☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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.

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).

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.

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 ~~February 7,~~May 8, 2023 was ~~42,785,565~~42,963,993.

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 and the COVID-19 pandemic on our business; the plans, strategies and objectives of management for our future operations, including our expectations for new product introductions during fiscal 2023; our implementation of our recently implemented strategic review (which includes our plans to reduce annual operating expenses) our recent partnerships with Trigall Genetics and Shell and their 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 ~~they~~ 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:

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 2023,” “fiscal 2022,” and “fiscal 2021” in this Quarterly Report on Form 10-Q refer to the respective fiscal year ended June 30, 2023, 2022 and 2021, 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.

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY


	Mezzanine Equity				Shareholders' Equity																									Mezzanine Equity				Shareholders' Equity
	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Non- controlling			Accumulated Other Comprehensive			Total Stockholders'			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			Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Interests			Loss			Equity
Balance, September 30, 2021		—	$	—		36,802,094	$	36,802		(25,000	)	$	(134,196	)	$	150,040,406		$	(75,711,884	)	$	(45,272	)	$	(6,311,953	)	$	67,873,903
Balance, December 31, 2021																															—	$	—		38,914,660	$	38,915		(25,000	)	$	(134,196	)	$	155,853,135		$	(85,506,986	)	$	(31,735	)	$	(6,058,604	)	$	64,160,529
Stock-based compensation		—		—		—		—		—			—			1,014,203			—			—			—			1,014,203			—		—		—		—		—			—			413,293			—			—			—			413,293
Issuance of Series B convertible preferred stock																															1,695		4,638,521		—		—		—			—			—			—			—			—			—
Series B detachable warrant																															—		12,919		—		—		—			—			361,729			(12,919	)		—			—			348,810
Accrued dividends on Series B convertible preferred stock																															—		40,276		—		—		—			—			—			(40,276	)		—			—			(40,276	)
Net issuance to settle RSUs		—		—		265,223		265		—			—			(117,838	)		—			—			—			(117,573	)		—		—		18,056		18		—			—			(20,458	)		—			—			—			(20,440	)
Proceeds from sale of common stock, net expenses		—		—		1,847,343		1,848		—			—			4,916,364			—			—			—			4,918,212
Proceeds from sale of common stock, net of expenses																															—		—		2,633,052		2,633		—			—			5,734,449			—			—			—			5,737,082
Other comprehensive income (loss)		—		—		—		—		—			—			—			—			—			253,349			253,349			—		—		—		—		—			—			—			—			—			480,280			480,280
Net (loss) income		—		—		—		—		—			—			—			(9,795,102	)		13,537			—			(9,781,565	)		—		—		—		—		—			—			—			(7,304,923	)		42,668			—			(7,262,255	)
Balance, December 31, 2021		—	$	—		38,914,660	$	38,915		(25,000	)	$	(134,196	)	$	155,853,135		$	(85,506,986	)	$	(31,735	)	$	(6,058,604	)	$	64,160,529
Balance, March 31, 2022																															1,695	$	4,691,716		41,565,768	$	41,566		(25,000	)	$	(134,196	)	$	162,342,148		$	(92,865,104	)	$	10,933		$	(5,578,324	)	$	63,817,023

Balance, September 30, 2022		1,695	$	4,918,880		42,632,585	$	42,633		(25,000	)	$	(134,196	)	$	164,486,927		$	(110,496,559	)	$	35,576		$	(7,274,895	)	$	46,659,486
Balance, December 31, 2022																															1,695	$	5,032,942		42,788,423	$	42,788		(25,000	)	$	(134,196	)	$	165,444,354		$	(116,596,626	)	$	30,988		$	(6,735,375	)	$	42,051,933
Stock-based compensation		—		—		—		—		—			—			305,894			—			—			—			305,894			—		—		—		—		—			—			619,892			—			—			—			619,892
Issuance of common stock for cash upon exercise of stock options																															—		—		1,050		1		—			—			996			—			—			—			997
Series B detachable warrant		—		25,838		—		—		—			—			—			(25,838	)		—			—			(25,838	)		—		25,838		—				—			—			—			(25,838	)		—			—			(25,838	)
Accrued dividends on Series B convertible preferred stock		—		88,224		—		—		—			—			—			(88,224	)		—			—			(88,224	)		—		95,299		—		—		—			—			—			(95,299	)		—			—			(95,299	)
Subordinated loan & security agreement warrants		—		—		—		—		—			—			656,427			—			—			—			656,427			—		—		—		—		—			—			1,092,000			—			—			—			1,092,000
Net issuance to settle RSUs		—		—		155,838		155		—			—			(4,894	)		—			—			—			(4,739	)		—		—		22,142		23		—			—			(12,737	)		—			—			—			(12,714	)
Proceeds from sale of common stock, net of expenses																															—		—		102,455		102		—			—			152,648			—			—			—			152,750
Other comprehensive income (loss)		—		—		—		—		—			—			—			—			—			539,520			539,520			—		—		—		—		—			—			—			—			—			(172,782	)		(172,782	)
Net (loss) income		—		—		—		—		—			—			—			(5,986,005	)		(4,588	)		—			(5,990,593	)
Balance, December 31, 2022		1,695	$	5,032,942		42,788,423	$	42,788		(25,000	)	$	(134,196	)	$	165,444,354		$	(116,596,626	)	$	30,988		$	(6,735,375	)	$	42,051,933
Net income (loss)																															—		—		—		—		—			—			—			32,119,365			(5,792	)		—			32,113,573
Balance, March 31, 2023																															1,695	$	5,154,079		42,914,070	$	42,914		(25,000	)	$	(134,196	)	$	167,297,153		$	(84,598,398	)	$	25,196		$	(6,908,157	)	$	75,724,512

	Mezzanine Equity				Shareholders' Equity																									Mezzanine Equity				Shareholders' Equity
	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Non- controlling			Accumulated Other Comprehensive			Total Stockholders'			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			Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Interests			Loss			Equity
Balance, June 30, 2021		—	$	—		36,772,983	$	36,773		(25,000	)	$	(134,196	)	$	149,684,357		$	(69,311,909	)	$	(31,006	)	$	(5,850,826	)	$	74,393,193			—	$	—		36,772,983	$	36,773		(25,000	)	$	(134,196	)	$	149,684,357		$	(69,311,909	)	$	(31,006	)	$	(5,850,826	)	$	74,393,193
Stock-based compensation		—		—		—		—		—			—			1,408,515			—			—			—			1,408,515			—		—		—		—		—			—			1,821,808			—			—			—			1,821,808
Issuance of Series B convertible preferred stock																															1,695		4,638,521		—		—		—			—			—			—			—			—			—
Series B detachable warrant																															—		12,919		—		—		—			—			361,729			(12,919	)		—			—			348,810
Accrued dividends on Series B convertible preferred stock																															—		40,276		—		—		—			—			—			(40,276	)		—			—			(40,276	)
Net issuance to settle RSUs		—		—		293,486		293		—			—			(158,581	)		—			—			—			(158,288	)		—		—		311,542		312		—			—			(179,039	)		—			—			—			(178,727	)
Proceeds from sale of common stock, net of expenses		—		—		1,848,191		1,849		—			—			4,918,844			—			—			—			4,920,693			—		—		4,481,243		4,481		—			—			10,653,293			—			—			—			10,657,774
Other comprehensive loss		—		—		—		—		—			—			—			—			—			(207,778	)		(207,778	)
Other comprehensive income																															—		—		—		—		—			—			—			—			—			272,502			272,502
Net loss		—		—		—		—		—			—			—			(16,195,077	)		(729	)		—			(16,195,806	)		—		—		—		—		—			—			—			(23,500,000	)		41,939			—			(23,458,061	)
Balance, December 31, 2021		—	$	—		38,914,660	$	38,915		(25,000	)	$	(134,196	)	$	155,853,135		$	(85,506,986	)	$	(31,735	)	$	(6,058,604	)	$	64,160,529
Balance, March 31, 2022																															1,695	$	4,691,716		41,565,768	$	41,566		(25,000	)	$	(134,196	)	$	162,342,148		$	(92,865,104	)	$	10,933		$	(5,578,324	)	$	63,817,023

Balance, June 30, 2022		1,695	$	4,804,819		42,608,758	$	42,609		(25,000	)	$	(134,196	)	$	163,892,575		$	(105,873,557	)	$	41,838		$	(6,560,600	)	$	51,408,669			1,695	$	4,804,819		42,608,758	$	42,609		(25,000	)	$	(134,196	)	$	163,892,575		$	(105,873,557	)	$	41,838		$	(6,560,600	)	$	51,408,669
Stock-based compensation		—		—		—		—		—			—			762,006			—			—			—			762,006			—		—		—		—		—			—			1,381,898			—			—			—			1,381,898
Issuance of common stock for cash upon exercise of stock options																															—		—		1,050		1		—			—			996			—			—			—			997
Series B detachable warrant		—		51,676		—		—		—			—			—			(51,676	)		—			—			(51,676	)		—		77,514		—		—		—			—			—			(77,514	)		—			—			(77,514	)
Accrued dividends on Series B convertible preferred stock		—		176,447		—		—		—			—			—			(176,447	)		—			—			(176,447	)		—		271,746		—		—		—			—			—			(271,746	)		—			—			(271,746	)
Subordinated loan & security agreement warrants		—		—		—		—		—			—			802,901			—			—			—			802,901			—		—		—		—		—			—			1,894,901			—			—			—			1,894,901
Net issuance to settle RSUs		—		—		179,665		179		—			—			(13,128	)		—			—			—			(12,949	)		—		—		201,807		202		—			—			(25,865	)		—			—			—			(25,663	)
Proceeds from sale of common stock, net of expenses																															—		—		102,455		102		—			—			152,648			—			—			—			152,750
Other comprehensive loss		—		—		—		—		—			—			—			—			—			(174,775	)		(174,775	)		—		—		—		—		—			—			—			—			—			(347,557	)		(347,557	)
Net loss		—		—		—		—		—			—			—			(10,494,946	)		(10,850	)		—			(10,505,796	)
Balance, December 31, 2022		1,695	$	5,032,942		42,788,423	$	42,788		(25,000	)	$	(134,196	)	$	165,444,354		$	(116,596,626	)	$	30,988		$	(6,735,375	)	$	42,051,933
Net income (loss)																															—		—		—		—		—			—			—			21,624,419			(16,642	)		—			21,607,777
Balance, March 31, 2023																															1,695	$	5,154,079		42,914,070	$	42,914		(25,000	)	$	(134,196	)	$	167,297,153		$	(84,598,398	)	$	25,196		$	(6,908,157	)	$	75,724,512

NOTE 4 - 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 its two partnerships, Trigall Australia and 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.

Contract Assets and Liabilities

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 (September 30th) 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 provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts (see Note 2). When it becomes probable that a trade receivable will not be collected, it is written off against the allowance for doubtful accounts. If an account that has been written off is subsequently corrected, the provision for doubtful receivables is reversed, which can result in a net negative provision in a period. During the three and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, the Company recorded a net provision for doubtful receivables of $~~30,212~~48,634 and a net reversal of the ~~provision~~allowance for doubtful ~~receivables~~accounts of $(($~~125,209~~76,575), respectively.

Deferred revenue represents payments received from customers in advance of completion of the Company's performance obligation. During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, the Company recognized $0.6 million of revenue that was included in the deferred balance as of June 30, 2022. During the ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, the Company recognized $0.4 million of revenue that was included in the deferred balance as of June 30, 2021.

ADAMA Collaboration Agreement

The Company has a collaboration agreement, or Collaboration Agreement, with Makhteshim Agan of North America, Inc., or ADAMA, 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 TeamTM Sorghum Cropping Solution. Both parties are active participants in the operating activities of the collaboration and exposed to significant risks and rewards depending on the commercial success of the activities. Although the DT product is designed to be used as a system, the Company sells only the Double TeamTM Sorghum seed portion of the system and recognizes the revenue consistent with its sales of other seed products.

Under the 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 license free royalty to use these DT related trademarks. The parties have agreed to share the increase in commercial value created and realized by DT, or Total Value Share, with the Company and ADAMA taking 60% and 40% of the Total Share Value, respectively. The Total Share Value is the sum of (a) the increase in gross margin realized by the Company from sale of the Double TeamTM Sorghum product compared to margins realized by its non-ATS Sorghum products, (b) 100% of the ADAMA’s ACCase herbicide margin, and (c) any DT-related technology licensing fees received by either party. The Total Value Share is estimated each calendar quarter and a final net settlement is paid at the end of each market year, which ends in August. Estimated and final net settlement amounts to be paid or received are recorded as adjustments to cost of sales.

Double TeamTM Sorghum seed sales were $3.8 million and $5.0 million for the three and nine months ended March 31, 2023, respectively, and $1.7 million for the three and nine months ended March 31, 2022. The Total Value Share net settlement amounts pursuant to the Collaboration Agreement were not significant for the three and nine months ended March 31, 2023 and 2022.

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 December 31,				Six Months Ended December 31,				Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021		2023		2022		2023		2022
Seed sales	$	12,834,831	$	11,818,392	$	32,672,618	$	26,723,793	$	17,382,360	$	22,791,148	$	50,054,978	$	49,946,635
Services		102,971		813,017		131,049		1,439,297		279,947		395,729		410,996		1,403,332
Total revenue	$	12,937,802	$	12,631,409	$	32,803,667	$	28,163,090	$	17,662,307	$	23,186,877	$	50,465,974	$	51,349,967

The following tables show revenue and percentage of revenue from external sources by destination country:

Three Months Ended December 31,

Six Months Ended December 31,

2022

2021

2022

2021

Saudi Arabia

$
2,165,680

17
%

$
1,680,546

13
%

$
7,337,966

22
%

$
5,147,756

18
%
United States

1,843,826

14
%

$
2,404,078

19
%

6,104,580

19
%

6,069,406

22
%
Australia

2,501,634

19
%

$
2,245,847

18
%

5,059,366

15
%

5,679,852

20
%
Libya

1,162

0
%

$
44,000

0
%

2,999,209

9
%

1,088,000

4
%
Mexico

1,799,590

14
%

$
94,000

1
%

2,530,690

8
%

322,420

1
%
Sudan

1,508,599

12
%

$
—

0
%

2,310,643

7
%

819,618

3
%
Pakistan

531,471

4
%

$
2,067,506

16
%

1,353,091

4
%

2,231,561

8
%
South Africa

933,927

7
%

$
1,378,781

11
%

933,927

3
%

1,378,781

5
%
Argentina

443,474

3
%

$
1,058,308

8
%

806,452

2
%

1,409,147

5
%
Algeria

—

0
%

$
186,000

1
%

754,680

2
%

186,000

1
%
Other

1,208,439

9
%

$
1,472,343

12
%

2,613,063

8
%

3,830,549

14
%
Total revenue

$
12,937,802

100
%

$
12,631,409

100
%

$
32,803,667

100
%

$
28,163,090

100
%


	Three Months Ended March 31,									Nine Months Ended March 31,
	2023					2022				2023				2022
United States	$	8,035,365		45	%	$	9,270,851	40	%	$	12,751,506	25	%	$	15,340,257	30	%
Australia		7,336,338		42	%		8,846,660	38	%		12,522,642	25	%		14,526,512	28	%
Saudi Arabia		292,150		2	%		1,168,502	5	%		7,631,494	15	%		6,316,258	12	%
Mexico		482,300		3	%		602,060	3	%		4,297,823	8	%		2,833,622	6	%
Libya		—		0	%		929,335	4	%		2,995,608	6	%		1,668,044	3	%
Sudan		—		0	%		265,292	1	%		2,303,702	5	%		1,644,073	3	%
Pakistan		240,935		1	%		—	0	%		1,594,026	3	%		1,409,147	3	%
South Africa		(751	)	0	%		—	0	%		1,063,255	2	%		1,088,000	2	%
Algeria		176,000		1	%		557,510	2	%		912,040	2	%		959,810	2	%
Argentina		(3,188	)	0	%		—	0	%		803,264	2	%		819,618	2	%
Other		1,103,158		6	%		1,546,667	7	%		3,590,614	7	%		4,744,626	9	%
Total revenue	$	17,662,307		100	%	$	23,186,877	100	%	$	50,465,974	100	%	$	51,349,967	100	%

NOTE 10 - EQUITY-BASED COMPENSATION

Stock Options

During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, the Company granted options to purchase ~~787,502~~1,289,675 shares of its common stock to certain of its directors, members of the executive management team, ~~and~~ other employees, and non-employee service providers at exercise prices ranging from $0.81 - $~~1.04~~1.89 per share. These options vest in either quarterly or annual periods over oneto three ~~year~~syears and expire ten years from the date of grant.

