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

☒

~~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

☐

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


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


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

•

whether we are successful in implementing our strategies focused on growth opportunities, changes in our cost structure and improved financial performance;

•

whether we are able to maintain compliance with our current loan agreements, including to provide access to sufficient liquidity to pay our growers and suppliers;

•

the COVID-19 pandemic and other geopolitical and macroeconomic events, such as global inflation, bank failures, supply chain disruptions, uncertain market conditions and the ongoing military conflict between Russia and Ukraine and related sanctions, the armed conflict in Sudan, and the extent to which they continue to disrupt the local and global economies, as well as our business and the businesses of our customers, distributors and suppliers;

•

changes in demand for our seed products, including Double TeamTM, our non-GMO herbicide tolerant sorghum solution;

•

whether we are able to develop and successfully launch additional trait technology products;

•

whether we are successful in commercializing our current and future trait technology products, including Double TeamTM;

•

our plans for expansion of our business (including by expanding crop offerings and market share of existing offerings through acquisitions, partnerships, joint ventures and other strategic transactions) and our ability to successfully integrate acquisitions into our operations;

•

whether we continue to invest in research and development and whether such investment results in trait improvement across our crop categories;

•

the continued ability of our distributors and suppliers to have access to sufficient liquidity to fund their operations;

•

market trends and other factors affecting our financial condition or results of operations from period to period;

•

the impact of crop disease, severe weather conditions, such as flooding, or natural disasters, such as earthquakes, on crop quality and yields and on our ability to grow, procure or export our products;

•

the impact of pricing of other crops that may influence what crops our growers elect to plant;

•

whether we are successful in aligning expense levels to revenue changes;

•

whether we are successful in monetizing camelina and stevia;

•

the cost and other implications of pending or future legislation or court decisions and pending or future accounting pronouncements;

•

our recent partnerships with Trigall Genetics and Shell may not provide the anticipated benefits; and

•

other risks that are described herein and in the section titled “Risk Factors” contained in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, or the Annual Report, and that are otherwise described or updated from time to time in our filings with the Securities Exchange Commission.

•

~~whether we are successful in implementing our strategies focused on growth opportunities, changes in our cost structure and improved financial performance;~~

•	~~whether we are able to maintain compliance with our current loan agreements or secure replacement loan financing;~~

•	the COVID-19 pandemic, global inflation and the ongoing military conflict between Russia and Ukraine and the extent to which they continue to disrupt the local and global economies, as well as our business and the businesses of our customers, distributors and suppliers;

•	~~changes in demand for our seed products, including DoubleTeam~~^TM~~, our non-GMO herbicide tolerant sorghum solution;~~

•	~~whether we are able to develop and successfully launch additional trait technology products;~~

•	~~whether we are successful in commercializing our current and future trait technology products, including DoubleTeam~~^TM;

•	our plans for expansion of our business (including by expanding crop offerings and market share of existing offerings through acquisitions) and our ability to successfully integrate acquisitions into our operations;

•	~~whether we continue to invest in research and development and whether such investment results in trait improvement across our crop categories;~~

•	~~the continued ability of our distributors and suppliers to have access to sufficient liquidity to fund their operations;~~

•	~~market trends and other factors affecting our financial condition or results of operations from period to period;~~

•	the impact of crop disease, severe weather conditions, such as flooding, or natural disasters, such as earthquakes, on crop quality and yields and on our ability to grow, procure or export our products;

•	~~the impact of pricing of other crops that may be influence what crops our growers elect to plant;~~

•	~~whether we are successful in aligning expense levels to revenue changes;~~

•	~~whether we are successful in monetizing our stevia business;~~

•	~~the cost and other implications of pending or future legislation or court decisions and pending or future accounting pronouncements;~~

•	our preliminary, nonbinding discussions for a joint venture in wheat with Trigall Genetics may not result in a consummated transaction, the joint venture may not be created in the manner or on the terms expected, or at all, and the joint venture may not provide the anticipated benefits; and

•

other risks that are described herein and in the section titled “Risk Factors” contained in Part I, Item A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, or the Annual Report, and that are otherwise described or updated from time to time in our filings with the Securities Exchange Commission.

Item 1. Financial Statements

~~Item 1.~~

~~Financial Statements~~

Three Months Ended March 31,

Nine Months Ended March 31,

2022

2021

2022

2021

Net loss

$
(7,262,255
)

$
(1,849,088
)

$
(23,458,061
)

$
(17,430,206
)
Foreign currency translation adjustment, net of income taxes

480,280

36,875

272,502

570,841

Comprehensive loss

$
(6,781,975
)

$
(1,812,213
)

$
(23,185,559
)

$
(16,859,365
)
Comprehensive income (loss) attributable to noncontrolling interests

42,668

(1,796
)

41,939

56,298

Comprehensive loss attributable to S&W Seed Company

$
(6,824,643
)

$
(1,810,417
)

$
(23,227,498
)

$
(16,915,663
)

Preferred Stock

Common Stock

Treasury Stock

Additional
Paid-In

Accumulated

Noncontrolling

Accumulated
Other
Comprehensive

Total
Stockholders'

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Interests

Loss

Equity

Balance, December 31, 2020

—

—

34,189,660

$
34,190

(25,000
)

$
(134,196
)

$
140,028,674

$
(65,780,154
)

(62,365
)

$
(5,577,458
)

$
68,508,691

Stock-based compensation -
   options, restricted stock, and RSUs

—

—

—

—

—

—

421,814

—

—

—

421,814

Net issuance to settle RSUs

—

—

20,718

21

—

—

(28,727
)

—

—

—

(28,706
)
Proceeds from sale of common stock, net of fees and expenses

—

—

1,080,902

1,081

—

—

3,740,910

—

—

—

3,741,991

Other comprehensive income

—

—

—

—

—

—

—

—

—

36,875

36,875

Net loss

—

—

—

—

—

—

—

(1,847,292
)

(1,796
)

—

(1,849,088
)
Balance, March 31, 2021

—

$
—

35,291,280

$
35,291

(25,000
)

$
(134,196
)

$
144,162,671

$
(67,627,446
)

$
(64,161
)

$
(5,540,583
)

$
70,831,576

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 -
   options, restricted stock, and RSUs

—

—

—

—

—

—

413,293

—

—

—

413,293

Series B Detachable Warrant

—

—

—

—

—

—

361,729

(12,919
)

—

—

348,810

Accrued dividends on Series B Convertible Preferred Stock

—

—

—

—

—

—

—

(40,276
)

—

—

(40,276
)
Net issuance to settle RSUs

—

—

18,056

18

—

—

(20,458
)

—

—

—

(20,440
)
Proceeds from sale of common stock, net of fees and expenses

—

—

2,633,052

2,633

—

—

5,734,449

—

—

—

5,737,082

Other comprehensive income

—

—

—

—

—

—

—

—

—

480,280

480,280

Net loss

—

—

—

—

—

—

—

(7,304,923
)

