UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 14, 2020

S&W SEED COMPANY

(Exact name of registrant as specified in Its charter)

 

Nevada

001-34719

27-1275784

 (State or Other Jurisdiction of Incorporation)

 (Commission File Number)

(IRS Employer Identification Number)

 

2101 Ken Pratt Blvd, Suite 201

Longmont, CO

 

 

80501

(Address of principal executive offices)

 

 

(Zip Code)

 

Registrant's telephone number, including area code: (720) 506-9191

 

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.          

 

 

 

 


 

Item 2.02.    Results of Operations and Financial Condition.

On May 14, 2020, S&W Seed Company (the "Company") issued a press release announcing financial results for the third quarter of fiscal 2020 ended March 31, 2020. The text of the press release is furnished as Exhibit 99.1 to this current report.

The information in this Item 2.02 and Exhibit 99.1 hereto shall not be deemed "filed" for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Unless expressly incorporated into a filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, the information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any Company filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit

Description

99.1

Press Release of S&W Seed Company dated May 14, 2020, announcing financial results for the third quarter of fiscal 2020 ended March 31, 2020*

 

*

This exhibit is furnished and shall not be deemed "filed" for purposes of the Exchange Act, as amended.

2


 

SIGNATURES

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 hereunto duly authorized.

 

 

S&W SEED COMPANY

 

 

 

 

 

 

 

By:

/s/ Matthew K. Szot

 

 

Matthew K. Szot

 

 

Executive Vice President of Finance and Administration and Chief Financial Officer

 

 

 

Date: May 14, 2020

 

 

 

3

sanw-ex991_6.htm

EXHIBIT 99.1

 

S&W Announces Third Quarter and Year-to-Date Fiscal 2020 Financial Results

 

Conference call to be conducted on Thursday, May 14, 2020 at 11:00 am ET

 

For Immediate Release

Company Contact:Investor Contact:

Matthew Szot, Chief Financial Officer Robert Blum

S&W Seed CompanyLytham Partners, LLC
Phone: (720) 506-1164Phone: (602) 889-9700
www.swseedco.comsanw@lythampartners.comwww.lythampartners.com

LONGMONT, Colorado – May 14, 2020 – S&W Seed Company (Nasdaq: SANW) today announced financial results for the three and nine months ended March 31, 2020.

 

“The results for the third quarter and first nine months of fiscal 2020 reflect the continued progress to diversify our product offerings and expand our distribution channels, highlighted by our recent acquisition of Pasture Genetics in Australia,” commented Mark Wong, President & CEO of S&W Seed Company. “Over the last few months, we made solid progress integrating our newly acquired business and also announced a significant collaboration on the development of a new sorghum herbicide-tolerant system which we believe has the ability to bring innovation to sorghum growers through improved weed control and yields. We, like many other agricultural companies, are working through the near-term uncertainty surrounding COVID-19 and the impact it has caused to global logistics and our ability to interact with our customers during our peak selling season. We remain committed to the safety of our employees, while serving the needs of our global agricultural customers.”

 

Financial Results

Core Revenue (which we define as total revenue, excluding product revenue attributable to Pioneer) for the third quarter of fiscal 2020 was $17.9 million, compared to Core Revenue for the third quarter of fiscal 2019 of $10.3 million, an increase of approximately 74%. Core Revenue for the first nine months of fiscal 2020 was $36.1 million, compared to Core Revenue for the first nine months of fiscal 2019 of $25.8 million, an increase of approximately 40%. Included in Core Revenue for the third quarter and nine months of fiscal 2020 was $5.5 million of revenue pertaining to a partial period contribution from the Company’s acquisition of Pasture Genetics which occurred on February 24, 2020. Excluding contributions from Pasture Genetics, Core Revenue growth was 20% and 18% respectively, for the three and nine months ended March 31, 2020 versus the comparable periods of the prior year.