A summary of stock option activity for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and the year ended June 30, 2022 is presented below:


	Number of Options			Weighted - Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value		Number of Options			Weighted - Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2021		3,776,568		$	2.65		8.0	$	3,962,766		3,776,568		$	2.65		8.0	$	3,962,766
Granted		994,725			2.63						994,725			2.63
Exercised		(38,774	)		2.33						(38,774	)		2.33
Canceled/forfeited/expired		(95,419	)		2.82						(95,419	)		2.82
Outstanding at June 30, 2022		4,637,100			2.64		6.6		—		4,637,100		$	2.64		6.6	$	—
Granted		787,502			0.87						1,289,675			1.26
Exercised		—			—						(1,050	)		0.95
Canceled/forfeited/expired		(844,545	)		2.79						(844,545	)		2.79
Outstanding at December 31, 2022		4,580,057			2.31		7.2		491,508
Outstanding at March 31, 2023											5,081,180		$	2.27		7.2	$	459,346

Options vested and exercisable at December 31, 2022		3,048,678		$	2.63		6.2	$	1,875.00
Options vested and expected to vest as of December 31, 2022		4,568,721			2.31		7.2		486,844
Options vested and exercisable at March 31, 2023											3,235,391		$	2.59		6.1	$	39,501
Options vested and expected to vest as of March 31, 2023											5,071,515		$	2.27		7.2	$	455,713

The weighted average grant date per share fair value of options granted during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 was $~~0.47~~0.70. ~~At December~~On March 31, ~~2022,~~2023, the Company had $~~1,019,195~~1,131,866 of unrecognized stock compensation expense, net of estimated forfeitures, related to the options under the S&W Seed Company 2009 Equity Incentive Plan and the S&W Seed Company 2019 Equity Incentive Plan, or 2019 Plan, which will be recognized over the weighted average remaining service period of ~~1.93~~1.41 years. The Company settles employee stock option exercises with newly issued shares of common stock.

Restricted Stock Units

During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, the Company issued ~~431,704~~495,196 restricted stock units to its directors, certain members of the executive management team, other employees, and ~~other employees.~~non-employee service providers. The restricted stock 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 ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022 totaled $~~443,375~~563,446 and $829,780, respectively, and was based on the closing stock price on the date of grants.

1922

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 Contractual Life (Years)		Number of Nonvested Restricted Stock Units			Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Life (Years)
Nonvested restricted units outstanding at June 30, 2021		361,570		$	2.51		1.3		361,570		$	2.51		1.3
Granted		304,421			2.78		—		304,421			2.78		—
Vested		(391,036	)		2.62		—		(391,036	)		2.62		—
Forfeited		(7,036	)		2.35		—		(7,036	)		2.35		—
Nonvested restricted units outstanding at June 30, 2022		267,919			2.66		1.2		267,919		$	2.66		1.2
Granted		431,704			1.03		—		495,196			1.14		1.6
Vested		(192,952	)		2.72		—		(224,164	)		2.55		—
Forfeited		(8,750	)		2.50		—		(8,750	)		2.50		—
Nonvested restricted units outstanding at December 31, 2022		497,921			1.22		1.7
Nonvested restricted units outstanding at March 31, 2023									530,201		$	1.29		1.7

~~At December~~On March 31, ~~2022,~~2023, the Company had $~~546,369~~461,652 of unrecognized stock compensation expense related to the restricted stock units, which will be recognized over the weighted average remaining service period of ~~1.72~~1.51 years.

Stock-based Compensation Expense

Stock-based compensation expense recorded for grants of stock options, restricted stock and restricted stock units for the three months ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022 totaled $~~305,894~~620,887 and $~~1,014,203~~413,293, respectively. Stock-based compensation expense recorded for grants of stock options, restricted stock and restricted stock units for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022, totaled $~~762,006~~1,382,895 and $~~1,418,515~~1,821,808, respectively.

~~At December~~On March 31, ~~2022,~~2023, there were ~~2,198,793~~1,642,198 shares available under the 2019 Plan for future grants and awards.

Weighted-average assumptions used in the Black-Scholes-Merton model are set forth below for the periods indicated:


	Six Months Ended December 31, 2022			Year Ended June 30, 2022	March 31, 2023		March 31, 2022
Risk free rate	2.87% - 4.41%			0.8% - 1.1%	2.9% - 4.4%		0.8% - 1.1%
Dividend yield	0			0%		—		—
Volatility	64.7% - 66.1%			61.8% - 62.4%	64.7% - 66.1%		61.8% - 63.8%
Average forfeiture assumptions		8.7	%	2.8%	8.2%		2.8%

NOte 11 - investments

Shell Partnership

On February 6, 2023, or Closing Date, the Company and Shell entered into a Contribution and Membership Interest Purchase Agreement, or Purchase Agreement, relating to a partnership for the development and production of sustainable biofuel feedstocks through its newly created subsidiary Vision Bioenergy Oilseeds LLC, or Vision Bioenergy, pursuant to which:

•

The Company (i) contributed its Nampa, Idaho production and research facilities, or the Nampa Facilities, to Vision Bioenergy, along with certain personal property, including vehicles, fixed assets and other similar equipment; (ii) caused Vision Bioenergy to make offers of employment to certain key personnel; (iii) assigned to Vision Bioenergy certain contracts and permits; and (iv) agreed to a two-year non-solicitation covenant with respect to the personnel transferred to Vision Bioenergy.

•

On the Closing Date, Shell (i) made a $13.2 million cash contribution to Vision Bioenergy; (ii) paid $7.0 million to the Company; and (iii) paid $6.8 million to retire in full the principal, accrued interest and related settlement costs of the Rooster Note, which was secured by a priority security interest in the property, plant and fixtures located at the Nampa Facilities.

•

In February 2024, Shell will be required to pay an additional $6.0 million to the Company, subject to adjustment in certain circumstances. The Purchase Agreement provides that this required payment could be decreased by up to $4.5 million if (i) the effective employment date of the certain key personnel transferred to Vision Bioenergy, or Transferred Personnel, is later than May 7, 2023, or any of the Transferred Personnel are no longer employed by Vision Bioenergy after February 6, 2024 and (ii) the Company or Vision Bioenergy, as applicable, fail to replace such Transferred Personnel with personnel of reasonably similar qualifications within 90 days of the events covered in clause (i) above. The Company’s management deemed that the full $6.0 million payment from Shell to the Company was realizable due to the high likelihood that the key employees would remain employed for the first year, or in any event could be replaced within 90 days. The fair value of the

full amount of this payment, based on the discounted value of the payment as of the Closing Date, was $5.7 million, which was recorded on the condensed consolidated balance sheets in the caption Prepaid expenses and other current assets.

•

In February 2024, Shell will be required to make an additional $12.0 million cash contribution to Vision Bioenergy. The fair value of these February 2024 payments on the Closing Date, based on the face value of the payments discounted at Shell’s (incremental borrowing rate) was $11.5 million.

•

S&W 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 purchase a 6% membership interest from Shell for a purchase price ranging between approximately $7.1 and $12.0 million, depending on the date on which such purchase is completed. The fair market value of the Purchase Option on the Closing Date was $0.6 million based on a third party appraisal.

•

Upon the achievement of certain specified milestones, measured as of the fourth and seventh anniversaries of the closing of the partnership transaction, the Company is eligible to receive transfers of up to an additional aggregate 10% interest in Vision Bioenergy from Shell, or Contingent Transfers. The basis for recognition and measurement of contingent consideration in deconsolidation is not addressed in ASC 810. The Company has made an accounting policy election to account for these contingent consideration items like property and casualty losses in accordance with ASC 610-30, in which anticipated insurance recoveries are limited to the lesser of (1) the amount of proceeds for which the likelihood of receipt is probable or (2) the total loss recognized. Under this approach, if the consideration received in the deconsolidation, excluding the contingent consideration, is greater than the carrying amount of the deconsolidated net assets, no contingent consideration would be recognized initially. Since the consideration received by the Company in sale of the interest in Vision Bioenergy to Shell was greater than the carrying value of the assets deconsolidated, no contingent consideration was recorded by the Company. Subsequent recognition and measurement of the contingent consideration would be based on the gain contingency model under ASC 450-30.

Although no contingent assets were recorded by the Company, the Contingent Transfers were a material part of the Purchase Agreement negotiated by the parties and therefore were included in the valuation of Shell’s investment of Vision Bioenergy. The fair value of the Contingent Transfers was determined to be $1.1 million based on Monte Carlo analysis of management projections of free cash flows.

The aggregate total value of the Shell’s payments to the Company and cash contributions to Vision Bioenergy on the Closing Date, the present value of Shell’s future cash payments and contributions, and the fair market values of the Purchase Option and Contingent Transfers, was $45.9 million. For this investment, Shell received a 66% interest in Vision Bioenergy, while the Company retained a 34% interest.

Prior to the closing of the Purchase Agreement, the Vision Bioenergy subsidiary of the Company held production and other property, rights to certain proprietary seed varieties and other trade secrets, and an experienced workforce with the necessary skills, knowledge, or experience to perform a process on the inputs that could generate an output, that meet the definition of a business as defined by ASC 805-10. Accordingly, the transfer of the 66% interest in Vision Bioenergy to Shell was accounted for as a sale of a business under ASC 805. Concurrent with the sale of the 66% interest, Vision Bioenergy was deconsolidated from the Company’s books, and the retained interest was recorded as an investment. Shell’s $45.9 million investment for a 66% interest reflected a total valuation of the Vision Bioenergy business of $69.6 million.

The consideration received by the Company for Shell’s 66% interest in Vision Bioenergy comprises the $7.0 million paid to the Company at closing, the retirement of $6.8 million of Company debt, the $5.7 million present value of the future payment to the Company described above, the $0.6 million fair market value of the Purchase Option, and the $23.7 million value of the equity investment, or $43.8 million in total. The total consideration, less the $5.5 million carrying value of the Nampa facility assets and inventory contributed by the Company to Vision Bioenergy, resulted in gain on the sale in the amount of $38.3 million. The gain is reported within the caption “Gain on equity method investments” on the condensed consolidated statements of operations. This consideration is summarized below:


Equity investment	$	23,664,195
Cash		7,000,000
Debt retirement		6,840,879
Present value of future payment		5,747,126
Fixed assets and inventory transfer		(5,532,694	)
Fair value of 6% member purchase option		604,000
Gain on equity method investments	$	38,323,506

Vision Bioenergy’s five-member Board of Directors includes two directors designated by the Company. Through its Board representation and 34% of the voting rights, the Company has significant influence in the management of Vision Bioenergy. Accordingly, the Company’s investment is accounted for using the equity method and reported within the “Equity method investments” caption on the condensed consolidated balance sheet. The Company recognizes its proportionate share of the reported earnings or losses of Vision

Bioenergy through net income and as an adjustment to the investment balance. This proportionate share is subject to adjustments, such as for the elimination of intra-entity (intercompany) gains or losses or amortization of basis differences. Vision Bioenergy is a pass-through entity for income tax purposes, with income or loss distributed to the partners.

The fair market values of the assets contributed to Vision Bioenergy by the Company at the Closing Date were determined by third-party market appraisals. The Nampa Facilities and other property with an aggregate carrying amount of $5.5 million were valued at $12.9 million. Rights established under a product uptake agreement with Shell and rights to certain proprietary seed technology with no carrying value on the Company's books, were valued at $18.1 million. These intangible assets were recorded on Vision Bioenergy's opening balance sheet and will be amortized through the end of their useful life. The total gain on the sale of the Vision Bioenergy interest recognized by the Company included $8.6 million related to the remeasurement of the retained investment in Vision Bioenergy to its fair value.

The fair market values of the Nampa Facilities and other property and the Purchase Option are provisional pending receipt of the final valuations for those assets.

On the Closing Date, the Company's proportionate 34% share of Vision Bioenergy’s equity was $23.7 million, calculated from the total valuation of the Vision Bioenergy business of $69.6 million. Of this, the Company’s equity share of Vision Bioenergy’s net identifiable assets was $18.9 million. The $4.8 million difference between the carrying amount of the equity method investment and the Company’s share of the net identifiable assets represented equity method goodwill. The equity method goodwill will not be subject to amortization but will assessed at least annually, or when certain triggering events occur, for impairment using fair value measurement techniques.

The summarized unaudited balance sheet presented below reflects the financial information of Vision Bioenergy as of March 31, 2023:


	As of March 31, 2023
Cash	$	11,042,929
Other current assets		432,992
Fixed assets		14,385,791
Intangible assets		17,820,005
Goodwill		14,006,268
Other assets		165,796
TOTAL ASSETS	$	57,853,781
Current liabilities		581,549
Long-term liabilities		117,492
Equity		57,154,740
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	57,853,781

The summarized unaudited income statement presented below reflects the financial information of Vision Bioenergy for the three and nine months ended March 31, 2023:


	Three and Nine Months Ended March 31, 2023
Revenue	$	83,505
Gross profit (loss)		(206,985	)
Loss from operations		(953,718	)
Net loss		(951,582	)

Trigall Australia Partnership

Effective December 23, 2022, the Company’s wholly owned subsidiary, S&W Seed Company Australia Pty Ltd, or S&W Australia, entered into a partnership with Trigall Genetics S.A., or Trigall, for the development and marketing of wheat varieties in Australia. Under the terms of the partnership agreement, S&W Australia transferred certain intellectual property license rights and equipment into a wholly owned subsidiary and subsequently sold an 80% interest in the subsidiary to Trigall. The subsidiary was renamed Trigall Australia Pty Ltd, or Trigall Australia. In return, S&W Australia received $2.0 million in cash, a $1.0 million promissory note to be paid in December 2023, and retained a 20% ownership interest in Trigall Australia. The $1.0 million promissory note is reported within the "Prepaid expenses and other current assets" caption on the condensed consolidated balance sheet. The grossed-up $3.0 million investment by Trigall for an 80% interest in Trigall Australia implied a $3.8 million valuation. S&W Australia’s 20% retained interest, valued accordingly at $0.8 million, as of the transaction date, is reported within the “Equity method investments” caption on the condensed consolidated balance sheet.