42,668

—

(7,262,255
)
Balance, March 31, 2022

—

$
—

41,565,768

$
41,566

(25,000
)

$
(134,196
)

$
162,342,148

$
(92,865,104
)

$
10,933

$
(5,578,324
)

$
63,817,023

Preferred Stock

Common Stock

Treasury Stock

Additional
Paid-In

Accumulated

Noncontrolling

Accumulated
Other
Comprehensive

Total
Stockholders'

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Interests

Loss

Equity

Balance, June 30, 2020

—

—

33,457,861

$
33,458

(25,000
)

$
(134,196
)

$
137,809,540

$
(50,140,942
)

(120,459
)

$
(6,111,424
)

$
81,335,977

Stock-based compensation -
   options, restricted stock, and RSUs

—

—

—

—

—

—

1,303,439

—

—

—

1,303,439

Net issuance to settle RSUs

—

—

253,199

253

—

—

(76,645
)

—

—

—

(76,392
)
Proceeds from sale of common stock, net of fees and expenses

—

—

1,580,220

1,580

—

—

5,126,337

—

—

—

5,127,917

Other comprehensive income

—

—

—

—

—

—

—

—

—

570,841

570,841

Net income (loss)

—

—

—

—

—

—

—

(17,486,504
)

56,298

—

(17,430,206
)
Balance, March 31, 2021

—

$
—

35,291,280

$
35,291

(25,000
)

$
(134,196
)

$
144,162,671

$
(67,627,446
)

$
(64,161
)

$
(5,540,583
)

$
70,831,576

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

Stock-based compensation -
   options, restricted stock, and RSUs

—

—

—

—

—

—

1,821,808

—

—

—

1,821,808

Series B Detachable Warrant

—

—

—

—

—

—

361,729

(12,919
)

—

—

348,810

Accrued dividends on Series B Convertible Preferred Stock

—

—

—

—

—

—

—

(40,276
)

—

—

(40,276
)
Net issuance to settle RSUs

—

—

311,542

312

—

—

(179,039
)

—

—

—

(178,727
)
Proceeds from sale of common stock, net of fees and expenses

—

—

4,481,243

4,481

—

—

10,653,293

—

—

—

10,657,774

Other comprehensive income

—

—

—

—

—

—

—

—

—

272,502

272,502

Net loss

—

—

—

—

—

—

—

(23,500,000
)

41,939

—

(23,458,061
)
Balance, March 31, 2022

—

$
—

41,565,768

$
41,566

(25,000
)

$
(134,196
)

$
162,342,148

$
(92,865,104
)

$
10,933

$
(5,578,324
)

$
63,817,023

NOTE 1 - ~~BACKGROUND AND ORGANIZATION~~GENERAL

~~Organization~~

The Company ~~began as S&W Seed Company,~~is a general partnership, in 1980 and was originally in the business of breeding, growing, processing and selling alfalfa seed. The Company incorporated a corporation with the same name in Delaware in October 2009, whichglobal multi-crop, middle-market agricultural company that is the successor entity to Seed Holding, LLC, having purchased a majority interest in the general partnership between June 2008 and December 2009. Following the Company’s initial public offering in May 2010, the Company purchased the remaining general partnership interests and became the sole owner of the general partnership’s original business. Seed Holding, LLC remains a consolidated subsidiary of the Company.

In December 2011, the Company reincorporated in Nevada as a result of a statutory short-form merger of the Delaware corporation into its wholly-owned subsidiary, S&W Seed Company, a Nevada corporation.

In April 2013, the Company, together with its wholly-owned subsidiary, S&W Holdings Australia Pty Ltd, an Australia corporation (f/k/a S&W Seed Australia Pty Ltd), or S&W Holdings, consummated an acquisition of all of the issued and outstanding shares of Seed Genetics International Pty Ltd, an Australia corporation, or SGI, from SGI’s shareholders. In April 2018, SGI changed its name to S&W Seed Company Australia Pty Ltd, or S&W Australia.

In September 2018, the Company and AGT Foods Africa Proprietary Limited, or AGT, formed a venture based in South Africa named SeedVision Proprietary Limited, or SeedVision. SeedVision will leverage AGT's African-based production and processing facilities to produce S&W's hybrid sunflower, grain sorghum, and forage sorghum to be sold by SeedVision in the African continent, Middle East countries, and Europe.

~~As part of the Company’s 2018 acquisition of all the assets of Chromatin, Inc., the Company acquired 51.0% of Sorghum Solutions South Africa.~~

~~In February 2020, S&W Australia acquired all of the issued and outstanding shares of Pasture Genetics Ltd., or Pasture Genetics, from Pasture Genetics’ sole shareholder.~~

~~Business Overview~~

~~Since its establishment, the Company, including its predecessor entities, has been~~ principally engaged in breeding, growing, processing and selling agricultural seeds. The Company ~~owns~~operates seed cleaning and processing facilities, which are located in ~~Nampa, Idaho, Dumas,~~ Texas, New ~~Deal, Texas, Keith,~~ South ~~Australia~~Wales and ~~Penfield,~~ South Australia. The Company’s seed products are primarily grown under contract by farmers. The Company ~~began its stevia initiative in fiscal year 2010 and~~ is currently focused on ~~breeding improved varieties~~growing sales of ~~stevia~~their proprietary and traited products, improving margins through pricing and operational efficiencies, and developing ~~marketing~~the camelina market via a newly formed partnership.

Investments and ~~distribution programs~~Partnership Activity

Shell Partnership

On February 6, 2023, S&W and Equilon Enterprises LLC (dba Shell Oil Products US, or Shell), entered into a partnership for the development and production of sustainable biofuel feedstocks through Vision Bioenergy Oilseeds LLC, or Vision Bioenergy. Under the terms of the partnership agreement, S&W contributed production and research facilities, along with certain personal property, including vehicles and other similar equipment, into its ~~stevia products.~~Vision Bioenergy subsidiary and subsequently sold a 66% interest in the subsidiary to Shell. See Note 11 for further information.

~~The~~Trigall Australia Partnership

Effective December 23, 2022, the Company’s wholly owned subsidiary, S&W Seed Company ~~has also been actively engaged in expansion initiatives through~~Australia Pty Ltd, or S&W Australia, entered into a ~~combination of organic growth and strategic acquisitions.~~

~~The Company had a long-term distribution agreement~~partnership with ~~Pioneer Hi-Bred International, Inc.~~Trigall Genetics S.A., or ~~Pioneer, now a subsidiary~~Trigall, for the development and marketing of ~~Corteva Agriscience, Inc., which is jointly referred to as Corteva, regarding conventional (non-GMO)~~wheat varieties ~~and a production agreement with Pioneer (relating to GMO-traited varieties). These agreements were terminated on May 20, 2019. See Note 4 for further discussion.~~

~~In May 2016,~~in Australia. Under the Company acquired the assets and business of SV Genetics, a private Australian company specializing in the breeding and licensing of proprietary hybrid sorghum and sunflower seed germplasm, which represented the Company’s initial effort to diversify its product portfolio beyond alfalfa seed and stevia.

