels, or concerns about our ability to timely fulfill their orders. If our customers delay or decrease their orders due to potential disruptions in our distribution and supply channels, including as a result of adverse geopolitical and macroeconomic events, this will adversely affect our product revenue.
32
The ultimate impact of adverse geopolitical and macroeconomic events will have on our Condensed Consolidated Financial Statements remains uncertain and ultimately will be dictated by the length and severity of such events and any broad-based supply chain disruptions, labor shortages, rising levels of inflation and interest rates, tightening of credit markets or other developments resulting from recent geopolitical and macroeconomic events. We will continue to evaluate the nature and extent of those potential and evolving impacts to our business and Condensed Consolidated Financial Statements.
Components of Our Statements of Operations Data
Revenue
We derive most of our revenue from the sale of our proprietary seed varieties and hybrids. We expect that over the next several years, a substantial majority of our revenue will be generated from the sale of sorghum and alfalfa, although we are continually assessing other possible product offerings or means to increase revenue, including expanding into higher margin crops.
The mix of our product offerings will continue to change over time with the introduction of new seed varieties and hybrids resulting from our robust research and development efforts. Potential sources of new revenue include expansion of novel, non-GMO product lines, entry into gene-edited product markets, entry into specialty crop markets, such as biofuels, and additional strategic transactions.
Our revenue will fluctuate depending on the timing of orders from our customers and distributors and the extent to which markets are impacted by sources of instability and volatility in global markets and industries. In fiscal 2024, we were impacted, among other things, by the military conflict between Russia and Ukraine, changing U.S. and foreign trade policies, including trade restrictions or tariffs, supply chain issues and global inflation. Because some of our large customers and distributors order in bulk only one or two times per year, our product revenue can fluctuate significantly from period to period. In addition, due to the numerous logistical challenges we have experienced in our shipping and distribution networks resulting from current geopolitical and macroeconomic events, our product revenue has fluctuated, and our ability to recognize revenues within a particular fiscal period has been impacted. We expect our product revenue will fluctuate from period to period as a result of current geopolitical and macroeconomic conditions.
Cost of Revenue (Excluding Depreciation and Amortization) and Gross Profit
Cost of revenue relates to sale of our seed products and consists of the cost of procuring seed, plant conditioning and packaging costs, direct labor and raw materials and overhead costs. Gross profit represents the profit remaining after deducting these costs from total revenue. As Double Team sorghum continues to gain market acceptance, we expect to see favorability in our gross profit.
Operating Expenses
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of employee costs, including salaries, employee benefits and share-based compensation, as well as professional service fees, insurance, marketing, travel and entertainment expense, public company expense and other overhead costs. We proactively take steps on an ongoing basis to control selling, general and administrative expenses as much as is reasonably possible.
Research and Development Expenses
Research and development expenses consist of costs incurred in the discovery, development, breeding and testing of new products incorporating the traits we have specifically selected. These expenses consist primarily of employee salaries and benefits, consultant services, land leased for field trials, chemicals and supplies and other external expenses.
Overall, we have been focused on controlling research and development expenses, while balancing that objective against the recognition that continued advancement in product development is an important part of our strategic planning. We intend to focus our resources on high value activities. For sorghum, we plan to invest in higher value grain products, proprietary herbicide tolerance traits and improved safety and palatability in forage products. We expect our research and development expenses will fluctuate from period to period as a result of the timing of various research and development projects.
Our internal research and development costs are expensed as incurred, while third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. The costs associated with equipment or facilities acquired or constructed for research and development activities that have alternative future uses are capitalized and depreciated on a straight-line basis over the estimated useful life of the asset.
Depreciation and Amortization
We amortize intangible assets, including Chromatin Inc. in 2018 and from SV Genetics Pty Ltd in 2016, using the straight-line method over the estimated useful life of the asset, consisting of periods of 10 to 30 years for technology/IP/germplasm, 5 to 20 years for customer relationships and trade names and 10 to 20 years for other intangible assets. Property, plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset, consisting of periods of 5 to 35 years for buildings, 3 to 20 years for machinery and equipment, 7 to 10 years for leasehold improvements and 2 to 5 years for vehicles.
33
Other (Income) Expense
Other (income) expense consists of foreign currency losses, interest expense, interest expense resulting from the amortization of debt discount, and other income. Interest expense and interest expense - amortization of debt discount primarily consists of interest costs related to outstanding borrowings on our working capital credit facilities. Amortization of the MFP Letter of Credit asset is also recorded to Interest expense - amortization of debt discount.
Provision for (Benefit from) Income Taxes
Our effective tax rate is based on income, statutory tax rates, differences in the deductibility of certain expenses and inclusion of certain income items between financial statement and tax return purposes, and tax planning opportunities available to us in the various jurisdictions in which we operate. Under U.S. generally accepted accounting principles, or GAAP, if we determine that a tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. Tax regulations require certain items to be included in the tax return at different times than when those items are required to be recorded in the Condensed Consolidated Financial Statements. As a result, our effective tax rate reflected in our Condensed Consolidated Financial Statements is different from that reported in our tax returns. Some of these differences are permanent, such as meals and entertainment expenses that are not fully deductible on our tax return, and some are temporary differences, such as depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax return in future years for which we have already recorded the tax benefit in our Condensed Consolidated Statements of Operations. Based on financial projections, we do not believe that it is more likely than not that our U.S. deferred tax assets will be realized, and a full valuation allowance is recorded against them.
Equity in Loss of Equity Method Investee, Net of Tax
Equity in loss of equity method investee, net of tax, represents our proportionate share of loss from our 34% interest in Vision Bioenergy for the periods presented.