 


As announced in May 2019, S&W entered into a termination agreement and an alfalfa license agreement with Pioneer Hi-Bred International, a subsidiary of Corteva Agriscience, to replace its prior alfalfa distribution agreement with Pioneer. Due to these agreements signed with Pioneer, S&W discloses Core Revenue as a metric to track performance of its business on a go-forward basis. Other than the contributions from Pasture Genetics, the increase in Core Revenue for the nine months ended March 31, 2020 can be primarily attributed to an increase in alfalfa and sorghum sales in the United States as well as growth in Pakistan, Europe and South Africa.

Total revenue for the third quarter of fiscal 2020 was $29.1 million, compared to total revenue of $18.2 million in the third quarter of fiscal 2019. Total revenue for the first nine months of fiscal 2020 was $53.7 million, compared to total revenue for the first nine months of fiscal 2019 of $62.9 million. Under the new agreements with Pioneer, Pioneer paid S&W $45.0 million in May 2019, $16.8 million in fiscal 2020, with S&W expecting to receive $8.4 million in additional payments from September 2020 through February 2021. For the first nine months of fiscal 2020, S&W recorded product revenue from Pioneer of $17.6 million under the new agreements, which was a decrease of $19.4 million from the first nine months of fiscal 2019.

Gross margins during the third quarter of fiscal 2020 were 22.1% compared to 26.3% in the third quarter of fiscal 2019. Gross margins during the first nine months of fiscal 2020 were 21.8% compared to gross margins of 23.8% in the first nine months of fiscal 2019. The change in gross margins for the third quarter of fiscal 2020 is primarily due to a change in sales mix.  

In the third quarter of fiscal 2020, adjusted operating expenses, excluding transaction costs (see Table A1), were $8.9 million, compared to $7.4 million in the third quarter of fiscal 2019. In the first nine months of fiscal 2020, adjusted operating expenses, excluding transaction costs (see Table A1), were $24.0 million, compared to $17.9 million in the first nine months of fiscal 2019. The increase in adjusted operating expenses for the third quarter and first nine months of fiscal 2020 can be attributed to additional expenses from the newly acquired Pasture Genetics operations, and additional investments in S&W's sales and marketing and product development functions.

GAAP net loss for the third quarter of fiscal 2020 was $(3.3) million, or $(0.10) per basic and diluted share, compared to GAAP net loss of $(3.3) million, or $(0.10) per basic and diluted share, in the third quarter of fiscal 2019.

GAAP net loss for the first nine months of fiscal 2020 was $(14.9) million, or $(0.45) per basic and diluted share, compared to GAAP net loss of $(6.1) million, or $(0.21) per basic and diluted share, in the first nine months of fiscal 2019.

Adjusted non-GAAP net loss (see Table A2) for the third quarter of fiscal 2020 was $(3.0) million, or $(0.09) per basic and diluted share, which excluded transaction costs and interest expense – amortization of debt discount. Adjusted non-GAAP net loss (see Table A2) for the third quarter of fiscal 2019, excluding transaction costs, reduction in estimated loss on sub-lease land and interest expense – amortization of debt discount, was $(3.2) million, or $(0.10) per basic and diluted share.


Adjusted non-GAAP net loss (see Table A2) for the first nine months of fiscal 2020 was $(13.7) million, or $(0.41) per basic and diluted share, which excluded transaction costs, change in estimated value of assets held for sale, loss on extinguishment of debt, and interest expense – amortization of debt discount. Adjusted non-GAAP net loss (see Table A2) for the first nine months of fiscal 2019, excluding transaction costs, reduction in estimated loss on sub-lease land and interest expense – amortization of debt discount, was $(4.8) million, or $(0.17) per basic and diluted share.

Adjusted EBITDA (see Table B) for the third quarter of fiscal 2020 was $(0.9) million, compared to adjusted EBITDA of $(1.2) million in the third quarter of fiscal 2019.

Adjusted EBITDA (see Table B) for the first nine months of fiscal 2020 was $(7.8) million, compared to adjusted EBITDA of $0.7 million in the first nine months of fiscal 2019.

Outlook

Due to uncertainties regarding the duration and impact of the COVID-19 pandemic, S&W is temporarily suspending its annual revenue and gross margin guidance for 2020.