Management determined that the assets transferred to Trigall Australia did not meet the definition of a business for accounting purposes, and the sale was accounted for as an asset sale. The $3.8 million valuation, less the $2.0 million carrying value of assets contributed, resulted in a $1.8 million gain on the sale. The gain is reported within the caption “Gain on equity method investment” on the condensed

consolidated statement of operations. The Company recognizes its proportionate share of the reported earnings or losses of Trigall, net of tax, through net income and as an adjustment to the investment balance.

S&W Australia is obligated to make an aggregate of $0.6 million in capital contributions to Trigall Australia through June 2025, and has agreed to provide certain marketing, collection and other operational services in support of the partnership.

Bioceres Investment

As of June 30, 2021, the Company held an investment in Bioceres, S.A., a provider of crop productivity solutions headquartered in Argentina. During the third quarter of fiscal year 2022, the Company sold 71.4% of the investment in Bioceres, S.A. for net proceeds of $1.0 million, which included a gain on the sale of marketable securities of $0.1 million. The carrying value of the remainder of the investment was $0.4 million at June 30, 2022, which was reported in Equity method investments on the Company's consolidated balance sheet. During the nine months ended March 31, 2023, the Company sold off the remainder of its investment in Bioceres, S.A. for net proceeds of $0.4 million, which included a gain on the sale of equity investment of $32,030.

The following summarizes the carrying amount of the Company's equity method investments reflected in the consolidated balance sheet:


	March 31, 2023					June 30, 2022
	Carrying Amount		Economic Interest			Carrying Amount		Economic Interest
Vision Bioenergy	$	23,340,657		34	%	$	—		0	%
Trigall Australia		781,114		20	%		—		0	%
Bioceres		—		0	%		367,970		1	%
Total equity method investments	$	24,121,771				$	367,970

NOTE 1112 – SERIES B CONVERTIBLE PREFERRED STOCK

The terms and conditions of the Company’s Series B Convertible Preferred Stock and accompanying Warrant are presented in Note 14 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022. No issuances or conversions of Series B Convertible Preferred Stock occurred during the ~~six~~nine months ended ~~December~~March 31, ~~2022.~~2023. 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, 2021	$	-	$	—
Issuance of preferred stock		4,638,521		4,638,521
Dividends accrued		127,541		127,541
Accretion of discount for warrants		38,757		38,757
Balance at June 30, 2022	$	4,804,819	$	4,804,819
Dividends accrued		176,447		271,746
Accretion of discount for warrants		51,676		77,514
Balance at December 31, 2022	$	5,032,942
Balance at March 31, 2023			$	5,154,079

2026

NOTE 1213 - 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 ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.


	Six Months Ended December 31,					Nine Months Ended March 31,
	2022		2021			2023			2022
Non-cash investing activities:
Contribution of intangible assets to partnership in exchange for equity investment and promissory note	$	1,750,000	$	—
ROU assets financed by lease liabilities		—		(122,863	)	$	498,143		$	271,524
Consideration received from Shell for equity interest in Vision Bioenergy:
Settlement of long-term debt principal, interest and other related costs							6,840,879			—
Note receivable							5,747,127			—
Membership purchase option							604,000			—
Contribution of property, plant and equipment and inventory to Vision Bioenergy for equity interest							(5,532,694	)		—
Contribution of intangible assets to Trigall in exchange for equity investment and promissory note							(1,750,000	)		—
Non-cash financing activities:
Warrants issued for financial commitment asset		802,901		—			1,894,901			—
Dividends accrued for participating securities							271,746			40,276
Accretion of discount for Series B preferred stock warrants		51,676		—			77,514			12,919
Dividends accrued for participating securities		176,447		—

~~NOTE 13 – SUBSEQUENT EVENTS~~

~~Shell Partnership~~

On February 6, 2023, S&W and Shell entered into a Contribution and Membership Interest Purchase Agreement, relating to a joint venture for the development and production of sustainable biofuel feedstocks, pursuant to which:

•

S&W (i) contributed its Nampa, Idaho production and research facilities, or the Nampa Facilities, to Vision Bioenergy, along with certain personal property, including vehicles, fixed assets and other similar equipment; (ii) caused Vision Bioenergy to make offers of employment to certain key personnel; (iii) assigned to Vision Bioenergy certain contracts and permits; and (iv) agreed to a two-year non-solicitation covenant with respect to the personnel transferred to Vision Bioenergy; and

•

~~Shell (i) made a $13.0~~ ~~million cash contribution to Vision Bioenergy; (ii) paid $7.0~~ ~~million to S&W; and (iii) paid off in full the Rooster Note, which was secured by a priority security interest in the property, plant and fixtures located at the Nampa Facilities.~~

~~In February 2024, Shell will be required to pay an additional $6.0~~ ~~million, and make an additional $12.0~~ ~~million cash contribution to Vision Bioenergy.~~

~~Shell received a~~ 66~~% interest in Vision Bioenergy and S&W retained a~~ 34% interest. Additionally, upon the achievement of certain specified milestones, measured as of the fourth and seventh anniversaries of the closing of the joint venture transaction, S&W is eligible to receive up to an additional aggregate 10~~% interest in Vision Bioenergy. In addition, S&W has a one-time option, exercisable at any time on or before the fourth anniversary of the closing of the joint venture transaction, to purchase a~~ 6~~% membership interest from Shell for a purchase price ranging between approximately $7.1~~ ~~and $12.0~~ ~~million, depending on the date on which such purchase is completed.~~

~~Amendment of NAB Finance Agreement~~

~~On February 8, 2023, the NAB Finance Agreement was amended to change the maximum permissible net related entity position from AUD $25.0~~ ~~million to USD $18.5~~ ~~million.~~

2127

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, 2022, particularly in Part I, Item 1A., “Risk Factors.”

Strategic Review

We recently undertook a strategic review of our operations and future growth opportunities to determine areas we believe are key centers of value, including our sorghum technology operations (led by Double Team™, our non-GMO herbicide tolerant sorghum solution), international forage operations, U.S. forage operations and our specialty crops.

With respect to specialty crops, we intend to initially focus on stevia and camelina. We believe that an opportunity exists to bring to market new stevia varieties that can both meet consumer taste requirements and have yield quality that would enable farmers to profitably grow stevia in North and South America. We plan to leverage our proprietary stevia germplasm to form collaborations and commercial agreements with supply chain partners to create a U.S.-based stevia production industry for high-quality stevia sweetener with superior taste profiles that would supply major customers in the U.S. market, including pursuant to our previously announced U.S. stevia pilot production supply agreement with Ingredion. We also believe we have an opportunity to enter the camelina market as a seed and technology provider, where we plan to work with large oil companies for biofuel production leveraging our capabilities in producing, processing, and packaging camelina.

We have also begun working to align our cost structure to support these centers of value while assessing other potential value-generating transactions and means to strengthen our balance sheet.

On January 3, 2023, we and Trigall Genetics S.A., or Trigall Genetics, a leader in transgenic wheat, announced our entry into a partnership for the development and marketing of wheat varieties in Australia through Trigall Australia Pty Ltd, a newly formed Australian corporation, or Trigall Australia. S&W Seed Company Australia Pty Ltd, our wholly owned subsidiary, or S&W Australia, contributed its Australia-based wheat breeding program and related assets to Trigall Australia in exchange for $2.0 million in cash, a $1.0 million promissory note to be paid in December 2023 and a 20% ownership interest in Trigall Australia. Pursuant to the partnership, S&W Australia is obligated to make an aggregate of $560,000 of capital contributions to Trigall Australia through June 2025 and has agreed to provide certain marketing, collection and other operational services in support of the partnership.

On February 6, 2023, ~~S&W~~we entered into a Contribution and Membership Interest Purchase Agreement, or Shell Partnership Agreement, with Equilon Enterprises LLC (dba Shell Oil Products US, or Shell), relating to a partnership for the development and production of sustainable biofuel feedstocks. The closing of the transactions contemplated by the Shell Partnership Agreement occurred on February 6, 2023, or the Shell Partnership Closing. At the Shell Partnership Closing, among other things:

•

~~S&W~~We (i) contributed its Nampa, Idaho production and research facilities, or the Nampa Facilities, to Vision Bioenergy Oilseeds LLC, an entity formed by S&W for purposes of the partnership, or Vision Bioenergy, along with certain personal property, including vehicles, fixed assets and other similar equipment; (ii) caused Vision Bioenergy to make offers of employment to certain key personnel; (iii) assigned to Vision Bioenergy certain contracts and permits; and (iv) agreed to a two-year non-solicitation covenant with respect to the personnel transferred to Vision Bioenergy; and

•

Shell (i) made a ~~$13.0~~$13.2 million cash contribution to Vision Bioenergy; (ii) paid $7.0 million to ~~S&W;~~us; and (iii) paid off ~~S&W’s~~our outstanding approximately ~~$7.0~~$6.8 million Rooster Note (as defined below), which was secured by a priority security interest in the property, plant and fixtures located at the Nampa Facilities.

In addition, under the terms and conditions of the Shell Partnership Agreement, on the one-year anniversary of the Shell Partnership Closing, Shell is required to pay an additional $6.0 million to ~~S&W~~us (subject to adjustment in certain circumstances) and make an additional $12.0 million cash contribution to Vision Bioenergy.

Shell received a 66% interest in Vision Bioenergy and ~~S&W~~we retained a 34% interest. Pursuant to the Shell Partnership Agreement, upon the achievement of certain specified milestones, measured as of the fourth and seventh anniversaries of the Shell Partnership Closing, S&W is eligible to receive up to an additional aggregate 10% interest in Vision Bioenergy. In addition, ~~S&W has~~we have a one-time option, exercisable at any time on or before the ~~fourth~~fifth anniversary of the Shell Partnership Closing, to purchase a 6% membership interest from Shell for a purchase price ranging between approximately $7.1 and $12.0 million, depending on the date on which such purchase is completed.

2228

We believe these partnerships will, among other things, enable us to reduce our operating expenses, provide immediate liquidity to fund our ongoing operations and sharpen our focus on key growth priorities. Overall, we have begun implementing our plan to reduce annual operating expenses by approximately $4.0 to 5.0 million.

In addition to the above partnerships, we have:

•

streamlined our European sunflower operations by closing our facilities in Hungary, which we expect to decrease operating expense by approximately ~~$700,000~~$0.7 million in fiscal 2023, and

•

reduced headcount and simplified our organization structure through a reduction in force.

Global Economic Conditions

We are subject to additional risks and uncertainties as a result of adverse geopolitical and macroeconomic events, such as the continued impact of the COVID-19 pandemic, the ongoing military conflict between Ukraine and Russia and related sanctions, the armed conflict in Sudan, 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. ~~The COVID-19 pandemic may cause further disruptions in the various markets in which we operate.~~

The COVID-19 pandemic negatively impacted our operations and financial results in 2021 and 2022, due to broad-based supply chain disruptions across the U.S. and globally. These supply chain issues negatively impacted our ability to book containers for ocean freight, which delayed customer shipments, which in certain cases, extended our regular sales and collection cycle. In 2023, we experienced a ~~lessoning~~lessening of the severity of these supply chain issues, though continue to experience effects in certain jurisdictions that continue to have various restrictions, which have impacted certain customers of ~~our customers.~~ours. We continue to work closely with our customers, business units, third party contractors and suppliers, and other external business partners to minimize the potential impact on our business.

~~As COVID-19 continues to affect the areas in which we operate, we believe future outbreaks could have a negative impact on our sales, operating results and financial condition.~~ The extent of the impact of the COVID-19 pandemic on our sales, operating results and financial condition will depend on certain developments, including the location, duration and spread of future outbreaks, and the resulting specific impacts felt by our customers, employees, and vendors, all of which are uncertain and cannot be predicted.

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 armed conflict in Sudan, which began in April 2023, has disrupted our shipments to the country. At this time, we have canceled all shipments to Sudan and are actively working to find alternative customers for the seed. We expect to find alternative outlets to sell this product, possibly including to customers in Sudan if conditions improve. Also, in Saudi Arabia, unregistered lower priced and lower quality European produced seed is currently being dumped into the country which has created a short-term imbalance. We believe inventory levels will normalize following the quick flushing out of this seed and we are making the strategic decision not to discount our high value seed to compete with this low-quality product. As a result of the Sudan geopolitical conflict, and this short-term impact in Saudi Arabia, we now believe there will be approximately $10.0 million in alfalfa orders that will move to the first half of fiscal 2024.

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 the COVID-19 pandemic or other adverse geopolitical and macroeconomic events, this will adversely affect our product revenue.

During the year ended June 30, 2022 and the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we experienced numerous logistical challenges due to limited availability of trucks for product deliveries, congestion at the ports, and overall volatility of shipping and transportation costs. We expect these logistical challenges to persist throughout fiscal 2023, which may, among other things, delay or reduce our ability to recognize revenues within a particular fiscal period and harm our results of operations.

The ultimate impact that COVID-19 and other adverse geopolitical and macroeconomic events will have on our consolidated financial statements remains uncertain and ultimately will be dictated by the length and severity of the pandemic 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

the pandemic or recent geopolitical and macroeconomic events, as well as the economic recovery and actions taken in response to local, state and national governments around the world, including the distribution of vaccinations. We will continue to evaluate the nature and extent of those potential and evolving impacts to our business and 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 alfalfa, sorghum, and pasture seed, 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, including our potential expansion of novel, non-GMO product lines, potential entry into gene-edited product markets, potential entry into specialty crop markets, including stevia and 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, including, among other things, the COVID-19 pandemic, the conflict between Russia and Ukraine, the armed conflict in Sudan, 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. Some of this fluctuation is offset by having operations in both the northern and southern hemispheres. In addition, due to the numerous logistical challenges we have experienced in our shipping and distribution networks resulting from current geopolitical and macroeconomic events, ~~including the COVID-19 pandemic,~~ 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 the current geopolitical and macroeconomic conditions.

Our specialty crops, including our stevia breeding program and biofuels program, have yet to generate any meaningful revenue. However, management continues to evaluate this portion of our business and assess various opportunities to monetize the results of our research and development efforts. Such potential opportunities include possible collaborations and/or joint ventures, licensing agreements and royalty-based agreements. For example, we recently entered into our Vision Bioenergy partnership with Shell in order to develop commercially viable camelina sativa and other oilseeds varieties that produce grain from which oil and meal can be extracted for future processing into biofuels, feed and other potential bioproducts. Although we have received upfront payments from Shell pursuant to the partnership and will be entitled to receive additional payments from Shell upon the one-year anniversary of our entry into partnership, there can be no assurance that this will generate any meaningful revenue.

Cost of Revenue and Gross Margin

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 margin represents the profit remaining after deducting these costs from total revenue. As Double Team sorghum continues to gain market acceptance, we expect to see additional favorability in our gross margin.

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 ~~expense~~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 alfalfa seed, we plan to invest in further development of differentiating forage quality traits. 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 those acquired from Pasture Genetics Ltd., or Pasture Genetics, in 2020, Chromatin Inc., or Chromatin, in 2018 and from SV Genetics Pty Ltd in May 2016, using the straight-line method over the estimated useful life of the asset, consisting of periods of 3-30 years for technology/IP/germplasm, 5-20 years for customer relationships and trade names and 3-20 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 5-35 years for buildings, 2-20 years for machinery and equipment and 2-5 years for vehicles.