Results of Operations
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
The following table presents our results of operations for the periods indicated:
Three Months Ended March 31,
2025
2024
Change
$
% of
Revenue
(1)
$
% of
Revenue
(1)
$
% Change
Revenue
$
9,552,427
100.0
%
$
9,367,984
100.0
%
$
184,443
2.0
%
Cost of revenue (excluding depreciation and amortization)
5,947,095
62.3
%
7,062,360
75.4
%
(1,115,265
)
(15.8
)%
Gross profit
3,605,332
37.7
%
2,305,624
24.6
%
1,299,708
56.4
%
Operating expenses
Selling, general and administrative expenses
2,955,365
30.9
%
3,960,684
42.3
%
(1,005,319
)
(25.4
)%
Research and development expenses
734,521
7.7
%
767,210
8.2
%
(32,689
)
(4.3
)%
Depreciation and amortization
578,047
6.1
%
815,807
8.7
%
(237,760
)
(29.1
)%
Total operating expenses
4,267,933
44.7
%
5,543,701
59.2
%
(1,275,768
)
(23.0
)%
Loss from operations
(662,601
)
(6.9
)%
(3,238,077
)
(34.6
)%
2,575,476
(79.5
)%
Other (income) expense
Foreign currency loss (gain)
1,611
0.0
%
25,168
0.3
%
(23,557
)
(93.6
)%
Interest expense - amortization of debt discount
241,375
2.5
%
367,624
3.9
%
(126,249
)
(34.3
)%
Interest expense, net
657,042
6.9
%
740,347
7.9
%
(83,305
)
(11.3
)%
Other income
(23,629
)
(0.2
)%
(50,476
)
(0.5
)%
26,847
(53.2
)%
Net loss from continuing operations before income taxes
(1,539,000
)
(16.1
)%
(4,320,740
)
(46.1
)%
2,781,740
(64.4
)%
Provision for income taxes
3,831
0.0
%
1,720
0.0
%
2,111
122.7
%
Net loss from continuing operations before equity in net earnings of affiliates
(1,542,831
)
(16.2
)%
(4,322,460
)
(46.1
)%
2,779,629
(64.3
)%
Equity in loss of equity method investee, net of tax
682,286
7.1
%
487,617
5.2
%
194,669
39.9
%
Net loss from continued operations
$
(2,225,117
)
(23.3
)%
$
(4,810,077
)
(51.3
)%
$
2,584,960
(53.7
)%
Net loss from discontinued operations
(10,917
)
(0.1
)%
(667,409
)
(7.1
)%
656,492
(98.4
)%
Net loss
$
(2,236,034
)
(23.4
)%
$
(5,477,486
)
(58.5
)%
$
3,241,452
(59.2
)%
(1) Amount in column may not foot due to rounding
The discussion and analysis presented below is concerned with material changes in our results of operations between the three months ended March 31, 2025 and the three months ended March 31, 2024. All comparisons presented are with respect to the prior year period, unless stated otherwise. This discussion and analysis should be read in conjunction with the “Management’s Discussion and Analysis of
34
Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC on November 1, 2024. If activity is consistent year-over-year, explanations may not be given.
Revenue
The $0.2 million quarter-over-quarter increase in revenue is due to a $0.6 million increase in non-dormant alfalfa sales in Mexico, a $0.4 million increase in conventional grain sorghum sales in the United States, and a $0.2 million increase from newly introduced Prussic Acid Free sorghum sales. These increases were partially offset by a $0.5 million decrease in sorghum sales into Asia due to the separation from the Australian entity and market focus going forward, a $0.3 million decrease in sorghum sales in Mexico due to credit restrictions, and a $0.2 million decrease in dormant alfalfa sales in the United States.
Cost of Revenue (Excluding Depreciation and Amortization) and Gross Profit
Cost of revenue decreased quarter-over-quarter. Our gross profit percentage increased to 37.7% from 24.6% compared to the prior year period. The gross profit increase of 13.1 points was primarily attributable to a 7.0 point improvement from the decrease in sorghum inventory write-downs, a 3.0 point improvement attributable to our international margins due to shift from non-dormant alfalfa mix to sorghum, a 3.0 percent increase attributable to margins from North America alfalfa sales, and a slight increase in margin attributable to the shift from conventional sorghum to higher margin Prussic Acid Free sorghum.
Selling, General and Administrative Expenses
The $1.0 million decrease in selling, general and administrative expenses is attributable to a $0.7 million decrease in compensation and benefits and other personnel expenses, a $0.3 million decrease in legal and accounting fees, a $0.1 million decrease in stock based compensation, a $0.1 million decrease in advertising and marketing expenses, and a $0.1 million decrease in other operating expenses related to lower bad debt. This decrease was partially offset by a $0.2 million increase in one-time transaction expenses and a $0.1 million increase in insurance due to higher premium renewals.
Depreciation and Amortization
Depreciation and amortization expenses decreased by $0.2 million following contributions of intangible assets in the voluntary administration settlement that occurred in November 2024, with these assets being transferred to S&W Australia.
Interest Expense - Amortization of Debt Discount
The slight decrease in debt amortization expense is due to changes in the amortization of costs associated with the Mountain Ridge and CIBC credit facilities.
Interest Expense, Net
Interest expense for the three months ended March 31, 2025 and 2024 primarily consisted of interest incurred on our working capital facilities, the AgAmerica loan, the MFP Loan, and equipment capital leases. The $0.1 million decrease was primarily due to fewer charges associated with the working capital facilities.
Provision for Income Taxes
The income tax expense totaled $0.0 million for the three months ended March 31, 2025 and 2024. Our effective tax rate was (0.3%) and 0.0% during the three months ended March 31, 2025 and 2024, respectively. Our effective tax rate for the three months ended March 31, 2025 was due primarily to the valuation allowance recorded against substantially all of our deferred tax assets. Due to the valuation allowance, we do not record the income tax expense or benefit related to substantially all of our current year operation results.
Equity in Loss of Equity Method Investees, Net of Tax
The loss on equity investments of $0.7 million and $0.5 million for the three months ending March 31, 2025 and 2024, respectively, was related to our proportionate share of loss from our 34% interest in Vision Bioenergy.
Net Loss from Discontinued Operations
The $0.7 million change in net loss from discontinued operations for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 is attributable to S&W Australia operations during the three months ended March 31, 2024. Refer to Note 3 - Discontinued Operations in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.
35
Nine Months Ended March 31, 2025 Compared to the Nine Months Ended March 31, 2024
The following table presents our results of operations for the periods indicated:
Nine Months Ended March 31,
2025
2024
Change
$
% of
Revenue
(1)
$
% of
Revenue
(1)
$
% Change
Revenue
$
22,938,801
100.0
%
$
28,386,639
100.0
%
$
(5,447,838
)
(19.2
)%
Cost of revenue (excluding depreciation and amortization shown separately below)
16,114,578
70.3
%
19,821,935
69.8
%
(3,707,357
)
(18.7
)%
Gross profit
6,824,223
29.7
%
8,564,704
30.2
%
(1,740,481
)
(20.3
)%
Operating expenses:
Selling, general and administrative expenses
11,645,402
50.8
%
12,357,152
43.5
%
(711,750
)
(5.8
)%
Research and development expenses
2,308,927
10.1
%
2,269,692
8.0
%
39,235
1.7
%
Depreciation and amortization
2,088,851
9.1
%
2,441,191
8.6
%
(352,340
)
(14.4
)%
Loss (gain) on disposal of property, plant and equipment
21,484
0.1
%
(70,373
)
(0.2
)%
91,857
(130.5
)%
Total operating expenses
16,064,664
70.0
%
16,997,662
59.9
%
(932,997
)
(5.5
)%
Loss from operations
(9,240,441
)
(40.3
)%
(8,432,958
)
(29.7
)%
(807,483
)
9.6
%
Other expense (income):
Foreign currency loss
10,350
0.0
%
611
0.0
%
9,739
1594.6
%
Interest expense - amortization of debt discount
955,190
4.2
%
1,071,686
3.8
%
(116,496
)
(10.9
)%
Interest expense, net
2,249,157
9.8
%
2,250,914
7.9
%
(1,757
)
(0.1
)%
Other income
(1,806
)
(0.0
)%
(147,370
)
(0.5
)%
145,564
(98.8
)%
Net loss from continuing operations before income taxes
(12,453,332
)
(54.3
)%
(11,608,799
)
(40.9
)%
(844,533
)
7.3
%
Provision for (benefit from) income taxes
6,523
0.0
%
(8,740
)
(0.0
)%
15,263
(174.6
)%
Net loss from continuing operations before equity in net earnings of affiliates
(12,459,855
)
(54.3
)%
(11,600,059
)
(40.9
)%
(859,796
)
7.4
%
Equity in loss of equity method investee, net of tax
2,254,061
9.8
%
1,841,630
6.5
%
412,431
22.4
%
Net loss from continued operations
$
(14,713,916
)
(64.1
)%
$
(13,441,688
)
(47.4
)%
$
(1,272,227
)
9.5
%
Net loss from discontinued operations
(5,412,701
)
(23.6
)%
(4,486,760
)
(15.8
)%
(925,941
)
20.6
%
Net loss
$
(20,126,617
)
(87.7
)%
$
(17,928,448
)
(63.2
)%
$
(2,198,169
)
12.3
%
(1) Amount in column may not foot due to rounding
The discussion and analysis presented below is concerned with material changes in our results of operations between the nine months ended March 31, 2025 and the nine months ended March 31, 2024. All comparisons presented are with respect to the prior year period, unless stated otherwise. This discussion and analysis should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC on November 1, 2024. If activity is consistent year-over-year, explanations may not be given.