~~In October 2018, the Company acquired substantially all~~terms of the ~~assets of Chromatin, Inc., a U.S.-based sorghum genetics and seed company, as part of the Company's efforts to expand its penetration into the hybrid sorghum market.~~

~~In August 2019,~~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. See Note 11 for further information.

Bioceres Investment

As of ~~S&W Seed~~June 30, 2021, the Company ~~licensed certain wheat germplasm varieties and acquired certain equipment from affiliates~~held an investment in Bioceres, S.A., a provider of ~~Corteva. In the transaction, S&W Australia paid a one-time license fee of $2.3 million and an equipment purchase price of $0.3 million. The license has an initial term of 15 years.~~

~~In February 2020, S&W Australia acquired Pasture Genetics,~~crop productivity solutions headquartered in Argentina. During the third ~~largest pasture seed company~~quarter of fiscal year 2022, the Company sold 71.4% of the investment in ~~Australia, as part~~Bioceres, S.A. for net proceeds of $988,504, which included a gain on the sale of marketable securities of $68,967. The carrying value of the remainder of the investment was $367,970 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 $400,000, which included a gain on the sale of equity investment of $32,030.

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair statement of the Company’s ~~efforts~~consolidated balance sheets, statements of operations, comprehensive income (loss), cash flows and mezzanine equity and stockholders’ equity for the periods presented. Operating results for the periods presented are not necessarily indicative of the results to ~~diversify its product offerings~~be expected for the full year ending June 30, 2023. Certain information and ~~expand its distribution channels.~~disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2022, as filed with the SEC.

Certain prior period information has been reclassified to conform to the current period presentation. Operating lease right-of-use assets were reclassified from “Other assets” to “Right-of-use assets – operating leases” on the balance sheet in accordance with the disclosure guidance of ASC 842. Previously, the operating lease right-of-use assets were disclosed in the footnotes.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in the financial statements. These include allowance for doubtful trade receivables, inventory valuation, the carrying value of the Company's equity investments, asset impairments, provisions for income taxes, grower accruals (an estimate of amounts payable to farmers who grow seed for the Company), contingencies and litigation. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and certain

intangible assets as well as valuing stock-based compensation. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows.

The Company believes the estimates and assumptions underlying the accompanying condensed consolidated financial statements are reasonable and supportable based on the information available at the time the financial statements were prepared. However, certain adverse geopolitical and macroeconomic events, such as the ongoing conflict between Ukraine and Russia and related sanctions, and uncertain market conditions, including higher inflation and supply chain disruptions, have, among other things, negatively impacted the global economy, created significant volatility and disruption of financial markets, and significantly increased economic and demand uncertainty. These factors make many of the estimates and assumptions reflected in these condensed consolidated financial statements inherently less certain. Therefore, actual results may ultimately differ from those estimates to a greater degree than historically.

Liquidity and Going Concern

~~Basis of Presentation and Principles of Consolidation~~

~~The consolidated financial statements include~~Excluding the ~~accounts of S&W Seed Company and its subsidiaries. All intercompany accounts and transactions have been eliminated~~gain recognized in ~~consolidation. The consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, or GAAP, and include~~relation to the assets, liabilities, revenue and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company exercises control. Outside stockholders' interests in subsidiaries are shown on the condensed consolidated financial statements as Noncontrolling interests.

~~The Company owns 50.1% of SeedVision, which is a variable interest entity as defined in ASC 810-10,~~ ~~Consolidation,~~ ~~because no substantive equity contributions have been made to it, and SeedVision is being funded through advances, as needed, from its investors~~. The Company has concluded that it is the primary beneficiary of SeedVision because it has the power, through a tie-breaking vote on the board of directors, to direct the sales and marketing activities of SeedVision, which are considered to be the activities that have the greatest impact on the future economic performance of SeedVision.

~~The Company owns 51.0% of Sorghum Solutions South Africa, which is a variable interest entity as defined in ASC 810-10,~~ ~~Consolidation~~, because no substantive equity contributions have been made to it, and Sorghum Solutions South Africa is being funded through advances, as needed, from its investors. The Company has concluded that it is the primary beneficiary of Sorghum Solutions South Africa because it has the power, through a tie-breaking vote on the board of directors, to direct the sales and marketing activities of Sorghum Solutions South Africa, which are considered to be the activities that have the greatest impact on the future economic performance of Sorghum Solutions South Africa.

~~Because~~Vision Bioenergy partnership, the Company is ~~its primary beneficiary, SeedVision's~~not profitable and ~~Sorghum Solutions South Africa’s financial results are included in these financial statements. The Company~~has recorded a combined $0.5 million of current assets (restricted) and $0.1 million of current liabilities (nonrecourse) for these entities in its consolidated balance sheet as of March 31, 2022. The Company recorded a combined $0.6 million of current assets (restricted) and $0.1 million of current liabilities (nonrecourse) for these entities in its consolidated balance sheet as of June 30, 2021.

~~Unaudited Interim Financial Information~~

The Company has prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, for interim financial reporting. These consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the Company’s consolidated balance sheets, statements of operations, comprehensive income (loss),negative cash flows ~~and stockholders’ equity~~ for the ~~periods presented. Operating results for the periods presented are not necessarily indicative of the results to be expected for the full year~~ ~~ending~~ June 30, 2022. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Annual Report, as filed with the SEC.

~~Use of Estimates~~

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in the financial statements. These include allowance for doubtful trade receivables, inventory valuation, asset impairments, provisions for income taxes, grower accruals (an estimate of amounts payable to farmers who grow seed for the Company), contingent consideration obligations, contingencies and litigation. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and certain intangible assets, goodwill as well as valuing stock-based compensation. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows.

The COVID-19 pandemic and the efforts to contain it have, among other things, negatively impacted the global economy and created significant volatility and disruption of financial markets. In addition, the COVID-19 pandemic has significantly increased economic and demand uncertainty. The Company believes the estimates and assumptions underlying the accompanying consolidated financial statements are reasonable and supportable based on the information available at the time the financial statements were prepared.

However, uncertainty over the impact COVID-19 will have on the global economy and the Company’s business in particular makes many of the estimates and assumptions reflected in these consolidated financial statements inherently less certain. Therefore, actual results may ultimately differ from those estimates to a greater degree than historically.

~~Certain Risks and Concentrations~~

The Company’s revenue is principally derived from the sale of seed, the market for which is highly competitive. NaN customer accounted for 15% of its revenue for the three months ended March 31, 2022 and 1 customer accounted for 28% of its revenue for the three months ended March 31, 2021. NaN customers accounted for 14% of its revenue for the nine months ended March 31, 2022 and 1 customer accounted for 25% of its revenue for the nine months ended March 31, 2021.