Conference Call

S&W Seed Company has scheduled a conference call for Thursday, May 14, 2020, at 11:00 am ET (8:00 am PT) to review these results. Interested parties can access the conference call by dialing (844) 861-5498 or (412) 317-6580 or can listen via a live Internet webcast, which is available in the Investor Relations section of the Company's website at http://www.swseedco.com/investors. A teleconference replay of the call will be available for three days at (877) 344-7529 or (412) 317-0088, confirmation #10143452. A webcast replay will be available in the Investor Relations section of the Company's website at http://www.swseedco.com/investors for 30 days.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we have provided the following non-GAAP financial measures in this release and the accompanying tables: adjusted operating expenses, adjusted EBITDA; adjusted non-GAAP net loss; and adjusted loss per share. We use these non-GAAP financial measures internally to facilitate period-to-period comparisons and analysis of our operating performance and liquidity, and believe they are useful to investors as a supplement to GAAP measures in analyzing, trending and benchmarking the performance and value of our business. However, these measures are not intended to be a substitute for those reported in accordance with GAAP. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures.

For reconciliations of historical non-GAAP financial measures to the most comparable financial measures under GAAP, see Tables A1, A2 and B accompanying this release.


In order to calculate these non-GAAP financial measures, we make targeted adjustments to certain GAAP financial line items found on our Consolidated Statement of Operations, backing out non-recurring or unique items or items that we believe otherwise distort the underlying results and trends of the ongoing business. We have excluded the following items from one or more of our non-GAAP financial measures for the periods presented:

Selling, general and administrative expenses. We exclude from operating expenses a portion of SG&A expense for non-recurring transaction expenses related to acquisitions. Such acquisition-related expenses include non-recurring transaction fees, due diligence costs and other direct costs associated with our acquisitions. These amounts are unrelated to our core performance during any particular period and are impacted by the timing of the acquisition. We exclude acquisition-related expenses from our SG&A expense and total operating expenses to provide investors a method to compare our operating results to prior periods and to peer companies, as such amounts can vary significantly based on the frequency of acquisitions and the magnitude of acquisition expenses.

Change in estimated value of assets held for sale.  The change in estimated value of assets held for sale represents our estimated change in the value of certain properties held for sale.  These amounts are non-cash losses, and are unrelated to our core performance during any particular period. We believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

Loss on extinguishment of debt.   Loss on extinguishment of debt represents the unamortized debt issuance costs related to our recently terminated KeyBank credit agreement.  These amounts are non-cash losses, and are unrelated to our core performance during any particular period. We believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

Reduction of anticipated loss on sub-lease land.  The reduction of anticipated loss on sub-lease land represents a change in estimate of the reserve for the difference between our lease-obligations and our expected sub-lease income on certain land. We exclude this amount as it is a non-recurring income / charge and is unrelated to our core performance during any particular period, and therefore, we believe it is useful to exclude this amount in order to better understand our business performance and allow investors to compare our results with peer companies.

Interest expense – amortization of debt discount.  Amortization of debt discount and debt issuance costs are primarily related to our working capital lines of credit and term loans. These amounts are non-cash charges and are unrelated to our core performance during any particular period. We believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:


Adjusted operating expenses. We define adjusted operating expenses as operating expenses, adjusted to exclude non-recurring transaction costs from SG&A. We believe that the use of adjusted operating expenses is useful to investors and other users of our financial statements in evaluating our operating performance because non-recurring transaction costs are unrelated to our core performance during any particular period and are impacted by the timing of our acquisitions. We believe this provides investors with a method to compare our operating results to prior periods and to peer companies, as such amounts can vary significantly based on the frequency of acquisitions and the magnitude of acquisition expenses.