Revenue
The $5.4 million year-over-year decrease in revenue is due to a $2.4 million decrease in non-dormant alfalfa sales in the Middle East North Africa region driven by the import ban on alfalfa in Saudi Arabia and separation of the Australian entity, a $2.3 million decrease in Double Team grain sorghum sales based on the timing of our private label shipping, a $2.2 million decrease in sorghum sales in Mexico related to tightening of credit policies and carryover seed from the prior year in the market, a $0.6 million decrease in sorghum sales to South Africa due to limited inventory supply of compatible hybrids, and a $0.4 million decrease in sorghum sales in Asia due to the separation from the Australian entity and market focus going forward. These decreases were partially offset by a $0.9 million increase in dormant alfalfa sales due to a strategic bulk sale of conditioned dormant alfalfa, a $0.9 million increase in non-dormant alfalfa sales in North America, a $0.4 million increase in conventional grain sorghum sales in the United States and a $0.2 million increase from newly introduced Prussic Acid Free sorghum sales.
Cost of Revenue (Excluding Depreciation and Amortization) and Gross Profit
As anticipated with the decrease in revenue, cost of revenue decreased year-over-year. Our gross profit percentage also experienced a slight decrease to 29.7% from 30.2% compared to the prior year period. The gross profit decrease was attributable to a 3.8 point decrease in our international business, partially offset by a 2.6 point increase in conventional sorghum margins due to lower inventory write-offs, a 0.6 point increase attributable to the shift from conventional sorghum to Prussic Acid Free sorghum, and a 0.2 point increase in alfalfa margins in North America.
Selling, General and Administrative Expenses
The $0.7 million decrease in selling, general and administrative expenses is attributable to a $0.9 million decrease in compensation and benefits and other personnel expenses, a $0.4 million in other operating expenses related to lower bad debt, a $0.2 million decrease in stock based compensation, a $0.2 million decrease in office expenses related to lower software licenses, computer network, and rent expenses, and a $0.2 million decrease in advertising and marketing expenses. This was partially offset by a $0.8 million increase in one-time transaction expenses the Company incurred related to the S&W Australia entity voluntary administration process, a $0.2 million
36
increase in insurance due to higher premium renewals, a $0.1 million increase in board of director fees, and a $0.1 million increase due to a reduction in expenses associated with the service level agreement with Vision Bioenergy.
Depreciation and Amortization
Depreciation and amortization expenses decreased by $0.4 million following contributions of intangible assets in the voluntary administration settlement that occurred in November 2024, with these assets being transferred to S&W Australia.
Loss on Disposal of Property, Plant, and Equipment
There was a $0.1 million increase in loss recognized on the disposal of property, plant, and equipment related to the disposal of fixed assets held in the United States.
Interest Expense - Amortization of Debt Discount
The slight decrease in debt amortization expense is due to changes in the amortization of costs associated with the Mountain Ridge and CIBC credit facilities.
Provision for (Benefit from) Income Taxes
The income tax expense totaled $0.0 million for the nine months ended March 31, 2025 and 2024. Our effective tax rate was (0.1%) and 0.1% during the nine months ended March 31, 2025 and 2024, respectively. Our effective tax rate for the nine months ended March 31, 2025 was due primarily to the valuation allowance recorded against substantially all of our deferred tax assets. Due to the valuation allowance, we do not record the income tax expense or benefit related to substantially all of our current year operation results.
Equity in Loss of Equity Method Investees, Net of Tax
The loss on equity investments of $2.3 million and $1.8 million for the nine months ending March 31, 2025 and 2024, respectively, was related to our proportionate share of loss from our 34% interest in Vision Bioenergy.
Net Loss from Discontinued Operations
The $0.9 million change in net loss from discontinued operations is due to the $5.2 million loss on the disposal of S&W Australia recognized on July 24, 2024 and a $0.2 million loss attributable to S&W Australia operations, which captured activity from July 1, 2024 through July 24, 2024 for the nine months ended March 31, 2025, offset by a $4.5 million loss attributable to S&W Australia operations for the nine months ended March 31, 2024. Refer to Note 3 - Discontinued Operations in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.
Results of Business Segments
Prior to the voluntary administration of S&W Australia, we had three operating and reportable segments that corresponded with our operating model, management structure, and internal reporting reviewed by our Chief Operating Decision Maker, who is our President and Chief Executive Officer. Effective with the loss of control of S&W Australia on July 24, 2024, this was reduced to two operating and reportable segments. Our Chief Operating Decision Maker currently allocates resources and assesses performance based on these two segments, which are Americas and International.
Americas
: Consists of operations in the United States that results in sales across North and South America. Total revenue for the Americas segment represented 92% and 90% of our total consolidated revenue for the three months ended March 31, 2025 and 2024, respectively, and was largely made up of sorghum and alfalfa sales. Americas revenue increased by $0.4 million due to a $0.4 million increase in conventional grain sorghum sales in the United States and a $0.2 million increase in sales of our new Prussic Acid Free sorghum, partially offset by a $0.2 million decrease in dormant alfalfa sales in the United States.
For the nine months ended March 31, 2025 and 2024, total revenue for the Americas segment represented 79% and 72% of our total consolidated revenue, and was largely made up of alfalfa and sorghum sales. Americas revenue decreased by $2.4 million due to fewer shipments of Double Team grain sorghum based on timing of our private label shipping and non-dormant alfalfa due to lower domestic demand as well as decreased sorghum sales in Mexico related to tightening of credit policies and carryover seed from the prior year in the market. This was partially offset by increased dormant alfalfa sales due to a strategic bulk shipment of conditioned alfalfa, increased sales of conventional sorghum in the United States due to increased available supply, increased non-dormant alfalfa sales in Mexico, and increased sales of our higher margin Prussic Acid Free sorghum recently introduced.
International
: Consists of operations in the United States that results in sales to countries outside of North and South America. Revenue in the International segment is largely alfalfa products in addition to some sorghum products. A large concentration of these sales went to the Middle East and North Africa region. Total revenue for the International segment represented 8% and 10% of our total consolidated revenue for the three months ended March 31, 2025 and 2024, respectively. Total revenue decreased by $0.2 million due primarily to a decrease in non-dormant alfalfa sales in the Middle East North Africa region driven by the import ban on alfalfa in Saudi Arabia.