Other (Income) Expense

Other (income) expense consists primarily of foreign currency gains and losses, gains on disposal of intangible assets and equity investments, changes in contingent consideration obligation, interest expense and interest expense resulting from the amortization of debt discount. Interest expense and Interest expense - amortization of debt discount primarily consists of interest costs related to outstanding borrowings on our working capital credit ~~facilities and our financing with Rooster Capital, LLC, or Rooster.~~facilities. Amortization of the MFP Letter of Credit (as defined below) asset is also recorded under the caption Interest expense - amortization of debt discount.

Provision (Benefit) for 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 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.

Results of Operations

Three Months Ended ~~December~~March 31, ~~2022~~2023 Compared to the Three Months Ended ~~December~~March 31, ~~2021~~2022

The following table presents our results of operations for the periods indicated:


	Three Months Ended December 31,																		Three Months Ended March 31,
	2022						2021						Change						2023						2022						Change
	$			% of Revenue(1)			$			% of Revenue(1)			$			% Change			$			% of Revenue(1)			$			% of Revenue(1)			$			% Change
Revenue	$	12,937,802			100.0	%	$	12,631,409			100.0	%	$	306,393			2.4	%	$	17,662,307			100.0	%	$	23,186,877			100.0	%	$	(5,524,570	)		(23.8	)%
Cost of revenue		10,188,511			78.7	%		10,971,045			86.9	%		(782,534	)		(7.1	)%		13,231,836			74.9	%		20,481,463			88.3	%		(7,249,627	)		(35.4	)%
Gross profit		2,749,291			21.3	%		1,660,364			13.1	%		1,088,927			65.6	%		4,430,471			25.1	%		2,705,414			11.7	%		1,725,057			63.8	%
Operating expenses
Selling, general and administrative expenses		6,241,461			48.2	%		7,073,320			56.0	%		(831,859	)		(11.8	)%		5,990,651			33.9	%		5,582,060			24.1	%		408,591			7.3	%
Research and development expenses		1,503,473			11.6	%		2,110,413			16.7	%		(606,940	)		(28.8	)%		1,208,038			6.8	%		1,904,631			8.2	%		(696,593	)		(36.6	)%
Depreciation and amortization		1,253,904			9.7	%		1,373,653			10.9	%		(119,749	)		(8.7	)%		1,107,206			6.3	%		1,379,856			6.0	%		(272,650	)		(19.8	)%
Loss (gain) on disposal of property, plant and equipment																				37,325			0.2	%		49,796			0.2	%		(12,471	)		(25.0	)%
Total operating expenses		8,998,838			69.6	%		10,557,386			83.6	%		(1,558,548	)		(14.8	)%		8,343,220			47.2	%		8,916,343			38.5	%		(573,123	)		(6.4	)%
Loss from operations		(6,249,547	)		(48.3	)%		(8,897,022	)		(70.4	)%		2,647,475			(29.8	)%		(3,912,749	)		(22.2	)%		(6,210,929	)		(26.8	)%		2,298,180			(37.0	)%
Other (income) expense
Foreign currency loss		176,624			1.4	%		258,482			2.0	%		(81,858	)		(31.7	)%		331,889			1.9	%		146,935			0.6	%		184,954			125.9	%
Government grant income																				(1,444,044	)		(8.2	)%		—			—			(1,444,044	)	-
Gain on sale of business interest																				(38,323,506	)		(217.0	)%		—			—			(38,323,506	)	-
Gain on disposal of intangible assets		(1,796,252	)		(13.9	)%		—			—			(1,796,252	)	-				—			—			(185,800	)		(0.8	)%		185,800			(100.0	)%
Change in contingent consideration obligation		—			—			(466,376	)		(3.7	)%		466,376			(100.0	)%		697,840			4.0	%		246,801			1.1	%		451,039			182.8	%
Interest expense - amortization of debt discount		578,112			4.5	%		221,196			1.8	%		356,916			161.4	%		1,163,533			6.6	%		592,853			2.6	%		570,680			96.3	%
Interest expense, net		1,092,327			8.4	%		589,694			4.7	%		502,633			85.2	%		—			—			(68,967	)		(0.3	)%		68,967			(100.0	)%
Gain on sale of equity investment		(32,030	)		(0.2	)%		—			—			(32,030	)	-
Other expense		4,561			0.0	%		23,771			0.2	%		(19,210	)		(80.8	)%
Loss before income taxes		(6,272,889	)		(48.5	)%		(9,523,789	)		(75.4	)%		3,250,900			(34.1	)%
(Benefit from) provision for income taxes		(282,296	)		(2.2	)%		257,776			2.0	%		(540,072	)		(209.5	)%
Net loss	$	(5,990,593	)		(46.3	)%	$	(9,781,565	)		(77.4	)%	$	3,790,972			(38.8	)%
Other (income) expenses																				1,641,406			9.3	%		(3,157	)		(0.0	)%		1,644,563			(52092.6	)%
Income (loss) before income taxes																				32,020,133			181.3	%		(6,939,594	)		(29.9	)%		38,959,727			(561.4	)%
Provision for (benefit from) income taxes																				(500,118	)		(2.8	)%		322,661			1.4	%		(822,779	)		(255.0	)%
Income (loss) before equity in net earnings of affiliates																				32,520,251			184.1	%		(7,262,255	)		(31.3	)%		39,782,506			(547.8	)%
Equity in loss of equity method investees, net of tax																				406,678			2.3	%		—			—			406,678		-
Net income (loss)																			$	32,113,573			181.8	%	$	(7,262,255	)		(31.3	)%	$	39,375,828			(542.2	)%

(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 ~~December~~March 31, ~~2022~~2023 and the three months ended ~~December~~March 31, ~~2021.~~2022. 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, 2022, as filed with the SEC on September 28, 2022.

Revenue

The year-over-year ~~increase~~decrease in revenue ~~for the second quarter ended December 31, 2022~~ was primarily due to ana $3.9 million decrease in product revenue from alfalfa sales to the Middle East/North Africa region, or MENA, United States, European, Asian, and South African regions, a $2.0 million decrease in pastures and forages sales in Australia, a $1.1 million decrease in conventional sorghum sales to the United States, a $0.2 million decrease in sunflower sales in the United States, and a $0.1 million decrease in service revenue in the United States. Much of this decline in sales to international markets was due to a wet La Nina spring in Australia and overall flooding in Eastern Australia, which caused the harvest to be later and smaller than usual. In the United States, we also experienced delayed plantings from cold temperatures. This, coupled with a generally weak domestic dormant alfalfa market, is creating a negative impact for us. For the US conventional sorghum, operational challenges led to slower shipping of conventional sorghum. These revenue decreases were partially offset by a $1.5 million increase ~~of $1.9~~in Double Team sorghum sales in the United States, a $0.2 million increase in conventional sorghum sales to the Latin America, or LATAM, region and a $0.1 million increase in alfalfa sales to the Middle East North Africa, or MENA, region, a $1.0 million increase in North America sorghum sales, and a $0.2 million increase in pastures sales in Australia. This was offset by a decrease in sales of sorghum to the MENA region of $1.4 million, a $0.7 million decrease in alfalfa sales to North America, and a $0.7 million decrease in North America service revenue.LATAM region.

Cost of Revenue and Gross Margin

~~Despite an increase in sales, the~~The cost of revenue ~~for the second quarter ended December 31, 2022~~ decreased compared to the prior year period, primarily driven by the decrease in sales. However, the gross margin more than doubled compared to the third quarter of fiscal 2022, primarily driven by increased sales of higher margin ~~alfalfa~~Double Team sorghum in the ~~MENA region and grain sorghum in North America, along with decreased sales of~~United States, reduced lower margin ~~sorghum products~~dormant alfalfa sales in the ~~MENA region~~United States, and ~~dormant alfalfa~~lower inventory write-downs in ~~North America. Write-downs~~fiscal 2023. Inventory write-downs during the three months ended March 31, 2023, decreased to $0.4 million from $1.1 million in the previous year quarter when we experienced a higher level of certain inventory lots that had deteriorated in quality and germination ~~rates were reduced from $0.4 million in the second quarter of fiscal 2022 to $0.1 million in the second quarter of fiscal 2023.~~rates.

Selling, General and Administrative Expenses

The $0.4 million increase in selling, general and administrative expenses is attributable to a $0.7 million increase in one-time transaction costs and a $0.2 million increase in stock-based compensation expense as a result of the accelerated vesting of equity awards of a former executive officer, offset by a $0.3 million decrease in compensation and other employee related expenses and a $0.2 million decrease in other cost reduction efforts.

Research and Development Expenses

The $0.7 million year-over-year decrease in research and development expenses is attributable to a $0.2 million reduction in field trial related expenses, a $0.2 million reduction in payroll and related expenses as a result of management’s cost reduction efforts, a $0.1 million reduction in consulting and professional fees, a $0.1 million reduction in office expenses, and a $0.1 million reduction in other research and development expenses.

Depreciation and Amortization

Depreciation and amortization expenses decreased by $0.3 million following contributions of intangible and fixed assets to the Trigall and Vision Bioenergy partnerships.

Foreign Currency Loss

The increase in foreign currency loss was attributable to fluctuations in foreign currency exchange rates between the Australian dollar and U.S. dollar.

Government Grant Income

The $1.4 million in government grant income was attributable to an Employee Retention Credit recognized for certain periods in 2021 under the Coronavirus Aid, Relief, and Economic Security Act.

Gain on Sale of Business Interest

The gain on sale of business interest was related to the sale of a 66% interest in Vision Biofuels to Shell. The $38.3 million gain was determined by the amount of consideration paid by Shell for the 66% interest plus the proportionate valuation of our retained 34% interest, less the carrying value of the assets we contributed to Vision Bioenergy.

Change in Contingent Consideration Obligation

The decrease in benefit to non-cash change in contingent consideration compared to the prior year period is due to the February 2022 final valuation of the contingent consideration obligation from the 2020 acquisition of Pasture Genetics Pty Ltd. The valuation resulted in no contingent consideration due, and a reversal of the remaining $0.5 million accrual.

Interest Expense - Amortization of Debt Discount

The increased debt amortization expense in the third quarter of fiscal 2023 compared to the prior year period was due to the amortization of the financial commitment asset established in conjunction with the MFP Loan Agreement beginning in September 2022 (see “Capital Resources and Requirements—MFP Loan Agreement,” below) and increased amortization of costs associated with the completion of refinancing our CIBC Credit Facility.

Interest Expense, Net

Interest expense for the three months ended March 31, 2023 and 2022 primarily consisted of interest incurred on the working capital credit facilities, the Rooster Note (as defined below), and equipment capital leases. The $0.5 million increase in interest expense was primarily driven by increases in average borrowings and increased interest rates on the working capital credit facilities.

Other (Income) Expenses

Other (income) expenses for the three months ended March 31, 2023 primarily consisted of $1.5 million in lender fees that were written off due to our coming to an agreement with CIBC, an existing lender. These fees are associated with uncompleted financing efforts with other lenders.

(Benefit from) Provision for Income Tax Benefit

The income tax provision (benefit) totaled ($0.5) million for the three months ended March 31, 2023, compared to a $0.3 million income tax provision for the three months ended March 31, 2022. Our effective tax rate for the three months ended March 31, 2023 was (1.7%) due primarily to the valuation allowance recorded against substantially all of our U.S. deferred tax assets and due to income tax expense

related to our Australian operations and minor state taxes. The effective tax rate for the three months ended March 31, 2022 was (4.7%) due to the valuation allowance recorded against substantially all of our deferred tax assets.

Equity in Loss of Equity Method Investees, Net of Tax

The loss on equity investments of $0.4 million was related to our proportionate share of loss from our 34% interest in Vision Bioenergy and our 20% interest in Trigall.

Nine Months Ended March 31, 2023 Compared to the Nine Months Ended March 31, 2022

The following table presents our results of operations for the periods indicated:


	Nine Months Ended March 31,
	2023						2022						Change
	$			% of Revenue(1)			$			% of Revenue(1)			$			% Change
Revenue	$	50,465,974			100.0	%	$	51,349,967			100.0	%	$	(883,993	)		(1.7	)%
Cost of revenue		38,781,701			76.8	%		43,857,520			85.4	%		(5,075,819	)		(11.6	)%
Gross profit		11,684,273			23.2	%		7,492,447			14.6	%		4,191,826			55.9	%
Operating expenses
Selling, general and administrative expenses		17,289,120			34.3	%		18,260,785			35.6	%		(971,665	)		(5.3	)%
Research and development expenses		4,226,891			8.4	%		6,010,172			11.7	%		(1,783,281	)		(29.7	)%
Depreciation and amortization		3,697,544			7.3	%		4,084,554			8.0	%		(387,010	)		(9.5	)%
Loss (gain) on disposal of property, plant and equipment		32,914			0.1	%		13,957			0.0	%		18,957			135.8	%
Total operating expenses		25,246,469			50.0	%		28,369,468			55.2	%		(3,122,999	)		(11.0	)%
Loss from operations		(13,562,196	)		(26.9	)%		(20,877,021	)		(40.7	)%		7,314,825			(35.0	)%
Other (income) expense
Foreign currency loss		699,428			1.4	%		567,963			1.1	%		131,465			23.1	%
Government grant income		(1,444,044	)		(2.9	)%		—			—			(1,444,044	)	-
Gain on sale of business interest		(38,323,506	)		(75.9	)%		—			—			(38,323,506	)	-
Gain on sale of equity investment		(1,796,252	)		(3.6	)%		—			—			(1,796,252	)	-
Gain on disposal of intangible assets		—			—			(714,429	)		(1.4	)%		714,429			(100.0	)%
Change in contingent consideration obligation		1,559,595			3.1	%		660,191			1.3	%		899,404			136.2	%
Interest expense - amortization of debt discount		3,042,539			6.0	%		1,735,392			3.4	%		1,307,147			75.3	%
Interest expense, net		(32,030	)		(0.1	)%		(68,967	)		(0.1	)%		36,937			(53.6	)%
Other (income) expenses		1,601,697			3.2	%		(13,746	)		(0.0	)%		1,615,443			(11752.1	)%
Income (loss) before income taxes		21,130,377			41.9	%		(23,043,425	)		(44.9	)%		44,173,802			(191.7	)%
Provision for (benefit from) income taxes		(884,078	)		(1.8	)%		414,636			0.8	%		(1,298,714	)		(313.2	)%
Income (loss) before equity in net earnings of affiliates		22,014,455			124.6	%		(23,458,061	)		(101.2	)%		45,472,516			(193.8	)%
Equity in loss of equity method investees, net of tax		406,678			0.8	%		—			—			406,678		-
Net income (loss)	$	21,607,777			42.8	%	$	(23,458,061	)		(45.7	)%	$	45,065,838			(192.1	)%

(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, 2023 and the nine months ended March 31, 2022. 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, 2022, as filed with the SEC on September 28, 2022.