~~NaN customers accounted for 13% of the Company’s accounts receivable at March 31, 2022. NaN customer accounted for 11% of the Company’s accounts receivable at June 30, 2021.~~

The Company sells a substantial portion of its products to international customers. Sales to international markets represented 60% and 52% of revenue during the three months ended March 31, 2022 and 2021, respectively. Sales to international markets represented 70% and 55% of revenue during the nine months ended March 31, 2022 and 2021, respectively. The net book value of fixed assets located outside the United States was 23% and 19% of total fixed assets at March 31, 2022 and June 30, 2021, respectively. Cash balances located outside of the United States may not be insured and totaled $363,694 and $204,813 at March 31, 2022 and June 30, 2021, respectively.

~~The following table shows revenue from external sources by destination country:~~

Three Months Ended March 31,

Nine Months Ended March 31,

2022

2021

2022

2021

United States

$
9,270,851

40
%

$
15,672,861

48
%

$
15,340,257

30
%

$
27,773,152

45
%
Australia

8,846,660

38
%

11,426,369

35
%

14,526,512

28
%

16,268,261

27
%
Saudi Arabia

1,168,502

5
%

324,000

1
%

6,316,258

12
%

2,383,192

4
%
Pakistan

602,060

3
%

444,353

1
%

2,833,622

6
%

2,041,548

3
%
China

929,335

4
%

1,366,381

4
%

1,668,044

3
%

1,847,007

3
%
South Africa

265,292

1
%

946,631

3
%

1,644,073

3
%

1,923,525

3
%
Argentina

—

0
%

—

0
%

1,409,147

3
%

1,183,667

2
%
Libya

—

0
%

306,000

1
%

1,088,000

2
%

718,960

1
%
Egypt

557,510

2
%

79,890

0
%

959,810

2
%

472,970

1
%
Sudan

—

0
%

—

0
%

819,618

2
%

484,645

1
%
Other

1,546,667

7
%

1,810,212

6
%

4,744,626

9
%

6,186,487

10
%
Total

$
23,186,877

100
%

$
32,376,697

100
%

$
51,349,967

100
%

$
61,283,414

100
%

~~Liquidity andCapital Resources~~

The Company is monitoring the impact of the COVID-19 pandemic and the ongoing military conflict between Russia and Ukraine on its business, including its results of operations and financial condition, and has implemented measures designed to protect the health and safety of its employees while continuing its operations.

The Company’s sales efforts historically involved significant in-person interaction with potential customers and distributors. Throughout the COVID-19 pandemic, many national, state and local governments in its target markets implemented various stay-at-home, shelter-in-place and other quarantine measures. As a result, the Company shifted its sales activities to video conferencing and similar customer interaction models and continues to evaluate its sales approach, but the Company has found these alternative approaches to generally be less effective than in-person sales efforts. In particular, the Company’s sales cycle is highly seasonal, and the majority of its sales season activities for the United States and Australia are typically concentrated between March and June of each year. If ongoing measures to protect against COVID-19 remain in effect throughout the 2022 sales season, the Company may experience similar negative impacts that it experienced during the 2020 and 2021 sales seasons.

In addition, the Company’s product revenue is predicated on its 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 the Company’s distribution and supply channels. If the Company’s customers delay or decrease their orders due to potential disruptions in

~~its distribution and supply channels, or if the Company is unable to timely fulfill their orders, this would adversely affect the Company’s product revenue.~~

During the year ended June 30, 2021 and the three and nine months ended March 31, 2022, the Company experienced numerous logistical challenges due to limited availability of trucks for product deliveries, congestion at the ports, and overall increases in shipping and transportation costs. The Company expects these logistical challenges to persist throughout fiscal 2022, which may, among other things, delay or reduce its ability to recognize revenue within a particular fiscal period and harm its results of operations.

~~Given the level of uncertainty regarding the duration and broader impact of the COVID-19 pandemic, the Company is unable to fully assess the extent of its impact on the Company’s operations.~~

last several years. For the nine months ended March 31, ~~2022, we~~2023, the Company reported a net ~~loss~~income of ~~$23.5~~$21.6 million and net cash used in operations of ~~$18.0~~$15.8 million. AtAs of March 31, ~~2022, we~~2023, the Company had cash on hand of ~~$3.1~~$1.6 million. The Company had $1.8 million of unused availability from its working capital facilities as of March 31, 2023 (see Note 7 for further discussion). The Company also has access to capital under ATM Common Stock Sales (defined below in Note 9), which had $6.2 million remaining available to sell under the ATM agreement as of March 31, 2023.

The Company’s ~~loan~~Loan and ~~security agreement~~Security Agreement, dated March 22, 2023, or the CIBC Loan Agreement, with CIBC Bank USA, or CIBC, which matures on August 31, 2024 ($18.3 million outstanding as of March 31, 2023),and ~~the Company’s secured promissory note~~its debt facilities with ~~Conterra Agriculture Capital, LLC,~~National Australia Bank, or ~~Conterra, which mature on December 23, 2022 and November 30, 2022, respectively,~~NAB, contain various operating and financial covenants ~~(See~~(see Note 8)7). ~~The COVID-19 pandemic~~Adverse geopolitical and macroeconomic events and other factors affecting the Company’s results of operations have increased the risk of the Company’s inability to comply with these covenants, which could result in acceleration of its repayment obligations and foreclosure on its pledged assets. For example, the Company was not in compliance with certain ~~of these~~ covenants in the CIBC Loan Agreement as of June 30, 2021, December 31, 2021, ~~and~~ March 31, 2022, June 15, 2022, and June 30, 2022, and was required to obtain waivers and/or amendments from CIBC. The CIBC ~~and Conterra. In particular, the CIBC loan agreement~~Loan Agreement as presently in effect requires the Company to meet minimum Adjusted EBITDA levels on a quarterly basis, and the NAB Finance Agreement (as defined below) includes an undertaking that requires the Company to maintain ~~minimum liquidity~~a net related entity position of ~~no less~~not more than ~~$1,000,000 through and including June 29, 2022 and $2,500,000 thereafter.~~USD $18.5 million. The Company ~~does not currently expect it will be able to generate sufficient cash flow from operations or maintain sufficient liquidity to meet these~~met all financial covenants in certain periods prior to maturity. The Company will need to either raise additional capital, secure future waivers and/or amendments from its lenders, obtain financing from new lenders, and/or accomplish some combinationas of ~~these items to maintain sufficient liquidity. The Company is actively pursuing refinancing of the CIBC debt facility. There~~March 31, 2023, but there can be no assurance the Company will be successful in ~~raising additional capital,~~meeting its covenants or securing future waivers and/or amendments from its ~~lenders, renewing or refinancing its existing debt or securing new financing.~~lenders. If the Company is unsuccessful in doing so and cannot obtain other financing options, it may need to reduce the scope of its operations, repay amounts ~~owing~~owed to its lenders or sell certain assets. These operating and liquidity factors raise substantial doubt regarding the Company’s ability to continue as a going concern. ~~Our~~The Company’s condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

International Operations

The Company translates its foreign operations’ assets and liabilities denominated in foreign currencies into U.S. dollars at the current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in the cumulative translation account, a component of accumulated other comprehensive income (loss). Gains or losses from foreign currency transactions are included in the condensed consolidated statement of operations.