Adjusted net loss and non-GAAP loss per share.  We define non-GAAP net loss as net loss less non-recurring transaction charges, change in estimated value of assets held for sale, loss on extinguishment of debt, reduction of anticipated loss on sub-lease land and interest expense - amortization of debt discount.  However, in order to provide a complete picture of our recurring core business operating results, we also exclude from non-GAAP net loss the tax effects of these adjustments. We used an effective tax rate that we believe would be applied had our income approximated the non-GAAP net loss for the presented periods. We caution investors that the tax effects of these adjustments are based on management's estimates. We believe that these non-GAAP financial measures provide useful supplemental information for evaluating our operating performance.

Adjusted EBITDA. We define Adjusted EBITDA as GAAP net loss, adjusted to exclude non-recurring transaction costs, depreciation and amortization, non-cash stock-based compensation, foreign currency (gain) loss, change in estimated value of assets held for sale, loss on extinguishment of debt, reduction of anticipated loss on sub-lease land, interest expense – amortization of debt discount, interest expense, and provision for income taxes. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We use adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. Management does not place undue reliance on adjusted EBITDA as its only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP.

About S&W Seed Company
Founded in 1980, S&W Seed Company is a global agricultural company headquartered in Longmont, Colorado. S&W's vision is to be the world's preferred proprietary seed Company which supplies a range of forage and specialty crop products that supports the growing global demand for animal proteins and healthier consumer diets. S&W is a global leader in proprietary alfalfa, sorghum, and pasture seeds, with significant research and development, production and distribution capabilities. S&W's product portfolio also includes hybrid sunflower and wheat and the company is utilizing its research and breeding expertise to develop and produce stevia, the all-natural, zero calorie sweetener for the food and beverage industry. For more information, please visit www.swseedco.com.


Safe Harbor Statement
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” describe future expectations, plans, results, or strategies and are generally preceded by words such as “may,” “future,” “plan” or “planned,” “will” or “should,” “expected,” “anticipates,” “draft,” “eventually” or “projected.” Forward-looking statements in this release include, but are not limited to, statements regarding the benefits of our new sorghum herbicide-tolerant system in development and statements regarding the advancement of our strategic plans.  You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that future acquisitions may not yield the anticipated benefits; sales during the high-volume selling season may be lower than expected; the realignment of our organization across geographic lines and to benefit from a multi-crop portfolio may not meet our expectations; our strategic initiatives may not achieve the expected results; and the risks associated with our ability to successfully optimize and commercialize our business. These and other risks are identified in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended June 30, 2019 and in other filings subsequently made by the Company with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based on management’s assumptions and estimates as of such date. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.

 

 


S&W SEED COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 



 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product and other

 

$

29,091,884

 

 

$

18,176,166

 

 

$

53,717,442

 

 

$

62,877,299

 

Total revenue

 

 

29,091,884

 

 

 

18,176,166

 

 

 

53,717,442

 

 

 

62,877,299

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product and other

 

 

22,667,126

 

 

 

13,388,470

 

 

 

42,027,439

 

 

 

47,942,933

 

Total cost of revenue

 

 

22,667,126

 

 

 

13,388,470

 

 

 

42,027,439

 

 

 

47,942,933

 

Gross profit

 

 

6,424,758

 

 

 

4,787,696

 

 

 

11,690,003

 

 

 

14,934,366

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

5,895,984

 

 

 

4,610,471

 

 

 

15,663,907

 

 

 

11,840,547

 

Research and development expenses

 

 

2,041,650

 

 

 

1,824,613

 

 

 

5,301,714

 

 

 

4,190,280

 

Depreciation and amortization

 

 

1,209,433

 

 

 

1,171,057

 

 

 

3,620,235

 

 

 

3,061,771

 

Gain on disposal of property, plant and equipment

 

 

(7,719

)

 

 

(97,483

)

 

 

(20,794

)

 

 

(94,020

)

Total operating expenses

 

 

9,139,348

 

 

 

7,508,658

 

 

 

24,565,062

 

 

 

18,998,578

 

Loss from operations

 

 

(2,714,590

)

 

 

(2,720,962

)

 

 

(12,875,059

)

 

 

(4,064,212

)

Other expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency loss (gain)

 

 

81,574

 

 

 

4,793

 

 

 

67,399

 

 

 

(53,638

)