Revenue

The $0.9 million year-over-year decrease in revenue was primarily due to the decrease in product revenue from alfalfa sales to the United States, European, Asian, and South African regions of $4.6 million, the decrease in conventional sorghum sales to the United States, Asian, South African, and MENA regions of $4.0 million, the decrease in pastures and forages sales in Australia of $2.0 million, and reduced service revenue in the United States of $1.0 million. Much of this decline in sales to international markets was due to wetter and cooler conditions for the Australia harvest, which caused it to be later and smaller than usual. In the US, operational challenges led to slower shipping of conventional sorghum. These revenue decreases were partially offset by an increase in sorghum sales to the MENA and LATAM region of $6.4 million, an increase in Double Team sorghum sales in the United States of $2.7 million, and an increase in conventional sorghum sales to the LATAM region of $1.6 million.

Cost of Revenue and Gross Margin

Cost of revenue decreased year-over-year, as the gross margin percentage improved from 15% to 23% compared to the prior year period. The margin improvement was primarily driven by increased sales of higher margin Double Team sorghum sales in the United States and higher margin non-dormant alfalfa sales in MENA, reduced lower margin sorghum Sudan sales to MENA and Asia, lower margin

dormant alfalfa sales in the United States, and lower inventory write-downs in fiscal 2023. Inventory write-downs during the nine months ended March 31, 2023, decreased to $0.9 million from $1.9 million in the previous year period, when we experienced a higher level of certain inventory lots that had deteriorated in quality and germination rates.

Selling, General and Administrative Expenses

The $1.0 million decrease in selling, general and administrative expenses ~~for the three months ended December 2022 compared to the three months ended December 31, 2021~~ is attributable to a $0.7 million decrease in stock-based compensation expense as a result of the accelerated vesting of equity awards of a former executive officer during the ~~three~~nine months ended ~~December 2021, $0.3~~March 31, 2022, $0.6 million in reduced payroll and other employee compensation related expenses as a result of management’s cost reduction efforts, $0.3 million in reduced bad debt expense, $0.2 million advertising and marketing spending reductions, $0.2 million of reduced consulting expenses, and $0.3 million in other various cost reductions. The cost reductions were partially offset by a ~~$0.1~~$1.0 million increase in ~~consulting~~one time transaction costs, a $0.2 million increase in stock-based compensation as a result of the accelerated vesting of equity awards of a former executive officer during the nine months ended March 31, 2023, and ~~professional fees.~~$0.2 million of increased travel expenses.

Research and Development Expenses

The year-over-year decrease in research and development expenses ~~for the second quarter ended December 31, 2022~~ is attributable to ~~a $0.3~~$0.6 million ~~reduction~~ in ~~field trial related expenses, a $0.2 million reduction in payroll~~reduced salaries, wages and related employment expenses as a result of management’s cost reduction efforts, ~~and a $0.1~~$0.4 million ~~reduction~~ in reduced United States field trial related expenses, $0.3 million in reduced consulting and professional ~~fees.~~fees, $0.2 million of reduced investment in our sunflower programs in Hungary, $0.2 million in reduced office expenses, and $0.1 million in reduced other research and development related activities.

Depreciation and Amortization

~~The decrease in depreciation~~Depreciation and amortization expenses ~~for the three months ended December 31, 2022 compared~~decreased by $0.4 million following contributions of intangible and fixed assets to the ~~three months ended December 31, 2021 was attributable to decreased depreciation expense on assets held by S&W Australia, our wholly owned Australian subsidiary.~~Trigall and Vision Bioenergy partnerships.

Foreign Currency Loss

The ~~decrease~~increase in foreign currency loss for ~~the three months ended December 31, 2022 compared to the three months ended December 31, 2021~~fiscal 2023 was attributable to fluctuations in foreign currency exchange rates between the Australian dollar and U.S. dollar.

Government Grant Income

The $1.4 million in government grant income was attributable to an Employee Retention Credit recognized for certain periods in 2021 under the Coronavirus Aid, Relief, and Economic Security Act.

Gain on Sale of Business Interest

Gain on Disposal of Intangible Assets

The $1.8 million gain on disposal of intangible assets occurred in the second quarter of fiscal 2023, ~~was recognized by S&W Australia~~ as a result of the contribution of ~~its~~our Australia-based wheat breeding program and related assets to Trigall Australia in furtherance of the partnership with Trigall Australia, as discussed under the caption “Strategic Review,” above.

Change in Contingent Consideration Obligation

The decrease in benefit to non-cash change in contingent consideration compared to the prior year period is due to the February 2022 final valuation of the contingent consideration obligation from the 2020 acquisition of Pasture Genetics Pty Ltd. The valuation resulted in no contingent consideration due and a reversal of the remaining $0.5 million accrual.

Interest Expense - Amortization of Debt Discount

The increased debt amortization expense ~~in the second quarter of fiscal 2023 compared to the prior year period~~ was due to the amortization of the financial commitment asset established in conjunction with the MFP Loan Agreement beginning in September 2022 (see “Capital Resources and Requirements—MFP Loan Agreement,” below).and increased amortization of costs associated with completion of refinancing our CIBC Credit Facility.

2635

Interest Expense, Net

Interest expense for the ~~three~~nine months ended ~~December~~March 31, ~~2022,~~2023 and ~~2021~~2022 primarily consisted of interest incurred on the working capital credit facilities, the Rooster Note (as defined below), and equipment capital leases. The ~~$0.5~~$0.7 million increase in interest expense ~~for the three months ended December 31, 2022,~~ was primarily driven by increases in average borrowings and increased interest rates on the working capital credit ~~facilities and increased interest rates on both our United States and Australian wholly owned subsidiaries.~~facilities.

~~Gain on Sale of Equity Investment~~Other (Income) Expenses

~~The gain on sale~~Other (income) expenses for the nine months ended March 31, 2023 primarily consisted of ~~equity investment was a result of the sale of the remainder of~~$1.5 million in lender fees that were written off due to our ~~investment in Bioceres.~~coming to an agreement with CIBC, an existing lender. These fees are associated with uncompleted financing efforts with other lenders.

(Benefit from) Provision for Income Tax Benefit

~~Income~~The income tax provision (benefit) totaled ($~~0.3)~~0.9) million for the ~~three~~nine months ended ~~December~~March 31, ~~2022~~2023, compared to a $0.4 million income tax ~~expense of $0.3 million~~provision for the ~~three~~nine months ended ~~December~~March 31, ~~2021.~~2022. Our effective tax rate was ~~4.5% for~~(4.4%) during the ~~three~~nine months ended ~~December~~March 31, ~~2022~~2023 compared to ~~an effective tax rate of (2.7)~~(1.8)% for the ~~three~~nine months ended ~~December~~March 31, ~~2021.~~2022. Our effective tax rate for the ~~three~~nine months ended ~~December~~March 31, ~~2022~~2023 was ~~4.5%~~ due primarily to the valuation allowance recorded against substantially all of our deferred tax assets, ~~and~~ the tax effects of the partnership with Trigall Genetics entered into during the ~~quarter.~~second quarter, and income tax expense related to our Australian operations and minor state taxes. 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, with the exception of our operations in Australia. ~~Our effective tax rate for the current quarter is primarily due to income tax expense related to our foreign operations and minor state taxes.~~

~~Six Months ended December 31, 2022 Compared to the Six Months Ended December 31, 2021~~

~~The following table presents our results of operations for the periods indicated:~~

Six Months Ended December 31,

2022

2021

Change

$

% of
Revenue(1)

$

% of
Revenue(1)

$

% Change

Revenue

$
32,803,667

100.0
%

$
28,163,090

100.0
%

$
4,640,577

16.5
%
Cost of revenue

25,549,865

77.9
%

23,376,057

83.0
%

2,173,808

9.3
%
Gross profit

7,253,802

22.1
%

4,787,033

17.0
%

2,466,769

51.5
%
Operating expenses

Selling, general and administrative expenses

11,294,058

34.4
%

12,642,887

44.9
%

(1,348,829
)

(10.7
)%
Research and development expenses

3,018,853

9.2
%

4,105,541

14.6
%

(1,086,688
)

(26.5
)%
Depreciation and amortization

2,590,338

7.9
%

2,704,698

9.6
%

(114,360
)

(4.2
)%
Total operating expenses

16,903,249

51.5
%

19,453,126

69.1
%

(2,549,877
)

(13.1
)%
Loss from operations

(9,649,447
)

(29.4
)%

(14,666,093
)

(52.1
)%

5,016,646

(34.2
)%
Other (income) expense

Foreign currency loss

367,539

1.1
%

421,028

1.5
%

(53,489
)

(12.7
)%
Gain on disposal of intangible assets

(1,796,252
)

(5.5
)%

—

—

(1,796,252
)

--

Change in contingent consideration obligation

—

—

(528,630
)

(1.9
)%

528,630

(100.0
)%
Interest expense - amortization of debt discount

861,755

2.6
%

413,391

1.5
%

448,364

108.5
%
Interest expense, net

1,879,006

5.7
%

1,142,539

4.1
%

736,467

64.5
%
Gain on sale of equity investment

(32,030
)

(0.1
)%

—

—

(32,030
)

--

Other income

(39,709
)

(0.1
)%

(10,589
)

(0.0
)%

(29,120
)

275.0
%
Loss before income taxes

(10,889,756
)

(33.2
)%

(16,103,832
)

(57.2
)%

5,214,076

(32.4
)%
(Benefit from) provision for income taxes

(383,960
)

(1.2
)%

91,974

0.3
%

(475,934
)

(517.5
)%
Net loss

(10,505,796
)

(32.0
)%

(16,195,806
)

(57.5
)%

5,690,010

(35.1
)%

~~(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 six months ended December 31, 2022 and the six months ended December 31, 2021. 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, 2022, as filed with the SEC on September 28, 2022.

~~Revenue~~

The year-over-year increase in revenue for the six months ended December 31, 2022 was primarily due to the increase in product revenue from alfalfa sales to the MENA region of $6.6 million and increased alfalfa and sorghum sales to North America of $2.0 million. These revenue increases were partially offset by a decrease in sorghum sales to the MENA region of $1.7 million, a decrease in service revenue in the United States of $1.3 million, a decrease in pasture product sales to Australia of $0.5 million, a decrease in sorghum sales to Asia of $0.3 million, and a decrease in alfalfa sales to South America of $0.3 million.

~~Cost of Revenue and Gross Margin~~

Cost of revenue increased year-over-year due to increased sales in the six months ended December 31, 2022, but gross margin improved compared to the prior year period, primarily driven by increased sales of higher margin alfalfa seed in the MENA region and grain sorghum seed in North America, as well as decreased sales of lower margin sorghum products in the MENA region.

Cost of revenue for the six months ended December 31, 2022 and 2021 included inventory write-downs of $0.7 million and $0.7 million, respectively, related to certain inventory lots that had deteriorated in quality and germination rates.

~~Selling, General and Administrative Expenses~~

~~The decrease~~Equity in selling, general and administrative expenses for the six months ended December 2022 compared to the prior year period is attributable to a $0.7 million decrease in stock-based compensation expense as a result of the accelerated vesting of equity awards of a former executive officer during the six months ended December 31, 2021, $0.6 million in reduced payroll and related expenses as a result of management’s cost reduction efforts, and $0.2 million decrease in advertising and marketing, offset by a $0.1 million increase in consulting and professional fees.

~~Research and Development Expenses~~

The year-over-year decrease in research and development expenses for the six months ended December 31, 2022 is attributable to a $0.4 million reduction in United States field trial related expenses, $0.4 million in reduced salaries, wages and related employment expenses as a result of management’s cost reduction efforts,~~$0.2 million reduction of investment in our sunflower programs in Hungary and $0.1 million reduction in consulting and professional fees.~~

~~Depreciation and Amortization~~

The decrease in depreciation and amortization expenses for the six months ended December 2022 compared to the six months ended 2021 was attributable to decreased depreciation expense on assets held by S&W Australia.

~~Foreign Currency~~ Loss

The decrease in foreign currency loss for the six months ended December 31, 2022 compared to the six months ended December 31, 2021 was attributable to fluctuations in foreign currency exchange rates between the Australian dollar and U.S. dollar.

~~Gain on Disposal of Intangible Assets~~

The $1.8 million gain on disposal of intangible assets in the second quarter of fiscal 2023 was recognized by S&W Australia as a result of its contribution of its Australia-based wheat breeding program and related assets to Trigall Australia in furtherance of the partnership with Trigall Australia, as discussed under the caption “Strategic Review,” above.

~~Change in Contingent Consideration Obligation~~

~~Interest Expense - Amortization of Debt Discount~~

The increased debt amortization expense in the six months ended December 31, 2022 compared to the prior year period was due to the amortization of the financial commitment asset established in conjunction with the MFP Loan Agreement beginning in September 2022 (see “~~Capital Resources and Requirements—MFP Loan Agreement,” below).~~

~~Interest Expense, Net~~

Interest expense for the six months ended December 31, 2022, and 2021 primarily consisted of interest incurred on the working capital credit facilities, the Rooster Note (as defined below), and equipment capital leases. The $0.7 million increase in interest expense for the six months ended December 31, 2022 was primarily driven by increases in average borrowings on the working capital credit facilities and increased interest rates on both our United States and Australian wholly owned subsidiaries.

~~Gain on Sale~~ of Equity ~~Investment~~

~~The gain on sale~~Method Investees, Net of ~~equity investment was a result of the sale of the remainder of our investment in Bioceres.~~

~~(Benefit from) Provision for Income~~ Tax ~~Benefit~~

The ~~income tax (benefit) totaled $(0.4)~~loss on equity investments of $0.4 million ~~for the six months ended December 31, 2022 compared to a $0.1 million income tax provision for the six months ended December 31, 2021. Our effective tax rate~~ was 3.5% during the six months ended December 31, 2022 compared to -0.6% for the six months ended December 31, 2021. Our effective tax rate for the six months ended December 31, 2022 was 3.5% due primarily to the valuation allowance recorded against substantially all of our deferred tax assets, and the tax effects of the partnership with Trigall Genetics entered into during the second quarter. 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, with the exception of our operations in Australia. Our effective tax rate for the current quarter is primarily due to income tax expense related to our ~~foreign operations~~proportionate share of loss from our 34% interest in Vision Bioenergy and ~~minor state taxes.~~our 20% interest in Trigall.

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 ~~historically have paid~~pay our North American contracted growers progressively, starting in the second fiscal quarter. In fiscal year ~~2022,~~2023, we paid our North American growers approximately 50% of amounts due in the fall of ~~2021~~2022 and the balance was paid in the spring of ~~2022.~~2023. This payment cycle to our growers was similar in fiscal year ~~2021,~~2022, and we expect it to be similar for fiscal year ~~2023.~~2024. S&W Australia and Pasture Genetics, our Australia-based wholly owned subsidiaries, have production cycles that are

counter-cyclical to North America; however, the timing of payments to Australian growers, which occurs in the second through fourth quarters, also puts a greater demand on our working capital and working capital requirements during these periods.

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 of 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, both in the United States and Australia.

Capital Resources and Material Cash Requirements

WeExcluding the gain recognized in relation to the Vision Bioenergy partnership, we are not profitable and have had negative cash flow from operations for the last several years. To help fund our operations, we have relied on equity and debt 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 believe that cash flow from operations, cash payments from Shell pursuant to the Shell Partnership Agreement and undrawn availability under our existing debt facilities will be sufficient to meet our cash requirements over the next 12 months. We expect to meet our longer-term expected future cash requirements and obligations beyond the next 12 months through a combination of existing cash and cash equivalents, cash flow from operations, ~~the undrawn availability under~~ our debt facilities and issuances of equity securities or debt offerings, among other sources of

capital. Our ability to fund longer-term operating needs will depend on our ability to generate sufficient cash flows through sales of our products, our ability to maintain compliance with, and secure additional funds from, our existing debt facilities, and our ability to access the capital markets, 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, 2022, as filed with the SEC on September 28, 2022.