~~Cost of Revenue~~

~~The Company records purchasing and receiving costs, inspection costs and warehousing costs in~~ For the nine months ended March 31, 2023, a $0.6 million loss was recognized to cost of ~~revenue. When~~revenues and a $0.7 million foreign currency loss was recorded to other (income) expense. For the ~~Company is required~~three months ended March 31, 2023, a $0.4 million loss was recognized to ~~pay for outward freight and/or the costs incurred to deliver products to its customers, the costs are included in~~ cost of ~~revenue.~~

~~Cash~~revenues and ~~Cash Equivalents~~

~~For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less~~a $0.3 million foreign currency loss was recorded to ~~be cash and cash equivalents. At times, cash and cash equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation.~~other (income) expense.

Accounts Receivable

The Company provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer’s trade accounts receivable. The allowance for doubtful trade receivables was ~~$264,892~~$258,821 and ~~$57,582 at~~$233,927 on March 31, ~~2022~~2023 and June 30, ~~2021,~~2022, respectively.

~~Inventories consist~~Components of ~~seed and packaging materials.~~

~~Inventories~~inventory are ~~stated at the lower of cost or net realizable value, and an inventory reserve permanently reduces the cost basis of inventory. Inventories are valued~~ as follows: Actual cost is used to value raw materials such as packaging materials, as well as goods in process. Costs for substantially all finished goods, which include the cost of carryover crops from the previous year, are valued at actual cost. Actual cost for finished goods includes plant conditioning and packaging costs, direct labor and raw materials and manufacturing overhead costs based on normal capacity. The Company records abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges and allocates fixed production overhead


	As of		As of
	March 31, 2023		June 30, 2022
Raw materials and supplies	$	3,312,634	$	2,645,764
Work in progress		12,890,422		6,677,980
Finished goods		39,463,571		45,192,150
Inventories, net	$	55,666,627	$	54,515,894

Employee Retention Credit

In response to the ~~costs of finished goods based~~COVID-19 pandemic, the Employee Retention Credit, or ERC, was established under the Coronavirus Aid, Relief, and Economic Security Act. The ERC is a refundable tax credit meant for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to December 31, 2021. Companies who meet the eligibility requirements can claim the ERC on an original or adjusted employment tax return for a period within those dates.

In March 2023, the ~~normal capacity~~Company determined that it qualifies for $1.4 million in relief for the period from April 1, 2021 to September 30, 2021. Upon receipt of the ~~production facilities.~~

~~Inventory~~relief, the Company will owe $0.2 million in tax advisory costs associated with the assessment of the tax credit. Further research is ~~periodically reviewed~~ongoing to determine if the Company qualifies for any other reporting periods. As there is no authoritative guidance under US GAAP for government assistance to for-profit business entities, the Company accounts for the ERC by analogy to International Accounting Standards 20, or IAS 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, management determined it ~~is marketable, obsolete, or impaired. Inventory that is determined to be obsolete or impaired is written off to expense at the time the impairment is identified. Inventory quality is a function~~has reasonable assurance of germination percentage. Our experience has shown that our alfalfa seed quality tends to be stable under proper storage conditions; therefore, we do not view inventory obsolescence for alfalfa seed as a material concern. Hybrid crops (sorghum and sunflower) seed quality may be affected by warehouse storage pests such as insects and rodents. The Company maintains a strict pest control program to mitigate risk and maximize hybrid seed quality.

~~Components of inventory are:~~

March 31,
2022

June 30,
2021

Raw materials and supplies

$
2,676,366

$
2,722,832

Work in progress

20,398,537

6,662,006

Finished goods

48,842,807

54,010,418

$
71,917,710

$
63,395,256

~~Property, Plant and Equipment~~

~~Property, plant and equipment is depreciated using the straight-line method over the estimated useful life~~receipt of the ~~asset - periods of 5-35 years for buildings, 2-20 years for machinery~~identified ERC amount and ~~equipment, and 2-5 years for vehicles.~~

~~Intangible Assets~~

~~Intangible assets acquired in business acquisitions are reported at their initial fair value less accumulated amortization. Intangible assets are amortized using~~recorded the straight-line method over the estimated useful life of the asset. Periods of 3-30 years for technology/IP/germplasm, 5-20 years for customer relationships and trade names and 3-20 for other intangible assets. The weighted average estimated useful lives are 26 years for technology/IP/germplasm, 20 years for customer relationships, 16 years for trade names, 18 years for license agreements and 18 years for other intangible assets.

~~Goodwill~~

~~Goodwill is assessed at least annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change~~$1.4 million benefit as Government grant income in the ~~business climate, legal factors, a decline in operating performance, competition, sale or disposition~~condensed consolidated statements of a significant portion of the business, or other factors. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value is less than its carrying amount, management conducts a quantitative goodwill impairment test. The goodwill impairment test is used to identify potential impairment by comparing the fair value with its carrying amount, including goodwill. The Company uses market capitalization and an estimate of a control premium to estimate the fair value. If the fair value exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill.

The Company acquired Pasture Genetics in February 2020, and recorded goodwill of $1,452,436 as part of this transaction. The Company performed a quantitative assessment of goodwill at June 30, 2021 on its 1 reporting unit and determined that goodwill was not impaired. See Note 6 for further information.

~~Investment in Bioceres S.A.~~

The Company owns less than 1% of Bioceres, S.A., a provider of crop productivity solutions headquartered in Argentina. The carrying value of the investment is $0.4 million at March 31, 2022 and $1.3 million at June 30, 2021, and the investment is included in Other Assets on the Consolidated Balance Sheet.

~~The Company adopted ASU 2016-01,~~ ~~Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~ ~~beginning July 1, 2018. As such, this investment is accounted for in accordance with ASC 321,~~ ~~Investments – Equity Securities~~. As the stock is not publicly traded, the Company has elected to account for its investment at cost, with adjustments to fair value when there are observable transactions that provide an indicator of fair value. In addition, if qualitative factors indicate a potential impairment, fair value must be estimated, and the investment written down to that fair value if it is lower than the carrying value.

~~During~~operations during the three ~~months~~and nine month periods ended March 31, ~~2022, the Company sold 71.4%~~2023. A corresponding accrual of the ~~investment in Bioceres, S.A. for net proceeds of $988,504, which included~~tax credit receivable was recorded as a ~~gain~~current asset on the ~~sale~~condensed consolidated balance sheet as of ~~marketable securities of $68,967. NaN adjustments for impairment were made for the three months or nine months ended~~ March 31, ~~2022 or March 31, 2021.~~ 2023.