Reduction of anticipated loss on sub-lease land

 

 

 

 

 

(141,373

)

 

 

 

 

 

(141,373

)

Change in estimated value of assets held for sale

 

 

 

 

 

 

 

 

92,931

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

140,638

 

 

 

 

Interest expense - amortization of debt discount

 

 

96,222

 

 

 

103,362

 

 

 

393,935

 

 

 

238,754

 

Interest expense

 

 

444,401

 

 

 

758,669

 

 

 

1,382,680

 

 

 

2,057,377

 

Loss before income taxes

 

 

(3,336,787

)

 

 

(3,446,413

)

 

 

(14,952,642

)

 

 

(6,165,332

)

Provision for income taxes

 

 

(7,296

)

 

 

(82,411

)

 

 

17,224

 

 

 

(77,878

)

Net loss

 

$

(3,329,491

)

 

$

(3,364,002

)

 

$

(14,969,866

)

 

$

(6,087,454

)

Net loss attributed to noncontrolling interests

 

 

(47,742

)

 

 

(22,102

)

 

 

(97,770

)

 

 

(429

)

Net loss attributable to S&W Seed Company

 

$

(3,281,749

)

 

$

(3,341,900

)

 

$

(14,872,096

)

 

$

(6,087,025

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to S&W Seed Company per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

 

$

(0.10

)

 

$

(0.45

)

 

$

(0.21

)

Diluted

 

$

(0.10

)

 

$

(0.10

)

 

$

(0.45

)

 

$

(0.21

)

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

33,385,376

 

 

 

33,267,258

 

 

 

33,323,239

 

 

 

29,043,493

 

Diluted

 

 

33,385,376

 

 

 

33,267,258

 

 

 

33,323,239

 

 

 

29,043,493

 

 


TABLE A1

 

S&W SEED COMPANY

 

ITEMIZED RECONCILIATION BETWEEN OPERATING EXPENSES AND NON-GAAP ADJUSTED OPERATING EXPENSES

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating expenses

 

$

9,139,348

 

 

$

7,508,658

 

 

$

24,565,062

 

 

$

18,998,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring transaction costs

 

 

(228,604

)

 

 

(147,337

)

 

 

(584,963

)

 

 

(1,142,653

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted Operating Expenses

 

$

8,910,744

 

 

$

7,361,321

 

 

$

23,980,099

 

 

$

17,855,925

 

 

 


TABLE A2

S&W SEED COMPANY

 

ITEMIZED RECONCILIATION BETWEEN NET LOSS AND NON-GAAP ADJUSTED NET LOSS

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net Loss attributable to S&W Seed Company

 

$

(3,281,749

)

 

$

(3,341,900

)

 

$

(14,872,096

)

 

$

(6,087,025

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring transaction costs

 

 

228,604

 

 

 

147,337

 

 

 

584,963

 

 

 

1,142,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in estimated value of assets held for sale

 

 

-

 

 

 

-

 

 

 

92,931

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

140,638

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reduction of anticipated loss on sub-lease land

 

 

-

 

 

 

(141,373

)

 

 

-

 

 

 

(141,373

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense - amortization of debt discount

 

 

96,222

 

 

 

103,362

 

 

 

393,935

 

 

 

238,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted Net Loss

 

$

(2,956,923

)

 

$

(3,232,574

)

 

$

(13,659,629

)

 

$

(4,846,991

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted Net loss attributable to S&W Seed Company per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.09

)

 

$

(0.10

)

 

$

(0.41

)

 

$

(0.17

)

Diluted

 

$

(0.09

)

 

$

(0.10

)

 

$

(0.41

)

 

$

(0.17

)

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

33,385,376

 

 

 

33,267,258

 

 

 

33,323,239

 

 

 

29,043,493

 

Diluted

 

 

33,385,376

 

 

 

33,267,258

 

 

 

33,323,239

 

 

 

29,043,493

 

 


TABLE B

 

S&W SEED COMPANY

 

ITEMIZED RECONCILIATION BETWEEN NET INCOME (LOSS) AND NON-GAAP ADJUSTED EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