For the nine months ended March 31, 2025 and 2024, total revenue for the International segment represented 21% and 28% of our total revenue for the three months ended March 31, 2025 and 2024, respectively, and was largely alfalfa product sales in addition to some
37
sorghum and sunflower product sales. Total revenue decreased by $3.2 million for the nine months ended March 31, 2025 due to fewer sales to the Middle East North Africa region due to the import ban in Saudi Arabia, amongst other reasons.
As presented in the table below, Other consists of intercompany activity with S&W Australia. This has historically been eliminated; however, as we are not consolidating this subsidiary, the activity is no longer eliminated.
Our total revenue broken out by reportable segment for the three and nine months ended March 31, 2025 and 2024 was as follows:
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
Americas
$
8,822,813
92
%
$
8,404,205
90
%
$
18,028,481
79
%
$
20,406,388
72
%
International
729,614
8
%
963,779
10
%
4,819,615
21
%
7,980,251
28
%
Other
—
0
%
—
0
%
90,705
0
%
—
0
%
Total revenue
$
9,552,427
100
%
$
9,367,984
100
%
$
22,938,801
100
%
$
28,386,639
100
%
Our gross profit (excluding depreciation and amortization) and gross profit percentage broken out by reportable segment for the three and nine months ended March 31, 2025 and 2024 were as follows:
For the three months ended March 31, 2025
For the nine months ended March 31, 2025
Segment
Revenue
Gross Profit (Excluding Depreciation and Amortization)
Gross Profit %
Revenue
Gross Profit (Excluding Depreciation and Amortization)
Gross Profit %
Americas
$
8,822,813
$
3,473,174
39.4
%
$
18,028,481
$
6,115,670
33.9
%
International
729,614
132,158
18.1
%
4,819,615
906,337
18.8
%
Other
—
—
—
90,705
(197,784
)
-218.1
%
Total
$
9,552,427
$
3,605,332
37.7
%
$
22,938,801
$
6,824,223
29.7
%
For the three months ended March 31, 2024
For the nine months ended March 31, 2024
Segment
Revenue
Gross Profit (Excluding Depreciation and Amortization)
Gross Profit %
Revenue
Gross Profit (Excluding Depreciation and Amortization)
Gross Profit %
Americas
$
8,404,205
$
2,464,517
29.3
%
$
20,406,388
$
6,773,708
33.2
%
International
963,779
(158,893
)
-16.5
%
7,980,251
1,790,996
22.4
%
Total
$
9,367,984
$
2,305,624
24.6
%
$
28,386,639
$
8,564,704
30.2
%
Both gross profit and gross profit percentage increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to increased sales and a more favorable product mix with fewer inventory write-downs in the Americas segment in addition to favorability in gross profit of the International segment, which saw negative gross profit for the three months ended March 31, 2024.
For the nine months ending March 31, 2025 compared to the nine months ending March 31, 2024, both gross profit and gross profit percentage decreased due to fewer sales and a less favorable product mix. For the Americas segment, this decrease is primarily attributable to reduced sales of our high margin Double Team sorghum and a strategic sale of dormant alfalfa product, partially offset by an increase attributable to the sale of North America conventional sorghum and our non-dormant alfalfa business. For the International segment, this decrease is driven by lower selling prices in the Middle East North Africa region due to lower demand.
Liquidity and Capital Resources
Our working capital and working capital requirements fluctuate from quarter to quarter depending on the phase of the growing and sales cycle that falls during a particular quarter. Our need for cash has historically been highest in the second and third fiscal quarters (October through March) because we pay our North American contracted growers progressively, starting in the second fiscal quarter. In fiscal 2024, we paid our North American growers approximately 50% of amounts due in the fall of 2023 and the balance was paid in the spring of 2024. This payment cycle to our growers was similar in fiscal 2023 and we expect it to be similar for fiscal 2025.
Historically, due to the concentration of sales to certain distributors, our month-to-month and quarter-to-quarter sales and associated cash receipts are highly dependent upon the timing of deliveries to and payments from these distributors, which varies significantly from year-to-year.
We continuously monitor and evaluate our credit policies with all our customers based on historical collection experience, current economic and market conditions and a review of the current status of the respective trade accounts receivable balance. Our principal working capital components include cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and our working capital lines of credit.
In addition to funding our business with cash from operations, we have historically relied upon occasional sales of our debt and equity securities and credit facilities from financial institutions.
38
As previously discussed, S&W Australia adopted a voluntary plan of administration on July 24, 2024 based on its determination that it was likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001. As a result of the voluntary administration process, effective July 24, 2024, we no longer controlled S&W Australia for accounting purposes, resulting in S&W Australia being deconsolidated from our financial statements as of July 24, 2024.
On October 11, 2024, creditors of S&W Australia approved a proposed DOCA, pursuant to which, among other things, our outstanding shares of S&W Australia would be transferred to Avior Asset Management No. 3 Pty Ltd. In order to facilitate the satisfaction of certain conditions to the effectiveness of the DOCA, on November 22, 2024, we entered into (i) a Business Transfer Agreement, (ii) a Transitional Services Deed, and (iii) a Deed of Settlement and Release with S&W Australia. The Company also entered into a Deed of Release of U.S. Corporate Guarantee with NAB and obtained a release of certain applicable liens from CIBC. As a result of these executed agreements, we transferred all of our shares in S&W Australia to Avior Asset Management No. 3 Pty Ltd. on November 22, 2024.
Capital Resources and Material Cash Requirements
We are not profitable and have had negative cash flow from operations for the last several years, excluding the fiscal 2023 gain recognized in relation to the Vision Bioenergy partnership. To help fund our operations, we have relied on debt and equity financings, and we will need to obtain additional funding to finance our operations in the future. Accordingly, we are actively evaluating financing and strategic alternatives, including debt and equity financings and potential sales of assets or certain lines of business.
We expect to meet our future cash requirements and obligations through a combination of existing cash and cash equivalents, cash flows from operations, and through debt financing, among other sources of capital. Our ability to fund our operating needs will depend on our ability to generate sufficient cash flows through sales of our products, our ability to find other sufficient financing options if we are unable to renew our existing debt facilities, the impacts of adverse geopolitical and macroeconomic events, and other factors, including those discussed under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC on November 1, 2024.
Below is a summary of material changes to our sources of capital during fiscal 2025 to date:
Mountain Ridge Loan Agreement
On December 19, 2024, we entered into a Credit and Security Agreement, or the Mountain Ridge Credit Agreement, with ABL OPCO LLC, or Mountain Ridge, as administrative agent, and the lenders party thereto. The Mountain Ridge Credit Agreement provides for a senior secured credit facility of up to $25.0 million, or the Mountain Ridge Credit Facility, which matures on February 20, 2026, provided, however, that if on or prior to December 22, 2025, the maturity date of the term loan agreement entered into on June 20, 2023 between us and AgAmerica Lending LLC, or AgAmerica, is extended to a maturity date on or after March 19, 2028, the maturity date under the Mountain Ridge Credit Agreement will be December 19, 2027, or the Mountain Ridge Maturity Date.