Below is a summary of material changes to our sources of capital during the ~~six~~nine months ended ~~December~~March 31, ~~2022:~~2023:

Shell Partnership

On February 6, 2023, S&W and Shell entered into a partnership for the development and production of sustainable biofuel feedstocks through Vision Bioenergy. We received $7.0 million at the Shell partnership Closing and will be eligible to receive an additional $6.0 million in February 2024, subject to adjustment in certain circumstances.

Trigall Australia Partnership

In connection with our partnership with Trigall Genetics (as discussed under “—Strategic Review”), we received $2.0 million in cash and a promissory note for $1.0 million due in December 2023. Under the partnership agreement we are obligated to make an aggregate of $560,000 of capital contributions to Trigall Australia through June 2025.

CIBC Loan Agreement

Our Loan and Security Agreement with CIBC Bank USA, or CIBC, as amended to date, or the CIBC Loan Agreement, provides for a ~~$21.0~~$25.0 million credit facility. The following amendments to the CIBC Loan Agreement occurred during the ~~six~~nine months ended ~~December~~March 31, ~~2022:~~2023:

•

on September 22, 2022, the CIBC Loan Agreement was amended to, among other things: (i) specify that the borrowing base eligible inventory sublimit cannot be reduced below the proceeds available to be drawn under the MFP Letter of Credit (as defined below), (ii) waive our non-compliance with certain financial covenants under the CIBC Loan Agreement and (iii) establish a minimum liquidity of no less than $1.0 million, tested weekly as of the last day of each week for the remainder of the term of the CIBC Loan Agreement;

•

on October 28, 2022, the CIBC Loan Agreement was amended to, among other things, increase (i) the total revolving loan commitment to $21.0 million from $18.0 million and (ii) the borrowing base eligible inventory sublimit to $12.0 million from $9.0 million; ~~and~~

•

on December 23, 2022, the CIBC Loan Agreement was further amended to extend the maturity date of all revolving loans, advances and other obligations outstanding under the CIBC Loan Agreement from December 23, 2022 to March 23, 2023. As of ~~December~~March 31, ~~2022,~~2023, we were in compliance with all covenants contained in the CIBC Loan Agreement, and approximately $4.8 million remained available for use under this credit ~~facility.~~facility; and

•

on March 22, 2023, the Company entered into an Amended and Restated Loan and Security Agreement, or the Amended CIBC Loan Agreement, with CIBC, as administrative agent and sole lead arranger, and the other loan parties and lenders party thereto. The Amended CIBC Loan Agreement replaced the existing CIBC Loan Agreement. The Amended CIBC Loan Agreement now matures on August 31, 2024.

30The Amended CIBC Loan Agreement provides for a senior secured credit facility of up to $25.0 million from February 1 to October 31 of each year, and up to $18.0 million from November 1 to January 31 of each year, or the Amended CIBC Credit Facility. The proceeds of advances under the Amended CIBC Credit Facility may be used to finance the Company’s ongoing working capital requirements and other general corporate purposes. Availability of funds under the Amended CIBC Credit Facility is subject to a borrowing base equal to (a) up to 85% of eligible domestic accounts receivable, plus (b) up to 90% of eligible foreign accounts receivable, plus (c) up to the lesser of (i) 65% of eligible inventory and (ii) 85% of the appraised net orderly liquidation value of eligible inventory, in each case subject to an eligible inventory sublimit, in each case ((a), (b) and (c)), as more fully set forth in the Amended CIBC Loan Agreement and subject to lender reserves that CIBC may establish from time to time in its sole discretion, determined in good faith. Advances under the Amended CIBC Credit Facility bear interest at a rate per annum equal to a reference rate equal to CIBC’s prime rate at any time (or, if greater, the federal funds rate at such time plus 0.5%) plus an applicable margin of 2.0%. The Company’s obligations under the Amended CIBC Loan 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 Amended CIBC Loan 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, subject to certain exceptions. Amounts due under the Amended CIBC Loan Agreement may be accelerated upon an “event of default,” as defined in the Amended CIBC Loan

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, CIBC 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 Amended CIBC Loan Agreement, including, but not limited to, accrued and unpaid principal and interest due under the CIBC Credit Facility, will be due and payable in full on August 31, 2024.

NAB Finance Agreement

S&W Australia’s debt facilities with National Australia Bank or NAB, as amended to date, or the NAB Finance Agreement, were amended and restated on October 24, 2022 and further amended on October 25, 2022. Pursuant to the amendments contained in the NAB Finance Agreement, among other things:

•

the borrowing base line credit limit under S&W Australia’s seasonal credit facility was increased from AUD $32.0 million (USD ~~$21.8~~$21.4 million as of ~~December~~March 31, ~~2022)~~2023) to AUD $40.0 million (USD ~~$27.2~~$26.8 million as of ~~December~~March 31, ~~2022)~~2023), with a one-year maturity date extension to September 30, 2024;

•

the overdraft credit limit under S&W Australia’s seasonal credit facility was increased from AUD $1.0 million (USD $0.7 million as of ~~December~~March 31, ~~2022)~~2023) to AUD $2.0 million (USD ~~$1.4~~$1.3 million as of ~~December~~March 31, ~~2022)~~2023), with a one-year maturity date extension to September 29, 2023; and

•

the maturity date of S&W Australia’s master asset finance facility was extended by one year to September 29, 2023.

After the amendments, the consolidated debt facilities under the NAB Finance Agreement provide for up to an aggregate of AUD $49.0 (USD ~~$33.3~~$32.8 million as of ~~December~~March 31, ~~2022)~~2023) of credit. The NAB finance agreement is guaranteed by S&W Seed Company up to a maximum of AUD $15.0 million (USD ~~$10.2~~$10.0 million as of ~~December~~March 31, ~~2022)~~2023).

Following the October 2022 amendments, the NAB Finance Agreement contained an undertaking requiring us to maintain a net related entity position of not more than AUD $25.0 million, and our ability to comply with this undertaking was subject to fluctuations in foreign currency conversion rates outside of our control. Due to recent fluctuations in foreign currency conversion rates, we were not in compliance with this undertaking as of December 31, 2022, and we subsequently obtained a waiver from NAB with respect to such non-compliance as of December 31, 2022. On February 8, 2023, we further amended the NAB Finance Agreement to change the required net related entity position from AUD $25.0 million to USD $18.5 million (see "Amendment of NAB Finance Agreement," below). As of ~~December~~March 31, ~~2022,~~2023, the Company was in compliance with all NAB Finance Agreement covenants. As of March 31, 2023, approximately AUD ~~$4.3~~$5.3 million (USD ~~$2.9~~$3.6 million) remained available for use under the NAB Finance Agreement.

Rooster Note

Our promissory note, dated November 30, 2017, originally issued to Conterra Agricultural Capital, LLC, and subsequently endorsed to Rooster, as amended to date, or the Rooster Note, originally bore interest of 7.75% per annum, and on July 1, 2022, we made the final semi-annual principal and interest payment of $454,185. On September 22, 2022, we entered into an amendment to extend the Rooster Note’s maturity date to December 23, 2022. On December 23, 2022, we entered into an amendment to increase the interest rate on the Rooster Note from 7.75% to 9.25% per annum and extend the Rooster Note’s maturity date to March 1, 2023. On February 6, 2023, the Rooster Note was paid off in full by Shell in connection with the Vision Bioenergy partnership (see “—Payoff of Rooster Note”).

MFP Loan Agreement

On September 22, 2022, our largest stockholder, MFP Partners, L.P., or 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, or the MFP Letter of Credit, for the benefit of CIBC, as additional collateral to support our obligations under the CIBC Loan Agreement. The MFP Letter of Credit initially matured on January 23, 2023, one month after the maturity date of the existing CIBC Loan Agreement. Concurrently, on September 22, 2022, we 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 us. The MFP Loan Agreement initially provided for up to $9.0 million of term loan advances.

Concurrent with the October 28, 2022 amendment to the CIBC Loan Agreement (as described above), MFP amended the MFP Letter of Credit to increase the face amount from $9.0 million to $12.0 million, and the MFP Loan Agreement was amended to increase the maximum amount of term loan advances available to us from $9.0 million to $12.0 million. In connection with the December 23, 2022 amendment to the CIBC Loan Agreement, MFP amended the MFP Letter of Credit, extending the maturity date from January 23, 2023 to April 30, ~~2023~~2023. In connection with the Company’s entry into the Amended CIBC Loan Agreement, MFP further amended letter of credit to increase the maximum amount of term loan advances to $13.0 million and extend the maturity date to September 30, 2024.

The MFP Loan Agreement will mature on November 30, 2025. Pursuant to the MFP Loan Agreement, we will pay to MFP a cash fee through the maturity date of the MFP Letter of Credit equal to 3.50% per annum on all amounts remaining undrawn under the 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%, half of which will be payable in cash on the last day of each fiscal quarter and half of which will accrue as payment in kind interest payable on the maturity date, unless, with respect to any quarterly payment date, we elect to pay such interest in cash.

31Concurrent with the March 22, 2023, amendment to the CIBC Loan Agreement, the Company entered into a Third Amendment to Subordinate Loan and Security Agreement with MFP, or MFP Amendment, to (i) increase the aggregate amount of cash advances permitted from $12.0 million to $13.0 million; (ii) increase the cash fee payable to MFP on all amounts remaining undrawn under the Letter of Credit

from 3.50% to 4.25% per annum; (iii) provide for the issuance of the MFP Warrant to MFP (see Note 9); and (iv) reflect the extension of the maturity date of the Letter of Credit to September 30, 2024. The MFP Loan Agreement, as amended, will mature on November 30, 2025.

The MFP Loan Agreement, as amended, includes customary affirmative and negative covenants and events of ~~default. The MFP Loan Agreement~~default, and is secured by substantially all of ~~our~~the Company’s assets and is subordinated to the CIBC Loan 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.

~~Below is a summary of material changes to our sources of capital during subsequent to the six months ended December 31, 2022:~~

~~Shell Partnership~~

~~On February 6, 2023, S&W and Shell entered into a joint venture for the development and production of sustainable biofuel feedstocks through Vision Bioenergy (see “—Strategic Review” above), and we received $7.0 million at the Shell JV Closing and will be eligible to receive an additional $6.0 million in February 2024.~~

~~Payoff of Rooster Note~~

~~On February 6, 2023, the principal and accrued interest on the Rooster Note was paid off in its entirety in connection with the Vision Bioenergy partnership.~~

~~Amendment of NAB Finance Agreement~~

On February 8, 2023, we further amended the NAB Finance Agreement to change the maximum permissble net related entity position from AUD $25.0 million to USD $18.5 million. We believe that this amendment to the NAB Finance Agreement will provide us with greater control over our compliance with this undertaking.

Summary

The CIBC Loan Agreement and our debt facilities with NAB contain 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. In addition, these loan agreements contain cross-default provisions, such that certain defaults or breaches under any of our loan agreements may entitle CIBC to invoke default remedies. We were not in compliance with certain covenants in the CIBC Loan Agreement as of June 30, 2021, December 31, 2021, March 31, 2022, June 15, 2022, and June 30, 2022 and were required to obtain waivers and/or amendments from CIBC. In particular, the CIBC Loan Agreement as presently in effect requires us to maintain minimum liquidity of no less than $1.0 million and the NAB Finance Agreement, as amended, includes an undertaking that requires us to maintain a net related entity position of not more than USD $18.5 million. ~~We are actively pursuing refinancing of the CIBC Loan Agreement.~~

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 the COVID-19 pandemic, 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 CIBC, NAB, 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 and 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 COVID-19 pandemic and actions taken to slow its spread, the ongoing military conflict between Russia and Ukraine, the armed conflict in Sudan, 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, while we are currently in compliance with our loan agreements, our ability to comply with the terms of our loan agreements has been 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.

Summary of Cash Flows

The following table shows a summary of our cash flows for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021:~~2022:


	Six Months Ended December 31,						Nine Months Ended March 31,
	2022			2021			2023			2022
Cash flows from operating activities	$	(8,399,653	)	$	(8,065,824	)	$	(15,828,395	)	$	(18,006,419	)
Cash flows from investing activities		2,248,663			(1,206,255	)		8,360,648			(569,181	)
Cash flows from financing activities		5,446,944			8,699,613			6,565,494			17,899,513
Effect of exchange rate changes on cash		(24,290	)		(233,405	)		415,208			290,069
Net decrease in cash and cash equivalents		(728,336	)		(805,871	)		(487,045	)		(386,018	)
Cash and cash equivalents, beginning of period		2,056,508			3,527,937			2,056,508			3,527,937
Cash and cash equivalents, end of period	$	1,328,172		$	2,722,066		$	1,569,463		$	3,141,919

Operating Activities

For the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, operating activities used ~~$8.4~~$15.8 million in cash. Of this, the net loss excluding non-cash items as detailed on the statement of cash flows used ~~$8.0~~$14.3 million in cash and changes in operating assets and liabilities as detailed on the statement of cash flows used ~~$0.4~~$1.6 million in cash. The decrease in cash from changes in operating assets and liabilities was primarily driven by a ~~$5.6~~$3.0 million decrease in inventories, a $1.5 million decrease in accrued expenses and other current liabilities, a $0.8 million decrease in other non-current assets, and a $0.5 million decrease in accounts receivable, offset by a $1.9 million increase in accounts payable, a $1.5 million increase in prepaid expenses and other current assets, and a $0.8 million increase in deferred revenue from prepayments for our fiscal 2023 United States domestic business and decreased inventories of $0.6 million, offset by a $4.0 million increase in accounts receivable, a decrease in accounts payable and accruals of $1.6 million, and a $0.7 million increase in other non-current assets.business.

For the ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, operating activities used ~~$8.1~~$18.0 million in cash. ~~Of this,~~Net loss plus and minus the ~~net loss excluding~~adjustments for non-cash items as detailed on the statement of cash flows used ~~$11.0~~$15.5 million in cash, ~~while~~and changes in operating assets and liabilities as detailed on the statement of cash flows ~~provided $3.0~~used $2.5 million in cash. The ~~increase~~decrease in cash from changes in operating assets and liabilities was primarily driven by an increase in inventory of $10.2 million and accounts receivable of $4.3 million, offset by an increase in accounts payable of $8.9 million and an increase in deferred revenue from prepayment on end of season revenue of ~~$5.5 million, a decrease in accounts receivable of $2.5 million, and an increase in accounts payable of $1.1 million, partially offset by an increase in inventory of $5.7~~$2.7 million.

Investing Activities

Investing activities during the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023, provided ~~$2.2~~$8.4 million in cash, which resulted from $7.0 million in proceeds from the partnership transaction with Vision Bioenergy, $2.0 million in proceeds from the partnership transaction between Trigall ~~Genetics~~ and S&W Australia, and $0.4 million in proceeds from the sale of our

remaining shares of Bioceres stock, offset by ~~$0.2~~$0.9 million in additions to property, plant and equipment for our United States and Australian ~~facilities.~~facilities and $0.1 million in capital contributions to Trigall.