 

March 31,

 

 

 

March 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Net loss attributable to S&W Seed Company

 

$

 

(3,281,749

)

 

$

 

(3,341,900

)

 

$

 

(14,872,096

)

 

$

 

(6,087,025

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring transaction costs

 

 

 

228,604

 

 

 

 

147,337

 

 

 

 

584,963

 

 

 

 

1,142,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash stock based compensation

 

 

 

325,587

 

 

 

 

156,175

 

 

 

 

794,191

 

 

 

 

533,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

1,209,433

 

 

 

 

1,171,057

 

 

 

 

3,620,235

 

 

 

 

3,061,772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency loss (gain)

 

 

 

81,574

 

 

 

 

4,793

 

 

 

 

67,399

 

 

 

 

(53,638

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in estimated value of assets held for sale

 

 

 

-

 

 

 

 

-

 

 

 

 

92,931

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

-

 

 

 

 

-

 

 

 

 

140,638

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reduction of anticipated loss on sub-lease land

 

 

 

-

 

 

 

 

(141,373

)

 

 

 

-

 

 

 

 

(141,373

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense - amortization of debt discount

 

 

 

96,222

 

 

 

 

103,362

 

 

 

 

393,935

 

 

 

 

238,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

444,401

 

 

 

 

758,669

 

 

 

 

1,382,680

 

 

 

 

2,057,377

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

 

(7,296

)

 

 

 

(82,411

)

 

 

 

17,224

 

 

 

 

(77,878

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted EBITDA

 

$

 

(903,224

)

 

$

 

(1,224,291

)

 

$

 

(7,777,900

)

 

$

 

674,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


S&W SEED COMPANY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

March 31,

 

 

 

June 30,

 

 

 

 

2020

 

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

8,466,437

 

 

$

 

3,431,802

 

Accounts receivable, net

 

 

 

19,254,556

 

 

 

 

13,380,464

 

Inventories, net

 

 

 

70,807,964

 

 

 

 

71,295,520

 

Prepaid expenses and other current assets

 

 

 

1,746,268

 

 

 

 

1,687,490

 

Assets held for sale

 

 

 

 

 

 

 

1,850,000

 

TOTAL CURRENT ASSETS

 

 

 

100,275,225

 

 

 

 

91,645,276

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

 

20,628,422

 

 

 

 

20,634,949

 

Intangibles, net

 

 

 

37,854,710

 

 

 

 

32,714,484

 

Goodwill

 

 

 

2,381,684

 

 

 

 

 

Other assets

 

 

 

6,459,625

 

 

 

 

1,369,560

 

TOTAL ASSETS

 

$

 

167,599,666

 

 

$

 

146,364,269

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

 

14,739,329

 

 

$

 

6,930,829

 

Deferred revenue

 

 

 

8,416,430

 

 

 

 

9,054,549

 

Accrued expenses and other current liabilities

 

 

 

8,017,363

 

 

 

 

6,073,110

 

Lines of credit, net

 

 

 

28,145,189

 

 

 

 

10,755,548

 

Current portion of long-term debt, net

 

 

 

1,755,905

 

 

 

 

1,113,502

 

TOTAL CURRENT LIABILITIES

 

 

 

61,074,216

 

 

 

 

33,927,538

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, net, less current portion

 

 

 

13,852,560

 

 

 

 

12,158,095

 

Contingent consideration obligation

 

 

 

4,037,922

 

 

 

 

 

Other non-current liabilities

 

 

 

3,418,905

 

 

 

 

280,424

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

 

82,383,603

 

 

 

 

46,366,057

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 50,000,000 shares authorized; 33,423,019 issued and 33,398,019 outstanding at March 31, 2020; 33,303,218 issued and 33,278,218 outstanding at June 30, 2019

 

 

 

33,423

 

 

 

 

33,303

 

Treasury stock, at cost, 25,000 shares

 

 

 

(134,196

)

 

 

 

(134,196

)

Additional paid-in capital

 

 

 