The initial advance under the Mountain Ridge Credit Facility was used to repay in full our obligations to CIBC pursuant to the Amended and Restated Loan and Security Agreement with CIBC, dated March 22, 2023, as amended, or the CIBC Loan Agreement. Future advances under the Mountain Ridge Credit Facility may be used to finance our ongoing working capital requirements and other general corporate purposes. Availability of funds under the Mountain Ridge Credit Facility is subject to a borrowing base equal to the sum of (i) up to 95% of eligible letters of credit, plus (ii) up to 70% of eligible accounts (provided, that the maximum amount of eligible accounts that constitute (y) seasonal domestic accounts (after giving effect to the advance rate) which may be included as part of this component of the borrowing base shall not exceed (1) during the calendar months of October, November, December, and January, $3.0 million, (2) during the calendar month of February, $4.0 million, (C) during the calendar months of March, July, August, and September, $5.0 million, or (3) during the calendar months of April, May, and June, $6.0 million, or (z) eligible insured foreign accounts (after giving effect to the advance rate) which may be included as part of this component of the borrowing base shall not exceed $3.5 million); plus (iii) the lesser of (y) the product of 50% multiplied by the net orderly liquidation value of eligible inventory, and (z) $10.0 million, in each case ((i), (ii) and (iii)), as more fully set forth in the Mountain Ridge Credit Agreement and subject to lender reserves that Mountain Ridge may establish from time to time in its discretion, determined in good faith.
Loan advances under the Mountain Ridge Credit Facility bear interest at a rate per annum based on one-month term SOFR
plus
an applicable margin of 8.0%. Our obligations under the Mountain Ridge Credit Agreement are secured by a first priority security interest in substantially all of our assets (subject to certain exceptions), including intellectual property.
The Mountain Ridge Credit Agreement
contains certain customary representations and warranties, events of default, and affirmative and negative covenants, including limitations with respect to debt, liens, fundamental changes, asset sales, restricted payments, investments and transactions with affiliates, all subject to certain exceptions. Amounts due under the Mountain Ridge Credit Agreement
may be accelerated upon an event of default, as defined in the Mountain Ridge Credit Agreement, such as failure to pay amounts owed thereunder when due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject in some cases to cure periods. Additionally, upon the occurrence and during the continuance of an event of default, Mountain Ridge may elect to increase the existing interest rate on all of our outstanding obligations by 2.0% per annum.
39
All amounts outstanding under the Mountain Ridge Credit Agreement, including, but not limited to, accrued and unpaid principal and interest due under the Mountain Ridge Credit Facility, will be due and payable in full on the Mountain Ridge Maturity Date.
On May 9, 2025, we entered into Amendment No. 1 and Waiver to the Mountain Ridge Credit Agreement, or the Mountain Ridge Amendment, which amended the Mountain Ridge Credit Agreement by and among us, as borrower, and Mountain Ridge, as administrative agent and sole lead arranger. The Mountain Ridge Amendment, among other things:
•
waived existing events of default, which included:
o
our failure to immediately prepay the obligations in an aggregate amount equal to the amount by which the outstanding balance exceeded the available borrowing base reflected in the certification delivered by us to Mountain Ridge on April 9, 2025; and
o
our failure to cause S&W Holdings Australia Pty Ltd, an Australian private limited company, to be dissolved by April 18, 2025. S&W Holdings Australia Pty Ltd must now be dissolved by July 31, 2025. Failure by us to do so will constitute an event of default; and
•
revised the covenant calculation definition of "EBITDA", with effectiveness retroactive to December 31, 2024, to add two new add-backs (clauses (7) and (8) of the definition of "EBITDA") as follows:
o
"EBITDA" means, for any fiscal period, net income (or loss) for that period adjusted to exclude each of the following for that period (all calculated on a consolidated basis for the Loan Parties): (1) interest expense, (2) non-cash amortization of debt discount, (3) taxes, (4) depreciation and amortization, (5) non-cash stock based compensation, (6) non-cash foreign currency loss, (7) non-cash gains or losses on sales of fixed assets or discontinued or disposed of operations, including the discontinuation or disposition of a subsidiary or line of business, in each case to the extent such sale or disposition is permitted hereunder, and (8) non-cash gains or losses attributable to our equity investment in Vision Bioenergy to the extent such investment is accounted for by the equity method of accounting (provided, that to the extent any non-cash item added back to EBITDA in any period pursuant to any of the foregoing clauses results in a cash payment in such period or a subsequent period, such cash payment shall result in a reduction of EBITDA in the period when such payment is made).
Except as modified by the Mountain Ridge Amendment, all terms and conditions of the Mountain Ridge Credit Agreement remain in full force and effect.
CIBC Loan Agreement
On July 3, 2024, we entered into a Third Amendment to the Amended and Restated Loan and Security Agreement, or the Third Amendment, with CIBC, which amended the Amended CIBC Loan Agreement, by and among us, as borrower, and CIBC, as administrative agent and sole lead arranger. The Third Amendment, effective as of July 1, 2024, among other things:
•
subject to the satisfaction of certain post-closing covenants, extended the maturity date from August 31, 2024 to October 31, 2024, or the Maturity Date;
•
modified the maximum loan commitment under the Amended CIBC Loan Agreement to (i) $20.0 million from July 1, 2024 through July 31, 2024, (ii) $18.5 million from August 1, 2024 through September 1, 2024, (iii) $17.5 million from September 2, 2024 through September 15, 2024, (iv) $15.0 million from September 16, 2024 through October 9, 2024, and (v) $13.0 million from October 10, 2024 through the Maturity Date;
•
modified the eligible inventory sublimit under the Amended CIBC Loan Agreement from $5.0 million from July 1, 2024 through August 31, 2024 to (i) $8.5 million from July 1, 2024 through July 14, 2024, (ii) $7.5 million from July 15, 2024 through August 14, 2024, (iii) $7.0 million from August 15, 2024 through September 15, 2024, (iv) $6.5 million from September 16, 2024 through September 29, 2024, and (v) $5.0 million from September 30, 2024 through the Maturity Date;
•
added certain post-closing covenants which, should we not comply with the amended terms, shall constitute an immediate event of default under the Amended CIBC Loan Agreement;
•
added a fee of $15,000 payable by us to CIBC on the date of the Third Amendment;
•
added a fee of $10,000 payable by us to CIBC monthly beginning July 1, 2024, and payable only if the eligible inventory sublimit is greater than $5.0 million; and
•
added a fee of $25,000 payable by us to CIBC on October 1, 2024, and payable only if we do not repay the obligations under the Amended CIBC Loan Agreement in full by September 30, 2024.
On October 31, 2024, we entered into a Fourth Amendment to the Amended and Restated Loan and Security Agreement with CIBC, or the Fourth Amendment, which amended the Amended CIBC Loan Agreement by and among us, as borrower, and CIBC, as administrative agent and sole lead arranger. The Fourth Amendment, effective as of October 31, 2024, among other things:
40
•
extended the maturity date from October 31, 2024 to November 30, 2024, and, contingent upon our delivery to CIBC of an amended letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, and for the benefit of CIBC, that expires no earlier than December 31, 2024, which was delivered on November 8, 2024; and
•
provided for a fee of $25,000 payable by us to CIBC on the date of the Fourth Amendment.