Investing activities during the ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022, used ~~$1.2~~$0.6 million ~~of cash, consisting of additions~~in cash. Additions to property, plant and ~~equipment.~~equipment accounted for $1.6 million of the cash used offset by an increase in net proceeds from the sale of marketable securities of $1.0 million in investing activities.

Financing Activities

Financing activities during the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023, provided ~~$5.4~~$6.6 million in cash, consisting of ~~$6.6~~$7.8 million in net borrowings on the working capital lines of credit, ~~and~~ $0.3 million of borrowings of long-term debt, and $0.2 million in proceeds from sale of common stock, partially offset by repayments of long-term debt of ~~$1.1~~$1.4 million and debt issuance costs of ~~$0.4~~$0.3 million.

Financing activities during the ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022, provided ~~$8.7~~$17.9 million in cash. During the ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, we had net proceeds from the sale of common stock of $10.7 million, net proceeds from the sale of preferred stock of $5.0 million, and net borrowings on the working capital lines of credit and borrowings of long-term debt of ~~$4.8 million, net proceeds from sale of common stock of $4.9~~$3.6 million, partially offset by net repayments of long-term debt of ~~$0.7~~$1.0 million.

Inflation Risk

Inflationary pressures on labor and commodity price increases directly impacted our condensed consolidated results of operations during the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023 and we expect this to continue throughout the remainder of fiscal year 2023. 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.

Critical Accounting Estimates

This discussion of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures. On an ongoing basis, we evaluate our estimates, judgments and assumptions. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. Our actual results may differ from these estimates under different assumptions or conditions.

A critical accounting estimate is one that involves a significant level of estimation uncertainty and has had or is reasonably likely to have a material impact on our financial condition or results of operations. ~~Accordingly, we~~We believe that our estimates for revenue recognition, internal-use software, and business combinations are the most critical to fully understand and evaluate our financial condition and results of operations.

During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, there were no changes in our critical accounting ~~estimates.~~ estimates related to the Vision Bioenergy partnership transaction affecting the below financial statement line items:

Other Assets

The Purchase Option we received in connection with the Vision Bioenergy partnership transaction (referenced in Note 2) is currently valued at $0.6 million using a lattice option valuation model, which incorporated significant, unobservable inputs. 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. No adjustment to the fair value was recorded as of March 31, 2023.

Gain on Sale of Business Interest

The Vision Bioenergy partnership transaction was accounted for as a sale of a business. We recorded a gain on the sale of the business that was based in part on adjustments to fair value of certain tangible and intangible assets we contributed to the partnership and on current and future payments and contributions to us and to the partnership by Shell. The valuation of the contributions and payments made by both partners required us to estimate future financial performance, interest rates, and the likelihood of achieving certain milestones.

For additional information regarding our critical accounting estimates, see the discussion under "Critical Accounting Policies" 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, 2022, as filed with the SEC on September 28, 2022.

Item 3. Quantitative and Qualitative 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 ~~December~~March 31, ~~2022.~~2023. 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 the evaluation of our disclosure controls and procedures as of ~~December~~March 31, ~~2022,~~2023, our Principal Executive Officer and Principal Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no 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.

3542

Part II

OTHER INFORMATION

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. There are no matters pending that we expect to have a material adverse impact on our business, results of operations, financial condition or cash flows.

Item 1A. Risk Factors.

We are a smaller reporting company, and, as such, we are not required to provide the information under this Item of Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On February 8, 2023, S&W Australia, our wholly owned Australian subsidiary, entered into an amendment to the NAB Finance Agreement to revise the maximum permissible net related entity position from AUD $25.0 million to USD $18.5 million.None.

3643

Item 6. Exhibits.


Exhibit No.		Description

3.1(1)		Registrant's Articles of Incorporation, as amended.

3.2(2)		Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock.

3.3(3)		Registrant's Second Amended and Restated Bylaws, together with Amendment One thereto.

4.1		Reference is made to Exhibits 3.1, 3.2 and 3.3.

4.2(4)		Form of Common Stock Certificate.

4.3(5)		Form of Warrant issued on February 18, 2022.

4.4(6)		Common Stock Purchase Warrant issued to MFP Partners, L.P. on September 22, 2022.

4.5(7)		Common Stock Purchase Warrant issued to MFP Partners, L.P. on October 28, 2022.

4.6(8)		Common Stock Purchase Warrant issued to MFP Partners, L.P. on December 22, 2022.

~~10.1~~4.7		~~Amendment and Restatement Deed, dated October 18, 2022, by and between National Australia Bank Limited and S&W Seed Company Australia Pty Ltd~~Common Stock Purchase Warrant issued to MFP Partners, L.P. on March 22, 2023.

~~10.2~~10.1 †+(9)		Contribution and Membership Interest Purchase Agreement, dated February 6, 2023, by and between S&W Seed Company and Equilon Enterprises LLC (dba Shell Oil Products US).

10.2†		Amendment ~~Deed,~~and Restated Loan and Security Agreement, dated ~~October 21, 2022,~~March 22, 2023, by and ~~between National Australia Bank Limited and~~among S&W Seed Company ~~Australia Pty Ltd.~~and CIBC Bank USA.

10.3		~~Seventh~~Third Amendment to Loan and Security Agreement, dated ~~October 28, 2022,~~March 22, 2023, by and among S&W Seed Company ~~Seed Holding, LLC, Stevia California, LLC~~ and ~~CIBC Bank USA.~~MFP Partners, L.P..

10.4		~~First~~ Amendment ~~to Subordinate Loan and Security Agreement,~~Deed, dated ~~October 28, 2022,~~February 8, 2023, by and between National Australia Bank Limited and S&W Seed Company ~~and MFP Partners, L.P.~~

~~10.5~~		~~Eighth Amendment to Loan and Security Agreement, dated December 23, 2022, by and among S&W Seed Company, Seed Holding, LLC, Stevia California, LLC and CIBC Bank USA.~~

~~10.6~~		~~Second Amendment to Subordinate Loan and Security Agreement, dated December 22, 2022, by and between S&W Seed Company and MFP Partners, L.P.~~

~~10.7~~		~~Third Amendment to Note, dated December 23, 2022, by and between S&W Seed Company and Rooster Capital LLC.~~

~~10.8+~~		~~S&W Seed Company Non-Employee Director Compensation Policy~~Australia Pty Ltd.

31.1		Certification of Chief Executive Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document


104		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 3.3 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 14, 2020 (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).

(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 10.1 to the Registrant’s Current Report on Form 8-K, filed on February 23, 2022 (File No. 001-34719).

* 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.

~~+ Indicates management contract~~ †Schedules (or similar attachments, including exhibits) to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or ~~compensatory plan.~~exhibit will be furnished to the Securities and Exchange Commission or its staff upon request.

38+Pursuant to Item 601(b)(10) of Regulation S-K, certain portions of this exhibit have been omitted (indicated by [***]) because S&W has determined that the information is both not material and is the type that S&W treats as private or confidential.

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, thereunto duly authorized.


	S&W SEED COMPANY

Date: ~~February 13,~~May 11, 2023	By:	/s/ Elizabeth Horton
		Elizabeth Horton
		Chief Financial Officer (On behalf of the registrant in her capacity as Principal Financial and Accounting Officer)

3946


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)


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


ASSETS		December 31, 2022			June 30, 2022				March 31, 2023			June 30, 2022
CURRENT ASSETS	CURRENT ASSETS							CURRENT ASSETS
Cash and cash equivalents		$	1,328,172		$	2,056,508			$	1,569,463		$	2,056,508
Accounts receivable, net			24,099,180			19,051,236				20,424,589			19,051,236
Inventories, net			52,952,095			54,515,894				55,666,627			54,515,894
Prepaid expenses and other current assets			3,282,244			1,605,987				10,748,580			1,605,987
TOTAL CURRENT ASSETS			81,661,691			77,229,625				88,409,259			77,229,625
Property, plant and equipment, net			15,706,571			16,871,669				10,241,685			16,871,669
Intangibles, net			30,951,270			34,095,827				30,328,212			34,095,827
Right of use assets - operating leases			4,234,241			4,094,253				3,344,109			4,094,253
Equity method investments										24,121,771			367,970
Other assets			1,667,034			1,496,477				2,038,618			1,128,507
TOTAL ASSETS		$	134,220,807		$	133,787,851			$	158,483,654		$	133,787,851

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	15,275,082		$	15,901,116			$	17,441,428		$	15,901,116
Deferred revenue			6,184,025			605,960				1,411,651			605,960
Accrued expenses and other current liabilities			9,452,112			10,788,740				8,686,623			10,788,740
Current portion of working capital lines of credit, net			41,410,217			12,678,897				42,783,136			12,678,897
Current portion of long-term debt, net			7,743,900			8,316,783				1,058,051			8,316,783
TOTAL CURRENT LIABILITIES			80,065,336			48,291,496				71,380,889			48,291,496
Long-term working capital lines of credit, less current portion			—			21,703,286				—			21,703,286
Long-term debt, net, less current portion			3,731,856			3,992,540				3,648,732			3,992,540
Other non-current liabilities			3,338,740			3,587,041				2,575,442			3,587,041
TOTAL LIABILITIES			87,135,932			77,574,363				77,605,063			77,574,363
MEZZANINE EQUITY
Preferred stock, $0.001 par value; 3,323 shares authorized; 1,695 issued and outstanding at December 31, 2022 and June 30, 2022			5,032,942			4,804,819
Preferred stock, $0.001 par value; 3,323 shares authorized; 1,695 issued and outstanding at March 31, 2023 and June 30, 2022										5,154,079			4,804,819
TOTAL MEZZANINE EQUITY			5,032,942			4,804,819				5,154,079			4,804,819
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 42,788,423 issued and 42,763,423 outstanding at December 31, 2022; 42,608,758 issued and 42,583,758 outstanding at June 30, 2022			42,788			42,609
Common stock, $0.001 par value; 75,000,000 shares authorized; 42,914,070 issued and 42,889,070 outstanding at March 31, 2023; 42,608,758 issued and 42,583,758 outstanding at June 30, 2022										42,914			42,609
Treasury stock, at cost, 25,000 shares			(134,196	)		(134,196	)			(134,196	)		(134,196	)
Additional paid-in capital			165,444,354			163,892,575				167,297,153			163,892,575
Accumulated deficit			(116,596,626	)		(105,873,557	)			(84,598,398	)		(105,873,557	)
Accumulated other comprehensive loss			(6,735,375	)		(6,560,600	)			(6,908,157	)		(6,560,600	)
Noncontrolling interests			30,988			41,838
Non-controlling interests										25,196			41,838
TOTAL STOCKHOLDERS' EQUITY			42,051,933			51,408,669				75,724,512			51,408,669
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY		$	134,220,807		$	133,787,851			$	158,483,654		$	133,787,851


	Six Months Ended December 31,						Nine Months Ended March 31,
	2022			2021			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(10,505,796	)	$	(16,195,806	)
Adjustments to reconcile net loss from operating activities to net
Net income (loss)							$	21,607,777		$	(23,458,061	)
Adjustments to reconcile net income (loss) from operating activities to net
cash used in operating activities:
Stock-based compensation		762,006			1,408,515			1,382,895			1,821,808
Allowance for doubtful accounts		(125,209	)		221,163			(76,575	)		200,458
Inventory write-down		685,200			742,035			1,125,715			1,877,229
Depreciation and amortization		2,590,338			2,704,698			3,697,544			4,084,554
Gain on disposal of property, plant and equipment		(4,411	)		(35,840	)
Loss on disposal of property, plant and equipment								32,914			13,957
Gain on disposal of intangible assets								(1,796,252	)		—
Gain on sale of business interest								(38,323,506	)		—
Gain on sale of equity investment		(32,030	)		—			(32,030	)		—
Gain on disposal of intangible assets		(1,796,252	)		—
Equity in loss of equity method investees, net of tax								406,678			—
Government grant income								(1,444,044	)		—
Change in deferred tax provision		(259,747	)		—			(915,449	)		—
Change in foreign exchange contracts		19,466			239,713			(167,688	)		46,157
Foreign currency transactions		(200,666	)		—			(1,320,052	)		—
Change in contingent consideration obligation		—			(528,630	)		—			(714,429	)
Amortization of debt discount		861,755			413,391			1,559,595			660,191
Changes in:								—
Accounts receivable		(3,968,108	)		2,513,639			(347,874	)		(4,272,470	)
Unbilled accounts receivable								(149,735	)		—
Inventories		557,442			(5,741,778	)		(2,961,203	)		(10,256,441	)
Prepaid expenses and other current assets		20,736			170,844			1,470,258			363,963
Other non-current assets		(733,165	)		(95,186	)		(786,506	)		(152,621	)
Accounts payable		(385,529	)		1,131,032			1,868,140			8,866,376
Deferred revenue		5,578,365			5,504,147			806,691			2,670,287
Accrued expenses and other current liabilities		(1,256,423	)		(505,240	)		(1,438,490	)		360,147
Other non-current liabilities		(207,625	)		(12,521	)		(27,198	)		(117,524	)
Net cash used in operating activities		(8,399,653	)		(8,065,824	)		(15,828,395	)		(18,006,419	)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(154,997	)		(1,227,368	)		(925,747	)		(1,637,547	)
Proceeds from disposal of property, plant and equipment		3,660			21,113			6,292			79,862
Net proceeds from sale of equity investment		400,000			—			400,000			988,504
Proceeds from partnership transaction		2,000,000			—			2,000,000			—
Capital contributions to partnerships								(119,897	)		—
Proceeds from sale of business interest								7,000,000			—
Net cash provided by (used in) investing activities		2,248,663			(1,206,255	)		8,360,648			(569,181	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of common stock		—			4,920,693			152,750			10,657,775
Net proceeds from sale of Series B convertible preferred stock								—			5,000,250
Taxes paid related to net share settlements of stock-based compensation awards		(12,949	)		(158,288	)		(25,663	)		(178,727	)
Borrowings and repayments on lines of credit, net		6,598,076			3,911,452			7,825,838			2,757,274
Borrowings of long-term debt		285,005			875,683			298,694			860,801
Debt issuance costs		(359,527	)		(112,084	)		(324,629	)		(169,901	)
Repayments of long-term debt		(1,063,661	)		(737,843	)		(1,361,496	)		(1,027,959	)
Net cash provided by financing activities		5,446,944			8,699,613			6,565,494			17,899,513
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(24,290	)		(233,405	)		415,208			290,069
NET DECREASE IN CASH & CASH EQUIVALENTS		(728,336	)		(805,871	)		(487,045	)		(386,018	)
CASH AND CASH EQUIVALENTS, beginning of the period		2,056,508			3,527,937			2,056,508			3,527,937
CASH AND CASH EQUIVALENTS, end of period	$	1,328,172		$	2,722,066		$	1,569,463		$	3,141,919


	As of		As of		As of		As of
	December 31, 2022		June 30, 2022		March 31, 2023		June 30, 2022
Raw materials and supplies	$	3,808,923	$	2,645,764	$	3,312,634	$	2,645,764
Work in progress		11,035,458		6,677,980		12,890,422		6,677,980
Finished goods		38,107,714		45,192,150		39,463,571		45,192,150
Inventories, net	$	52,952,095	$	54,515,894	$	55,666,627	$	54,515,894