137,480,467

 

 

 

 

136,751,875

 

Accumulated deficit

 

 

 

(45,338,714

)

 

 

 

(30,466,618

)

Accumulated other comprehensive loss

 

 

 

(6,679,462

)

 

 

 

(6,138,467

)

Noncontrolling interests

 

 

 

(145,455

)

 

 

 

(47,685

)

TOTAL STOCKHOLDERS' EQUITY

 

 

 

85,216,063

 

 

 

 

99,998,212

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

 

167,599,666

 

 

$

 

146,364,269

 

 

 

 

 


S&W SEED COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Nine Months Ended March 31,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss

 

$

(14,969,866

)

 

$

(6,087,454

)

Adjustments to reconcile net loss from operating activities to net

 

 

 

 

 

 

 

 

cash used in operating activities

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

794,191

 

 

 

533,633

 

Change in allowance for doubtful accounts

 

 

(126,449

)

 

 

336,583

 

Inventory write-down

 

 

1,411,128

 

 

 

 

Depreciation and amortization

 

 

3,620,235

 

 

 

3,061,771

 

Gain on disposal of property, plant and equipment

 

 

(20,794

)

 

 

(94,020

)

Change in foreign exchange contracts

 

 

402,546

 

 

 

(53,650

)

Change in estimated value of assets held for sale

 

 

92,931

 

 

 

 

Loss on debt extinguishment

 

 

140,638

 

 

 

 

Reduction of anticipated loss on sub-lease land

 

 

 

 

 

(141,373

)

Amortization of debt discount

 

 

393,935

 

 

 

238,754

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(3,375,709

)

 

 

1,584,152

 

Unbilled accounts receivable

 

 

 

 

 

(4,258,450

)

Inventories

 

 

3,562,145

 

 

 

(20,442,220

)

Prepaid expenses and other current assets

 

 

(174,337

)

 

 

(177,526

)

Other non-current asset

 

 

(38,245

)

 

 

(15,608

)

Accounts payable

 

 

4,684,742

 

 

 

6,569,031

 

Deferred revenue

 

 

(634,962

)

 

 

(564,204

)

Accrued expenses and other current liabilities

 

 

430,788

 

 

 

853,767

 

Other non-current liabilities

 

 

(920,990

)

 

 

(112,424

)

Net cash used in operating activities

 

 

(4,728,073

)

 

 

(18,769,238

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(1,760,905

)

 

 

(836,983

)

Proceeds from disposal of property, plant and equipment

 

 

27,855

 

 

 

423,762

 

Proceeds from sale of assets held for sale

 

 

1,757,069

 

 

 

 

Additions to internal use software

 

 

 

 

 

(43,000

)

Acquisition of business, net of cash acquired

 

 

(7,497,645

)

 

 

(26,354,951

)

Acquisition of wheat assets

 

 

(2,633,000

)

 

 

 

Net cash used in investing activities

 

 

(10,106,626

)

 

 

(26,811,172

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net proceeds from sale of common stock

 

 

 

 

 

4,927,682

 

Net proceeds from sale of preferred stock

 

 

 

 

 

22,373,842

 

Taxes paid related to net share settlements of stock-based compensation awards

 

 

(65,480

)

 

 

(31,081

)

Borrowings and repayments on lines of credit, net

 

 

19,553,150

 

 

 

17,768,886

 

Borrowings of long-term debt

 

 

3,684,597

 

 

 

2,776,973

 

Debt issuance costs

 

 

(970,461

)

 

 

(411,315

)

Repayments of long-term debt

 

 

(1,855,708

)

 

 

(3,075,170

)

Net cash provided by financing activities

 

 

20,346,098

 

 

 

44,329,817

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

 

(476,764

)

 

 

(186,802

)

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS

 

 

5,034,635

 

 

 

(1,437,395

)

CASH AND CASH EQUIVALENTS, beginning of the period

 

$

3,431,802

 

 

 

4,320,894

 

CASH AND CASH EQUIVALENTS, end of period

 

$

8,466,437

 

 

$

2,883,499