On November 29, we entered into a Fifth Amendment to the Amended and Restated Loan and Security Agreement with CIBC, or the Fifth Amendment, which amended the Amended CIBC Loan Agreement by and among us, as borrower, and CIBC, as administrative agent and sole lead arranger. The CIBC Amendment, effective as of November 29, 2024, among other things:
•
extended the maturity date from November 30, 2024 to December 13, 2024, on the condition that we deliver to CIBC an amended letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, and for the benefit of CIBC, that expires no earlier than January 13, 2025; and
•
provided for a fee of $40,000 payable by us to CIBC on the date of the CIBC Amendment.
Except as modified by the Third Amendment, Fourth Amendment and Fifth Amendment, all terms and conditions of the Amended CIBC Loan Agreement remained in full force and effect until the loan was paid off on December 19, 2024.
Effective September 16, 2024, and until the loan was paid off on December 19, 2024, the revolving loan outstanding under the Amended CIBC Loan Agreement (as amended by the Third Amendment) exceeded the total revolving loan commitment thereunder, which constituted an event of default under the Amended CIBC Loan Agreement. On September 18, 2024, we received a reservation of rights letter from CIBC asserting the existence of such event of default, increasing the interest rate applicable to the loans by 2% per annum (which is the default rate under the Amended CIBC Loan Agreement), and reserving CIBC’s right to immediately exercise any of CIBC’s other rights or remedies under the Amended CIBC Loan Agreement as it deemed appropriate. CIBC did not accelerate the indebtedness under the Amended CIBC Loan Agreement prior to it being paid in full on December 19, 2024.
MFP Loan Agreement
On July 16, 2024, we entered into a Fourth Amendment to Subordinate Loan and Security Agreement with MFP, amending the MFP Loan Agreement to (i) extend the maturity date of the letter of credit to November 30, 2024 and (ii) extend the maturity date of the MFP Loan Agreement to May 31, 2025.
On October 31, 2024, we entered into a Fifth Amendment to Subordinate Loan and Security Agreement with MFP, further amending the MFP Loan Agreement to extend the maturity date of the letter of credit to March 31, 2025.
On November 27, 2024, we entered into a Sixth Amendment to Subordinate Loan and Security Agreement with MFP, further amending the MFP Loan Agreement to extend the maturity date of the letter of credit to January 31, 2025 in order to satisfy the Fifth Amendment condition for CIBC as discussed above.
In connection with our entry into the Mountain Ridge Credit Agreement, MFP provided a letter of credit, issued by JPMorgan Chase Bank, N.A. for the account of MFP, with a face amount equal to $13.0 million for the benefit of Mountain Ridge, or the Second MFP Letter of Credit, as collateral to support our obligations under the Mountain Ridge Credit Agreement. In addition, the Second MFP Letter of Credit constitutes an eligible letter of credit under the Mountain Ridge Credit Agreement and, therefore, provides us with borrowing base credit under the Mountain Ridge Credit Facility.
Concurrently with our entry into the Mountain Ridge Credit Agreement, on December 19, 2024, we entered into a Seventh Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Seventh Amendment, further amending the MFP Loan Agreement to reflect the payoff of the CIBC Loan Agreement and cancellation of the amended letter of credit previously issued by JPMorgan Chase Bank, N.A. for the account of MFP, for the benefit of CIBC, as additional collateral to support our obligations under the CIBC Loan Agreement. The MFP Seventh Amendment also extended the maturity date of the MFP Loan Agreement to July 31, 2028 and the letter of credit to January 31, 2028. Except as modified by these amendments, all terms and conditions of the MFP Loan Agreement remain in full force and effect.
AgAmerica Note
No amendments have occurred to the AgAmerica Agreement for the nine months ended March 31, 2025 or subsequent to period end. Due to the delayed filing of the Annual Report on Form 10-K for the year ended June 30, 2024, we were not in compliance with the reporting requirements per the AgAmerica Loan Agreement; however, a waiver was received from AgAmerica for such non-compliance, executed on November 1, 2024.
Summary
The Mountain Ridge Credit Agreement contains various operating and financial covenants. Adverse geopolitical and macroeconomic events and uncertain market conditions have increased the risk of our inability to comply with these covenants, which could result in acceleration of our repayment obligations and foreclosure on our pledged assets.
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Our future liquidity and capital requirements will be influenced by numerous factors, including:
•
the maturity and repayment of our debt;
•
the extent and sustainability of future operating income;
•
the level and timing of future sales and expenditures;
•
timing for when we are able to recognize revenue;
•
working capital required to support our growth;
•
our ability to timely pay our growers;
•
investment capital for plant and equipment;
•
investment in our sales and marketing programs;
•
investment capital for potential acquisitions;
•
our ability to renew and/or refinance our debt on acceptable terms;
•
our ability to raise equity financing, in order to secure refinancing as well as support our operations, among other things;
•
competition;
•
market developments; and
•
developments related to adverse geopolitical and macroeconomic events, including bank failures, inflation and supply chain disruptions.
We cannot assure you that we will be successful in renewing or refinancing our existing debt, raising additional capital, securing future waivers and/or amendments from Mountain Ridge or our other lenders, or securing new financing. If we are unsuccessful in doing so, we may need to reduce the scope of our operations, repay amounts owing to our lenders, finance our cash needs through a combination of equity and debt financings, enter into collaborations, strategic alliances and licensing arrangements, sell certain assets or divest certain operations.
If we are required or desire to raise additional capital in the future, whether as a condition to loan refinancing or separately, such additional financing may not be available on favorable terms, or available at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest would be diluted and the terms of these securities could include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, may be secured by all or a portion of our assets, and may be on terms less favorable than our existing loans. If we fail to obtain additional capital as and when required, such failure could have a material impact on our business, results of operations and financial condition.
As a result of the ongoing military conflict between Russia and Ukraine, changing U.S. and foreign trade policies, including increased trade restrictions or tariffs, and other geopolitical and macroeconomic factors beyond our control, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. On March 10, 2023, the Federal Deposit Insurance Corporation took control and was appointed receiver of Silicon Valley Bank. While we did not have deposits at Silicon Valley Bank, if other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition. It is possible that further deterioration in credit and financial markets and confidence in economic conditions will occur. If equity and credit markets deteriorate, it may affect our ability to raise equity capital, borrow on our existing facilities, access our existing cash, or make any additional necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. In addition, our ability to comply with the terms of our loan agreements can be compromised and could result in an event of default. If an event of default were to occur, our lenders could accelerate our repayment obligations or enforce their other rights under our agreements with them. Any such default may also require us to seek additional or alternative financing, which may not be available on commercially reasonable terms or at all.