Large, accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐


PART I.	FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements (Unaudited):	4
	Condensed Consolidated Balance Sheets at ~~December~~March 31, ~~2022~~2023 and June 30, 2022	4
	Condensed Consolidated Statements of Operations for the Three Months and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022	6
	Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity for the Three Months and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022	7
	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2228
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3442
Item 4.	Controls and Procedures	3442
PART II.	OTHER INFORMATION	3643
Item 1.	Legal Proceedings	3643
Item 1A.	Risk Factors	3643
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3643
Item 3.	Defaults Upon Senior Securities	3643
Item 4.	Mine Safety Disclosures	3643
Item 5.	Other Information	3643
Item 6.	Exhibits	3744


	Three Months Ended December 31,						Six Months Ended December 31,						Three Months Ended March 31,						Nine Months Ended March 31,
	2022			2021			2022			2021			2023			2022			2023			2022
Revenue	$	12,937,802		$	12,631,409		$	32,803,667		$	28,163,090		$	17,662,307		$	23,186,877		$	50,465,974		$	51,349,967
Cost of revenue		10,188,511			10,971,045			25,549,865			23,376,057			13,231,836			20,481,463			38,781,701			43,857,520
Gross profit		2,749,291			1,660,364			7,253,802			4,787,033			4,430,471			2,705,414			11,684,273			7,492,447
Operating expenses
Selling, general and administrative expenses		6,241,461			7,073,320			11,294,058			12,642,887			5,990,651			5,582,060			17,289,120			18,260,785
Research and development expenses		1,503,473			2,110,413			3,018,853			4,105,541			1,208,038			1,904,631			4,226,891			6,010,172
Depreciation and amortization		1,253,904			1,373,653			2,590,338			2,704,698			1,107,206			1,379,856			3,697,544			4,084,554
Loss (gain) on disposal of property, plant and equipment														37,325			49,796			32,914			13,957
Total operating expenses		8,998,838			10,557,386			16,903,249			19,453,126			8,343,220			8,916,343			25,246,469			28,369,468
Loss from operations		(6,249,547	)		(8,897,022	)		(9,649,447	)		(14,666,093	)		(3,912,749	)		(6,210,929	)		(13,562,196	)		(20,877,021	)
Other (income) expense
Foreign currency loss		176,624			258,482			367,539			421,028			331,889			146,935			699,428			567,963
Government grant income														(1,444,044	)		—			(1,444,044	)		—
Gain on sale of business interest														(38,323,506	)		—			(38,323,506	)		—
Gain on sale of equity investment														—			(68,967	)		(32,030	)		(68,967	)
Gain on disposal of intangible assets		(1,796,252	)		—			(1,796,252	)		—			—			—			(1,796,252	)		—
Change in contingent consideration obligation		—			(466,376	)		—			(528,630	)		—			(185,800	)		—			(714,429	)
Interest expense - amortization of debt discount		578,112			221,196			861,755			413,391			697,840			246,801			1,559,595			660,191
Interest expense, net		1,092,327			589,694			1,879,006			1,142,539			1,163,533			592,853			3,042,539			1,735,392
Gain on sale of equity investment		(32,030	)		—			(32,030	)		—
Other income (expense)		4,561			23,771			(39,709	)		(10,589	)
Loss before income taxes		(6,272,889	)		(9,523,789	)		(10,889,756	)		(16,103,832	)
(Benefit from) provision for income taxes		(282,296	)		257,776			(383,960	)		91,974
Net loss	$	(5,990,593	)	$	(9,781,565	)	$	(10,505,796	)	$	(16,195,806	)
(Loss) income attributable to noncontrolling interests		(4,588	)		13,537			(10,850	)		(729	)
Net loss attributable to S&W Seed Company	$	(5,986,005	)	$	(9,795,102	)	$	(10,494,946	)	$	(16,195,077	)
Other (income) expenses														1,641,406			(3,157	)		1,601,697			(13,746	)
Income (loss) before income taxes														32,020,133			(6,939,594	)		21,130,377			(23,043,425	)
Provision for (benefit from) income taxes														(500,118	)		322,661			(884,078	)		414,636
Income (loss) before equity in net earnings of affiliates														32,520,251			(7,262,255	)		22,014,455			(23,458,061	)
Equity in loss of equity method investees, net of tax														406,678			—			406,678			—
Net income (loss)													$	32,113,573		$	(7,262,255	)	$	21,607,777		$	(23,458,061	)
(Loss) income attributable to non-controlling interests														(5,792	)		42,668			(16,642	)		41,939
Net income (loss) attributable to S&W Seed Company													$	32,119,365		$	(7,304,923	)	$	21,624,419		$	(23,500,000	)

Calculation of net loss per share:
Net loss attributable to S&W Seed Company	$	(5,986,005	)	$	(9,795,102	)	$	(10,494,946	)	$	(16,195,077	)
Calculation of net income (loss) per share:
Net income (loss) attributable to S&W Seed Company													$	32,119,365		$	(7,304,923	)	$	21,624,419		$	(23,500,000	)
Dividends accrued for participating securities and accretion		(114,062	)		—			(228,123	)		—			(121,137	)		(53,195	)		(349,260	)		(53,195	)
Net loss attributable to common shareholders	$	(6,100,067	)	$	(9,795,102	)	$	(10,723,069	)	$	(16,195,077	)
Net income (loss) attributable to common shareholders													$	31,998,228		$	(7,358,118	)	$	21,275,159		$	(23,553,195	)

Net loss attributable to S&W Seed Company per common share, basic and diluted	$	(0.14	)	$	(0.25	)	$	(0.25	)	$	(0.43	)
Weighted average number of common shares outstanding, basic and diluted		42,651,270			38,461,049			42,627,645			37,617,457
Net income (loss) attributable to S&W Seed Company per common share:
Basic													$	0.75		$	(0.19	)	$	0.50		$	(0.62	)
Diluted													$	0.74		$	(0.19	)	$	0.50		$	(0.62	)
Weighted average number of common shares outstanding: basic and diluted
Basic														42,790,693			39,515,547			42,681,201			38,240,917
Diluted														43,166,148			39,515,547			42,873,830			38,240,917


	Three Months Ended December 31,						Six Months Ended December 31,						Three Months Ended March 31,						Nine Months Ended March 31,
	2022			2021			2022			2021			2023			2022			2023			2022
Numerator:
Net loss attributable to S&W Seed Company	$	(5,986,005	)	$	(9,795,102	)	$	(10,494,946	)	$	(16,195,077	)
Net income (loss) attributable to S&W Seed Company													$	32,119,365		$	(7,304,923	)	$	21,624,419		$	(23,500,000	)
Dividends accrued for participating securities		(88,224	)		—			(176,447	)		—			(95,299	)		(40,276	)		(271,746	)		(40,276	)
Accretion of Series B Preferred Stock redemption value		(25,838	)		—			(51,676	)		—			(25,838	)		(12,919	)		(77,514	)		(12,919	)
Numerator for net loss per common share - basic and diluted	$	(6,100,067	)	$	(9,795,102	)	$	(10,723,069	)	$	(16,195,077	)
Numerator for net income (loss) per common share - basic and diluted													$	31,998,228		$	(7,358,118	)	$	21,275,159		$	(23,553,195	)
Denominator:
Weighted average shares outstanding - basic and diluted		42,651,270			38,461,049			42,627,645			37,617,457
Net loss per common share - basic and diluted	$	(0.14	)	$	(0.25	)	$	(0.25	)	$	(0.43	)
Denominator for basic EPS - weighted average shares														42,790,693			39,515,547			42,681,201			38,240,917
Less: weighted average shares - dilutive securities:
Employee stock options														182,574			—			60,858			—
Employee restricted stock options														192,881			—			131,771			—
Denominator for diluted EPS - weighted average shares														43,166,148			39,515,547			42,873,830			38,240,917
Net income (loss) per common share - basic													$	0.75		$	(0.19	)	$	0.50		$	(0.62	)
Net income (loss) per common share - diluted													$	0.74		$	(0.19	)	$	0.50		$	(0.62	)


	Fair Value at 3/31/23		Valuation Technique	Unobservable Input	Range
Purchase Option	$	604,000	Option Model	Risk-free rate	3.8% - 4.9%
				Stock price volatility	60% - 65%
				Lack of control premium	13%
				Lack of marketability premium	30%


	Fair Value Measurements as of December 31, 2022 Using:						Fair Value Measurements as of March 31, 2023 Using:
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Foreign exchange contract liability	$	—	$	1,009,469	$	—	$	—	$	812,362	$	—
Vision Bioenergy interest purchase option								—		—		604,000
Total	$	—	$	1,009,469	$	—	$	—	$	812,362	$	604,000


	Fair Value Measurements as of June 30, 2022 Using:
	Level 1		Level 2		Level 3
Foreign exchange contract liability	$	—	$	996,106	$	—
Total	$	—	$	996,106	$	—


~~Leases~~	~~Balance Sheet Classification:~~	~~December 31, 2022~~
~~Assets:~~
~~Right of use assets~~ ~~- operating leases~~	~~Right of use assets - operating leases~~		~~4,234,241~~
~~Right of use assets - finance leases~~			~~2,011,082~~
~~Accumulated amortization - finance leases~~			(~~1,361,998~~	)
~~Right of use assets - finance leases, net~~	~~Other assets~~		~~649,084~~
~~Total lease assets~~			~~4,883,325~~

~~Liabilities:~~
~~Current lease liabilities - finance leases~~	~~Current portion of long-term debt, net~~		~~608,663~~
~~Current lease liabilities - operating leases~~	~~Accrued expenses and other current liabilities~~		~~1,429,482~~
~~Long-term portion of lease liabilities - finance leases~~	~~Long-term debt, net, less current portion~~		~~239,238~~
~~Long-term portion of lease liabilities - operating leases~~	~~Other non-current liabilities~~		~~3,078,345~~
~~Total lease liabilities~~			~~5,355,728~~


Leases	Balance Sheet Classification:	March 31, 2023			June 30, 2022
Assets:
Right of use assets - finance leases		$	1,736,128		$	2,071,609
Accumulated amortization - finance leases			(1,104,261	)		(1,131,842	)
Right of use assets - finance leases, net	Other assets		631,867			939,767
Right of use assets - operating leases	Right of use assets - operating leases		3,344,109			4,094,253
Total lease assets		$	3,975,976		$	5,034,020

Liabilities:
Current lease liabilities - finance leases	Current portion of long-term debt, net	$	402,164		$	804,309
Current lease liabilities - operating leases	Accrued expenses and other current liabilities		1,254,357			1,341,198
Long-term portion of lease liabilities - finance leases	Long-term debt, net, less current portion		246,977			500,723
Long-term portion of lease liabilities - operating leases	Other non-current liabilities		2,337,168			3,042,311
Total lease liabilities		$	4,240,666		$	5,688,541


Lease cost:	Income Statement Classification:	Three Months Ended December 31, 2022		Six Months Ended December 31, 2022		Income Statement Classification:	Three Months Ended March 31, 2023		Nine Months Ended March 31, 2023
Operating lease cost	Cost of revenue	$	163,389	$	347,249	Cost of revenue	$	193,011	$	540,260
Operating lease cost	Selling, general and administrative expenses		54,914		110,248	Selling, general and administrative expenses		45,040		155,288
Operating lease cost	Research and development expenses		88,620		224,817	Research and development expenses		92,016		316,833
Finance lease cost	Depreciation and amortization		125,949		265,639	Depreciation and amortization		120,263		385,901
Finance lease cost	Interest expense, net		12,841		28,791	Interest expense, net		8,714		30,033
Total lease costs		$	445,713	$	976,744		$	459,044	$	1,428,315


	Operating Leases			Finance Leases
2023	$	907,671		$	440,777
Fiscal Year							Operating Leases			Finance Leases
Remainder of 2023							$	359,999		$	126,830
2024		1,527,845			321,631			1,387,727			367,055
2025		1,024,653			98,337			978,126			144,272
2026		791,258			23,091			641,966			51,829
2027		509,239			—			400,807			-
Thereafter		102,165			—			102,974			-
Total lease payments		4,862,831			883,836			3,871,599			689,986
Less: Interest		(355,004	)		(35,935	)		(280,074	)		(40,845	)
Present value of lease liabilities	$	4,507,827		$	847,901		$	3,591,525		$	649,141


	Balance at June 30, 2022		Transfer to Trigall Australia			Amortization			Currency Translation Adjustment			Balance at December 31, 2022		Balance at June 30, 2022		Other Additions and Disposals			Amortization			Currency Translation Adjustment			Balance at March 31, 2023
Trade name	$	1,084,791	$	—		$	(98,148	)	$	(3,290	)	$	983,353	$	1,084,791	$	—		$	(147,630	)	$	(5,737	)	$	931,424
Customer relationships		5,499,815		—			(176,526	)		(59,071	)		5,264,218		5,499,815		—			(265,258	)		(131,244	)		5,103,313
GI customer list		42,983		—			(3,582	)		—			39,401		42,983		—			(5,373	)		—			37,610
Supply agreement		775,241		—			(37,817	)		—			737,424		775,241		—			(56,725	)		—			718,516
Grower relationships		1,331,581		—			(52,703	)		—			1,278,878		1,331,581		—			(79,055	)		—			1,252,526
Intellectual property		23,035,925		—			(692,933	)		—			22,342,992		23,035,925		—			(1,039,162	)		—			21,996,763
License agreement		1,986,598		(1,885,907	)		(75,610	)		(25,081	)		—		1,986,598		(1,885,907	)		(75,610	)		(25,081	)		(0	)
Internal use software		338,893		—			(33,889	)		—			305,004		338,893		—			(50,833	)		—			288,060
	$	34,095,827	$	(1,885,907	)	$	(1,171,208	)	$	(87,442	)	$	30,951,270	$	34,095,827	$	(1,885,907	)	$	(1,719,646	)	$	(162,062	)	$	30,328,212


	Balance at June 30, 2021		Other Additions and Disposals		Amortization			Currency Translation Adjustment			Balance at June 30, 2022
Trade name	$	1,310,489	$	—	$	(203,009	)	$	(22,689	)	$	1,084,791
Customer relationships		6,302,591		—		(373,393	)		(429,383	)		5,499,815
Non-compete		5,058		—		(5,058	)		—			—
GI customer list		50,146		—		(7,163	)		—			42,983
Supply agreement		850,874		—		(75,633	)		—			775,241
Grower relationships		1,436,988		—		(105,407	)		—			1,331,581
Intellectual property		24,427,857		—		(1,391,932	)		—			23,035,925
License agreement		2,340,269		—		(172,004	)		(181,667	)		1,986,598
Internal use software		406,670		—		(67,777	)		—			338,893
	$	37,130,942	$	—	$	(2,401,376	)	$	(633,739	)	$	34,095,827


	2023		2024		2025		2026		2027		Thereafter
Amortization expense	$	1,080,323	$	2,160,322	$	2,119,891	$	1,979,781	$	1,928,897	$	21,682,056


Operating lease remaining lease term	3.5
Operating lease discount rate		4.14	%
Finance lease remaining lease term	1.2 years
Finance lease discount rate		5.49	%
Cash paid for operating leases	$	603,304
Cash paid for finance leases		527,384


Operating lease remaining lease term	3.3 years
Operating lease discount rate		4.14	%
Finance lease remaining lease term	1.1 years
Finance lease discount rate		6.04	%
Cash paid for operating leases	$	1,063,242
Cash paid for finance leases		490,810