~~Research and Development Costs~~

The Company is engaged in ongoing research and development, or R&D, of proprietary seed and stevia varieties. All R&D costs must be charged to expense as incurred. Accordingly, internal R&D costs are expensed as incurred. Third-party R&D costs are expensed when the contracted work has been performed or as milestone results have been achieved. The costs associated with equipment or facilities acquired or constructed for R&D activities that have alternative future uses are capitalized and depreciated on a straight-line basis over the estimated useful life of the asset.

Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities, as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company’s effective tax rate for the three and nine months ended March 31, ~~2022~~2023 and ~~March 31, 2021~~2022 has been affected by the valuation allowance on the Company’s deferred tax assets. as well as the gain related to the formation of our wheat partnership with Trigall.

Net Income (Loss) Per Common Share Data

~~Basic net income (loss) per common share, or EPS, is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.~~

Diluted EPS is calculated by adjusting both the numerator (net income (loss)) and the denominator (weighted-average number of shares outstanding) for the dilutive effects of potentially dilutive securities, including options and restricted stock awards.

The treasury stock method is used for stock options and restricted stock awards. Under this method, consideration that would be received upon exercise (as well as remaining compensation cost to be recognized for awards not yet vested) is assumed to be used to repurchase shares of stock in the market, with net number of shares assumed to be issued added to the denominator.

The Company computes earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. The Company's Series B Preferred Stock and related warrant, or Series B Warrant (see Note 14 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended June 30, 2022, as filed with the SEC), are participating securities because holders of such shares have non-forfeitable dividend rights and participate in any undistributed earnings with common stock. Under the two-class method, total dividends provided to the holders of participating securities and undistributed earnings allocated to participating securities, are subtracted from net income attributable to the Company in determining net loss attributable to common ~~shareholders. During~~shareholders in the ~~three and nine months ended March 31, 2022, there were $40,276 in accrued dividends subtracted from net income attributable to common shareholders; there were 0 undistributed~~two-class earnings ~~to allocate to the participating securities. Additionally, any accretion~~per share, or EPS, calculation. Accretion to the redemption value for the Series B Preferred Stock is also treated as a deemed dividend ~~in the two-class EPS calculation. During the three and nine months ended March 31, 2022, $12,919 was accreted to the redemption value of the Series B Preferred Stock~~ and subtracted from net income attributable to ~~common~~ shareholders. There were no undistributed earnings to allocate to the participating securities in the three and nine month periods ended March 31, 2023 and 2022.

The calculation of ~~Basic and Diluted EPS~~net loss per common share is shown in the table ~~below.~~ below:

Three Months Ended March 31,

Nine Months Ended March 31,

2022

2021

2022

2021

Numerator:

Net loss attributable to S&W Seed Company

$
(7,304,923
)

$
(1,847,292
)

$
(23,500,000
)

$
(17,486,504
)
Dividends accrued for participating securities and accretion

(53,195
)

0

(53,195
)

0

Numerator for basic and diluted EPS

(7,358,118
)

(1,847,292
)

(23,553,195
)

(17,486,504
)
Denominator:

Denominator for basic EPS-weighted- average
shares

39,515,547

34,945,476

38,240,917

33,976,517

Effect of dilutive securities:

Employee stock options

0

0

0

0

Employee restricted stock units

0

0

0

0

Dilutive potential common shares

0

0

0

0

Denominator for diluted EPS - adjusted weighted
average shares and assumed conversions

39,515,547

34,945,476

38,240,917

33,976,517

Basic EPS

$
(0.19
)

$
(0.05
)

$
(0.62
)

$
(0.51
)
Diluted EPS

$
(0.19
)

$
(0.05
)

$
(0.62
)

$
(0.51
)


	Three Months Ended March 31,						Nine Months Ended March 31,
	2023			2022			2023			2022
Numerator:
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		(95,299	)		(40,276	)		(271,746	)		(40,276	)
Accretion of Series B Preferred Stock redemption value		(25,838	)		(12,919	)		(77,514	)		(12,919	)
Numerator for net income (loss) per common share - basic and diluted	$	31,998,228		$	(7,358,118	)	$	21,275,159		$	(23,553,195	)
Denominator:
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	)

~~The effects~~Anti-dilutive shares, which have been excluded from the computation of diluted income (loss) per share, included 4,319,232 employee stock options, 1,695,000 shares issuable upon conversion of the Series B Convertible Preferred Stock, warrants to purchase 2,633,400 shares of common stock related to the MFP Loan Agreement (as defined below), 559,350 warrants issued with the Company's Series B Convertible Preferred Stock, and48,439 restricted stock ~~units~~units. The terms and conditions of these securities are more fully described in Note 9 and Note 10 in these condensed consolidated financial statements and in Note 13 and Note 14 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended June 30, 2022, as filed with the SEC. For the period ended March 31, 2022, all potentially dilutive shares were anti-dilutive and excluded from the calculation of diluted loss per share because ~~they would be anti-dilutive due to~~net losses were recognized.

Concentrations

No single customer accounted for more than 10% of the ~~Company’s net loss~~Company's revenue for the three and nine months ended March 31, ~~2022~~2023 and ~~2021~~2022..

~~Impairment~~No one customer accounted for more than 10% of ~~Long-Lived Assets~~the Company’s accounts receivable as of March 31, 2023 and as of June 30, 2022.

The Company ~~evaluates~~sells a substantial portion of its ~~long-lived assets for impairment annually or more often if events~~products to international customers (see Note 4). Sales to international markets represented 55% and ~~circumstances warrant. Events relating~~60% of revenue during the three months ended March 31, 2023 and 2022, respectively. Sales to ~~recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period.~~ international markets represented 75% and 70% of revenue during the nine months ended March 31, 2023 and 2022, respectively. The ~~Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying~~net book value of ~~long-lived~~fixed assets ~~will be adjusted, based~~located outside the United States was 31% and 22% of total fixed assets on ~~estimates of future discounted cash flows resulting from the use~~March 31, 2023 and ~~ultimate disposition~~June 30, 2022, respectively. Cash balances located outside of the ~~asset. Refer to Note 6 for impairment discussion.~~United States may not be insured and totaled $439,920 and $811,551 on March 31, 2023 and June 30, 2022, respectively. Cash balances residing in the United States exceeding the Federal Deposit Insurance Corporation limit of $250,000 totaled $879,542 and $994,957 on March 31, 2023 and June 30, 2022, respectively.

Derivative Financial Instruments

~~Foreign Exchange Contracts~~

The Company’s subsidiary, S&W Australia, is exposed to foreign currency exchange rate fluctuations in the normal course of its business, which the Company at times manages through the use of foreign currency ~~forward contracts.~~derivative financial instruments.