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Summary of Cash Flows
The following table shows a summary of our cash flows for the nine months ended March 31, 2025 and 2024 from our continuing operations:
Nine Months Ended March 31,
2025
2024
Cash flows from operating activities
$
1,086,952
$
(3,967,820
)
Cash flows from investing activities
(168,642
)
5,847,589
Cash flows from financing activities
(856,652
)
(5,169,784
)
Effect of exchange rate changes on cash
6,331
2,921
Net increase (decrease) in cash and cash equivalents
67,989
(3,287,094
)
Cash and cash equivalents, beginning of period
286,508
3,389,698
Cash and cash equivalents, end of period
$
354,497
$
102,604
Operating
Activities
For the nine months ended March 31, 2025, operating activities provided $1.1 million in cash. Of this, the net loss excluding non-cash items as detailed on the statement of cash flows used $8.1 million in cash and changes in operating assets and liabilities as detailed on the statement of cash flows provided $9.2 million in cash. The increase in cash from changes in operating assets and liabilities was primarily driven by a $5.7 million increase in accounts payable, a $3.0 million decrease in accounts receivable, a $1.4 million increase in deferred revenue from prepayments for our fiscal 2025 United States domestic business, and a $1.2 million decrease in prepaid expenses and other current assets, partially offset by a $1.2 million decrease in accrued expenses and other current liabilities, a $0.5 million increase in inventories, a $0.4 million increase in receivable from unconsolidated subsidiary, and a $0.2 million increase in other non-current assets.
For the nine months ended March 31, 2024, operating activities used $4.0 million in cash. Of this, the net loss excluding non-cash items as detailed on the statement of cash flows used $5.5 million in cash and changes in operating assets and liabilities as detailed on the statement of cash flows provided $1.6 million in cash. The increase in cash from changes in operating assets and liabilities was primarily driven by a $5.7 million decrease in accounts receivable, a $2.0 million increase in deferred revenue, and a $1.3 million decrease in prepaid expenses and other current assets, partially offset by a $4.9 million decrease in accounts payable, a $1.9 million increase in receivable from unconsolidated subsidiary, a $0.5 million decrease in payable to unconsolidated subsidiary, and a $0.2 million decrease in accrued expenses and other current liabilities.
Investing Activities
Investing activities during the nine months ended March 31, 2025 used $0.2 million in cash, which resulted from $0.2 million in additions to property, plant and equipment for our United States facilities.
Investing activities during the nine months ended March 31, 2024 provided $5.8 million in cash, which resulted from $6.0 million in proceeds from the sale of business interest and $0.1 million in proceeds from the disposal of property, plant and equipment, partially offset by $0.3 million in additions to property, plant and equipment for our United States facilities.
Financing Activities
Financing activities during the nine months ended March 31, 2025, used $0.9 million in cash, consisting of $1.4 million in payments of debt issuance costs and $0.3 million in repayments of long term debt, partially offset by $0.8 million in net borrowings and repayments on the working capital lines of credit.
Financing activities during the nine months ended March 31, 2024, used $5.2 million in cash, consisting of $4.9 million in net borrowings and repayments on the working capital lines of credit, $0.2 million in payments of debt issuance costs, and $0.2 million in net proceeds from sale of common stock partially offset by $0.1 million in borrowings of long-term debt.
Inflation Risk
Inflationary pressures on labor and commodity price increases directly impacted our condensed consolidated results of operations during the nine months ended March 31, 2025 and we expect this to continue throughout the remainder of fiscal year 2025. We attempt to manage any inflationary costs through selective price increases and changes in product mix, but rapidly changing inflationary pressures from global commodity prices and logistics could impact our costs of goods before pricing adjustments can be implemented. Delays in implementing such price increases, competitive pressures, and other factors may limit our ability to recover such cost increases in the future. Inherent volatility experienced in certain commodity markets could have a significant effect on our results of operations and may have an adverse effect on us in the future. The extent of any impact will depend on our ability to manage such volatility through the product mix that we sell and selective price increases.
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Critical Accounting Estimates
In preparing our financial statements, we must select and apply various accounting policies in accordance with GAAP. Our most significant policies are discussed in Note 2 - Summary of Significant Accounting Policies, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q. In order to apply our accounting policies, we often need to make estimates, judgments and assumptions that we believe are reasonable, based upon the information available to us. In making such estimates, we rely on historical experience, market and other conditions, and on assumptions that we believe to be reasonable. However, the estimation process is by its nature uncertain given that estimates depend on events over which we may not have control. If market and other conditions change from those that we anticipate, our results of operations, financial condition and changes in financial condition may be materially affected. In addition, if our assumptions change, we may need to revise our estimates, or to take other corrective actions, either of which may also have a material effect on our results of operations, financial condition or changes in financial condition. Members of our senior management have discussed the development and selection of our critical accounting estimates, and our disclosure regarding them, with the audit committee of our Board, and do so on a regular basis.
Other than the bank guarantee below, assessed in the first fiscal quarter of 2025 and released this quarter, there have been no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC on November 1, 2024.
Bank Guarantee
Our obligations under the Parent Guarantee were not subject to stay in connection with S&W Australia’s voluntary administration and followed the terms of the facilities S&W Australia had with NAB. As we lost control and deconsolidated S&W Australia as a result of the voluntary administration process, we recognized a liability for the fair value of the Parent Guarantee per ASC 460,
Guarantees
. We assessed the fair value of the Parent Guarantee as of July 24, 2024 and elected to record the guarantee at fair value as of each reporting date, with any changes in fair value being recorded as a gain or loss in our Condensed Consolidated Statements of Operations. We obtained an independent valuation, assigning probabilities under various scenarios and applying estimated recovery and discount rates, which resulted in a $5.0 million liability being recorded for the Parent Guarantee under Bank guarantee in the our Condensed Consolidated Balance Sheets as of September 30, 2024. On November 22, 2024, we were released from this liability in connection with the settlement of the voluntary administration and, as such, this liability was removed in our Condensed Consolidated Balance Sheets.
Item 3. Quantitative and Qualitat
ive Disclosures About Market Risk.
We are a smaller reporting company and, therefore, we are not required to provide information typically disclosed under this item.
Item 4. Controls
and Procedures.
Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a‑15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, and as a result of the material weaknesses described below, our Principal Executive Officer and Principal Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures were not effective at a reasonable assurance level.
Notwithstanding such material weaknesses in internal control over financial reporting, our Principal Executive Officer and Principal Financial Officer have concluded that our Condensed Consolidated Financial Statements included in this report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles, or GAAP.
Material Weaknesses in Internal Control Over Financial Reporting
During the year ended June 30, 2024, in connection with the preparation of our annual financial statements as of and for the year ended June 30, 2024, we identified a material weakness in our internal control over financial reporting. The material weakness in internal control
44
over financial reporting related to having inadequate controls to appropriately analyze all relevant information required for complete and accurate presentation and disclosure under GAAP, or the First Material Weakness.
During the three months ended September 30, 2024, the Company identified an additional material weakness. The Company lacked an effectively designed system of internal control to ensure appropriate recognition and measurement of non-routine transactions under GAAP, or the Second Material Weakness.
Status of Remediation of Material Weakness
To remediate the First Material Weakness, during the nine months ended March 31, 2025, we continued our efforts to improve our controls over financial reporting with respect to the analysis of all relevant information required for complete and accurate presentation and disclosure under GAAP. Management has updated its internal control procedures to include, among other things, quarterly monitoring of any changes within the Company and its impact on financial reporting. We have updated our internal control procedures to include quarterly monitoring of any changes within the Company and its impact on financial reporting as well as formalizing a more robust process around financial statement reviews to ensure complete and accurate presentation and disclosure.