The Company has entered into ~~certain derivative financial instruments (specifically~~ foreign currency forward ~~contracts),~~contracts and foreign currency call options (see Note 8) and accounts for these instruments in accordance with ASC Topic 815, “Derivatives and ~~Hedging”,~~Hedging,” which establishes accounting and reporting standards requiring that derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. The Company’s foreign currency contracts and options are not designated as hedging instruments under ASC 815; accordingly, changes in the fair value are recorded in current period earnings.

Premiums paid for foreign currency options with strike prices below the spot market price when acquired represent the time value of the option, as there is no intrinsic value. Such premiums are recorded as a current asset and amortized over the option term. Currency options are measured at fair value if the market price at the reporting date exceeds the strike price. When the strike price exceeds the market price, no liability is recorded as the Company has no obligation to exercise the options.

Fair Value of Financial Instruments

The Company discloses assets and liabilities that are recognized and measured at fair value, presented in a three-tier fair value hierarchy, as follows:

•

Level 1. Observable inputs such as quoted prices in active markets;

•

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

•

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

•

~~Level 1. Observable inputs such as quoted prices in active markets;~~

•	~~Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and~~

•	~~Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.~~

The carrying value of cash and cash equivalents, financial commitment assets (see Note 9), the promissory note issued from Trigall (see Note 11), accounts payable, short-term and all long-term borrowings, as reflected in the condensed consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments or interest rates

commensurate with market rates. There have been no changes in operations and/or credit characteristics since the date of issuance that could impact the relationship between interest ~~rate~~rates and market ~~rates~~.rates.

S&W received a $6.0 million note receivable due from Shell in connection with the Vision Bioenergy partnership transaction (see Note 11). The note, which is due in February 2024, was initially recorded at its $5.7 million present value discounted at a rate of 4.4%, which is our estimated discount rate for similar instruments. The receivable balance is being accreted to the full receivable amount on a straight-line basis over the remaining receivable term due to its short-term maturity. The receivable balance was $5.8 million as of March 31, 2023.

Also in conjunction with the Vision Bioenergy partnership transaction, 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 repurchase a 6% membership interest from Shell. The option repurchase prices range between approximately $7.1 and $12.0 million, depending on the date on which such purchase is completed. The Purchase Option was valued at $0.6 million using a lattice option valuation model. The valuation model incorporated significant, unobservable inputs including a discounted cash flow model based on management projections of future Vision Bioenergy results and an estimate of the current per share value of Vision Bioenergy shares. In the model, the estimate of the current per share value was discounted to account for lack of control and marketability, which were considered to be part of the unit of account given the restrictions of the limited liability company agreement that governs the ownership rights of the members. Other unobservable inputs included the risk-free rates and the estimated future stock volatility based on the historical stock price volatilities of other market participants. A full fair value analysis will be performed at each fiscal year-end or when there is an indication that there may be an impairment to the valuation. Management will estimate and adjust the balance for interim periods. No adjustment to the fair value was recorded as of March 31, 2023.

Quantitative information about Level 3 fair value measurement is as follows:


	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%

Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows:


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

Fair Value Measurements as of
March 31, 2022 Using:

Level 1

Level 2

Level 3

Foreign exchange contract asset

$
0

$
93,800

$
0

Contingent consideration obligations

$
0

$
0

$
0

Total

$
0

$
93,800

$
0

Fair Value Measurements as of
June 30, 2021 Using:

Level 1

Level 2

Level 3

Foreign exchange contract liability

$
0

$
96,466

$
0

Contingent consideration obligations

$
0

$
0

$
741,552

Total

$
0

$
96,466

$
741,552

NOTE 3 - LEASES

~~S&W~~The Company leases office and laboratory space, research plots and equipment used in connection with its operations under various operating and finance leases.

Right-of-use, or ROU, assets represent the Company’s right to use the underlying assets for the lease term and lease liabilities represent the net present value of the Company’s obligation to make payments arising from these leases. The lease liabilities are based on the present value of fixed lease payments over the lease term using the implicit lease interest rate or, when unknown, the Company's incremental borrowing rate on the lease commencement date or July 1, 2019 for leases that commenced prior to that date. If the lease includes one or more options to extend the term of the lease, the renewal option is considered in the lease term if it is reasonably certain the Company will exercise the option(s). Operating lease expense is recognized on a straight-line basis over the term of the lease. As permitted by ASC 842, leases with an initial term of twelve months or less, or short-term leases, are not recorded on the accompanying consolidated balance sheet.

The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component under the practical expedient provisions of the standard. The Company has lease agreements with terms less than one year. For the qualifying short-term leases, the Company elected the short-term lease recognition exemption in which the Company will not recognize ROU assets or lease liabilities, including the ROU assets or lease liabilities for existing short-term leases of those assets in upon adoption.

Variable lease payments consist primarily of common area maintenance, utilities and taxes, which are not included in the recognition of ROU assets and related lease liabilities. Variable lease payments and short-term lease expenses were immaterial to the Company’s

~~financial statements for the three and nine months ended March 31, 2022. The Company’s lease agreements do not contain material restrictive covenants.~~

The components of lease assets and liabilities as of March 31, 2023 and June 30, 2022 are as follows:


Leases	Balance Sheet Classification	March 31, 2022			Balance Sheet Classification:	March 31, 2023			June 30, 2022
Assets:
Right of use assets - operating leases	Other assets	$	4,257,123

Right of use assets - finance leases	Other assets		2,301,350			$	1,736,128		$	2,071,609
Accumulated amortization - finance leases	Other assets		(1,120,890	)			(1,104,261	)		(1,131,842	)
Right of use assets - finance leases, net	Other assets		1,180,460		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		$	5,437,583			$	3,975,976		$	5,034,020

Liabilities:
Current portion of long-term debt, net	Current portion of long-term debt, net		883,251
Current lease liabilities	Accrued expenses and other current liabilities		1,314,027
Long-term debt, net	Long-term debt, net		735,257
Long-term lease liabilities	Other long-term liabilities		3,189,188
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		$	6,121,723			$	4,240,666		$	5,688,541

The components of lease cost are as follows:


Lease cost:	Income Statement Classification:	Three Months Ended March 31, 2023		Nine Months Ended March 31, 2023
Operating lease cost	Cost of revenue	$	193,011	$	540,260
Operating lease cost	Selling, general and administrative expenses		45,040		155,288
Operating lease cost	Research and development expenses		92,016		316,833
Finance lease cost	Depreciation and amortization		120,263		385,901
Finance lease cost	Interest expense, net		8,714		30,033
Total lease costs		$	459,044	$	1,428,315

Leases

Income Statement Classification

Three Months
Ended
March 31,
2022

Nine Months
Ended
March 31,
2022

Operating lease cost

Cost of revenue

$
172,582

$
527,354

Operating lease cost

Selling, general and administrative expenses

82,043

235,868

Operating lease cost

Research and development expenses

122,280

312,341

Finance lease cost

Depreciation and amortization

183,261

533,877

Total lease costs

$
560,166

$
1,609,440

Operating Leases

Finance Leases

Remainder of 2022

$
429,195

$
271,001

2023

1,254,993

956,902

2024

1,153,370

375,811

2025

811,971

109,016

2026

726,553

23,816

After 2026

505,569

—

Total lease payments

4,881,651

1,736,546

Less: Interest

(378,436
)