As it pertains to the Second Material Weakness, we have implemented certain changes in our internal controls to address the material weakness to include quarterly monitoring of non-routine transactions, including detailed reviews with all applicable parties, and its impact on our financial reporting to ensure appropriate recognition and measurement under GAAP to address this material weakness.
While we believe that these efforts have improved our internal control over financial reporting, the implementation of our remediation is ongoing and we will not consider the material weaknesses remediated until our controls are operational for a sufficient period of time and tested, enabling management to conclude that the controls are operating effectively. Therefore, the First Material Weakness and Second Material Weakness have not been remediated as of March 31, 2025.
While the foregoing measures are intended to effectively remediate the material weaknesses described in this Item 4, it is possible that additional remediation steps will be necessary. As such, as we continue to evaluate and implement our plan to remediate the material weaknesses, our management may decide to take additional measures to address the material weaknesses or modify the remediation steps described above. Until the material weaknesses are remediated, we plan to continue to perform additional analyses and other procedures to help ensure that our Condensed Consolidated Financial Statements are prepared in accordance with GAAP.
Changes in Internal Control over Financial Reporting
Except for the remediation measures described above, there have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the period of our evaluation that have significantly affected, or are reasonably likely to significantly affect, our internal control over financial reporting.
45
Part
II
OTHER INF
ORMATION
Item 1. Legal
Proceedings.
From time to time, we are involved in lawsuits, claims, investigations and proceedings, including pending opposition proceedings involving patents that arise in the ordinary course of business.
S&W Australia, our Australia-based wholly owned subsidiary, adopted a voluntary plan of administration on July 24, 2024. The sale of S&W Australia was completed on November 22, 2024. Refer to Note 1 - General in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q for additional details on the resolution of the voluntary plan of administration.
There are no other matters pending that we expect to have a material adverse impact on our business, results of operations, financial condition or cash flows.
Item 1A. Ris
k Factors.
You should carefully consider the factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report, which could materially affect our business, financial condition, cash flows or future results. Except for the risk factor set forth below, there have been no material changes in our risk factors included in our Annual Report. The risks described in this Quarterly Report on Form 10-Q and in the Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
International trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and prospects.
The recent announcements of substantial new tariffs and other restrictive trade policies have created a dynamic and unpredictable trade landscape, which may adversely impact our business.
Current or future tariffs or other restrictive trade measures may raise the costs of raw materials, components or finished goods, which may adversely impact both our product offerings and our operational expenses. Such cost increases may reduce our margins and require us to increase prices, which could harm our competitive position, reduce customer demand and damage customer relationships. Our growers, customers and distribution channels are also affected by the current trade environment, and we may experience supply chain disruptions as a result of increased costs and uncertainty, as well as risks to the long-term viability of key vendors, which may impact our ability to meet customer demand or manage inventory efficiently. Tariff and other trade-related cost pressures and supply chain disruptions may lead to reputational harm if we are unable to deliver products or services on expected timelines or if any price increases are poorly received by customers or business partners. In addition, many of our customers operate businesses that may be impacted by trade policies, which may result in decreased demand for our products or extended sales cycles as customers assess the impact of evolving trade policies on their operations and face increased costs or decreased revenue due to tariffs and trade restrictions.
Trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for our products or services, delay purchases or renewals, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively impact our business and operations. Ongoing tariff, trade restrictions and macroeconomic uncertainty has and may continue to contribute to volatility in the price of our common stock.
The complexity of announced or future tariffs may also increase the risk that we or our customers or suppliers may be subject to civil or criminal enforcement actions in the U.S. or foreign jurisdictions related to compliance with trade regulations. In addition, retaliatory trade policies or anti-U.S. sentiment in certain regions whether driven by trade tensions, political disagreements, or regulatory concerns may make customers, governments and investors more hesitant to engage with, purchase from or invest in U.S. firms. This may lead to increased preference for local competitors, changes to government procurement policies, heightened regulatory scrutiny, decreased intellectual property protections, delays in regulatory approvals or other retaliatory regulatory non-tariff policies, which may result in heightened international legal and operational risks and difficulties in attracting and retaining non-U.S. customers, suppliers, employees, partners and investors.
Ongoing uncertainty regarding trade policies may also complicate our short- and long-term strategic planning, and that of our partners and customers, including decisions regarding hiring, product strategy, capital investment, supply chain design and geographic expansion.
While we continue to monitor trade developments, the ultimate impact of these risks remains uncertain and any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, results of operations, financial condition and prospects. In addition, tariffs and other trade developments have and may continue to heighten the risks related to the other risk factors described elsewhere in this report and in our Annual Report.
46
Item 2. Unregistered Sales of Equit
y Securities and Use of Proceeds.
None.
Item 3. Defaults Upo
n Senior Securities.
None.
Item 4. Mine Saf
ety Disclosures.
Not applicable.
Item 5.
Other
Information.
On May 9, 2025, we entered into Amendment No. 1 and Waiver to the Credit and Security Agreement, or the Mountain Ridge Amendment, which amended the Credit and Security Agreement, or the Mountain Ridge Credit Agreement, by and among us, as borrower, and ABL OPCO LLC, or Mountain Ridge, as administrative agent and sole lead arranger. The Mountain Ridge Amendment, among other things, (i) waived existing events of default under the Mountain Ridge Credit Agreement and (ii) revised the definition of "EBITDA" utilized in the debt covenant calculation, with effectiveness retroactive to December 31, 2024. Except as modified by the Mountain Ridge Amendment, all terms and conditions of the Mountain Ridge Credit Agreement remain in full force and effect.
Cover Page Interactive Data File (embedded within the Inline XBRL document)
(1)
Incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q, filed on February 11, 2021 (File No. 001-34719).
(2)
Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on February 23, 2022 (File No. 001-34719).
(3)
Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on June 26, 2023 (File No. 001-34719).
(4)
Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-3, filed on August 4, 2017 (File No. 333-219726).
(5)
Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on February 23, 2022 (File No. 001-34719).
(6)
Incorporated by reference to Exhibit 4.4 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 14, 2022 (File No. 001-34719).
(7)
Incorporated by reference to Exhibit 4.5 to the Registrant’s Quarterly Report on Form 10-Q, filed on February 13, 2023 (File No. 001-34719).
48
(8)
Incorporated by reference to Exhibit 4.6 to the Registrant’s Quarterly Report on Form 10-Q, filed on February 13, 2023 (File No. 001-34719).
(9)
Incorporated by reference to Exhibit 4.7 to the Registrant's Quarterly Report on Form 10-Q, filed on May 11, 2023 (File No. 001-34719).
+ Management compensatory plan or arrangement
* Certain portions of this exhibit have been omitted pursuant to Item 601 of Regulation S-K.
** This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
49
SIGNA
TURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(We are using algorithms to extract and display detailed data. This is a hard problem and we are working continuously to classify data in an accurate and useful manner.)