(118,038
)
Present value of lease liabilities

$
4,503,215

$
1,618,508

The following are the weighted average assumptions used for lease term and discount rate and supplemental cash flow information related to leases as of March 31, ~~2022:~~2023:


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

Operating lease remaining lease term

4.3 years

Operating lease discount rate

4.09
%
Finance lease remaining lease term

1.8 years

Finance lease discount rate

5.09
%
Cash paid for operating leases

$
859,713

Cash paid for finance leases

$
1,244,746

~~NOTE 4 – PIONEER RELATIONSHIP~~

~~Distribution and Production Agreements with Pioneer~~

In 2014, the Company purchased from Pioneer certain assets related to alfalfa and entered into a long-term contract to sell alfalfa seed to Pioneer under a production agreement (GMO varieties) and a distribution agreement (conventional varieties). Under the production and distribution agreements with Pioneer, the Company grew, processed, and delivered alfalfa seed for and to Pioneer. See Note 5 for a discussion of the recognition of revenue under these agreements.

On May 22, 2019, the Company and Pioneer terminated the production and distribution agreements. As part of the termination, Pioneer’s parent company, Corteva, agreed to purchase from the Company certain quantities of seed held by the Company as of that date that Pioneer was not previously obligated to purchase. Those quantities of seed were delivered to Corteva periodically through March 2021.

~~The Company does not expect to sell any other products to Pioneer or Corteva beyond those quantities of seed.~~

~~License Agreement with Corteva~~

~~Contemporaneously with the terminations discussed above, the Company entered into a license agreement with Corteva, under which Corteva received~~ a fully pre-paid, exclusive license to produce and distribute certain of the Company's alfalfa seed varieties world-wide (except South America). The licensed seed varieties include certain of the Company's existing commercial conventional (non-GMO) alfalfa varieties and six pre-commercial dormant alfalfa varieties. The Company also assigned to Corteva grower production contract rights, and Corteva assumed grower production contract obligations, related to the licensed and certain other alfalfa varieties. Corteva received no license to the Company's other commercial alfalfa varieties or pre-commercial alfalfa pipeline products and no rights to any future products developed by the Company.

~~Payments Due from Corteva and Pioneer~~14

The Company received payments of $45.0 million in fiscal 2019, $16.7 million in fiscal 2020, and $8.3 million in fiscal 2021, which totaled $70.0 million. Approximately $34.2 million of these amounts referenced above has been allocated to the license to the Company’s alfalfa varieties. The $34.2 million was reported as licensing revenue in the consolidated statement of operations for the fiscal year ended June 30, 2019.

NOTE 54 - REVENUE RECOGNITION

The Company derives its revenue primarily from 1) the sale of seed ~~2) milling~~products to seed distributors. From time to time, the Company utilizes excess capacity to provide conditioning, treating and packaging services ~~3) research~~to other seed producers. The Company also derives service revenue from its two partnerships, Trigall Australia and ~~development~~Vision Bioenergy, by providing administrative services ~~and 4) product licensing agreements.~~

~~The following table disaggregates the Company’s revenue by type of contract:~~

Three Months Ended March 31,

Nine Months Ended March 31,

2022

2021

2022

2021

Pioneer product sales

$
—

$
8,507,062

$
—

$
14,198,857

Other product sales

22,791,148

22,987,351

49,946,635

45,267,007

Services

395,729

882,284

1,403,332

1,817,550

$
23,186,877

$
32,376,697

$
51,349,967

$
61,283,414

under a service level agreement.~~Pioneer Product Sales~~

~~In the three and nine months ended March 31, 2021, Pioneer product sales consisted of product shipments to Pioneer under the termination agreement discussed in Note 4.~~

~~Other Product Sales~~

Revenue from ~~other~~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.~~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. ~~Returns are only accepted on product received by August 31~~^st ~~of the current sales year.~~ 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.

~~Services~~Contract Assets and Liabilities

Revenue from milling, conditioning, and treating and packaging services, which are performed on the customer's product, is recognized as services are completed and the milled product is delivered to the customer.

~~Revenue from research and development services is recognized over time as the services are performed.~~

~~Payment Terms and Related Balance Sheet Accounts~~

Accounts receivable represent amounts that are payable to the Company by its customers subject only to the passage of time. Payment terms on invoices are generally 30 to 180 days for export customers and end of sales season (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.

~~Unbilled~~The Company provides an allowance for doubtful trade receivables ~~represent contract assets that arise when~~equal to the Company has partially performed under a contract but is not yet able to invoice the customer until the Company has made additional progress. Unbilled receivables arose from the distribution and production agreements for which the Company recognized revenue over time, as the Company bills for these arrangements upon product delivery, while revenue was recognized, as described above, as costs were incurred. Unbilled receivables may arise as much as three months before billing is expected to occur. Unbilled receivables are generally expected to be generated in the first and second fiscal quarters, and to be billed in the second, third and fourth fiscal quarters.

~~Losses on accounts receivable and unbilled receivables are recognized if and when~~estimated uncollectible amounts (see Note 2). When it becomes probable that ~~amounts~~a trade receivable will not be ~~paid. These losses are~~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 ~~subsequent periods if these amounts are paid.~~a net negative provision in a period. During the three ~~months ended March 31, 2022, the Company recognized a gain on amounts previously written off to bad debt expense of $(20,705). During the~~and nine months ended March 31, ~~2022,~~2023, the Company ~~recognized~~recorded a net ~~loss on amounts written off to bad debt expense~~provision for doubtful receivables of ~~$200,458.~~$48,634 and a net reversal of the allowance for doubtful accounts of ($76,575), respectively.

Deferred revenue represents payments received from customers in advance of completion of the Company's performance obligation. During the nine months ended March 31, ~~2022,~~2023, the Company recognized ~~$0.4~~$0.6 million of revenue that was included in the deferred balance as of June 30, ~~2021.~~2022. During the nine months ended March 31, ~~2021,~~2022, the Company recognized ~~$6.2~~$0.4 million of revenue that was included in the deferred balance as of June 30, ~~2020.~~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 March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Seed sales	$	17,382,360	$	22,791,148	$	50,054,978	$	49,946,635
Services		279,947		395,729		410,996		1,403,332
Total revenue	$	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 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 65 – ~~GOODWILL AND~~ INTANGIBLE ASSETS

Intangible assets consist of the following:


	Balance at June 30, 2022		Other Additions and Disposals			Amortization			Currency Translation Adjustment			Balance at March 31, 2023
Trade name	$	1,084,791	$	—		$	(147,630	)	$	(5,737	)	$	931,424
Customer relationships		5,499,815		—			(265,258	)		(131,244	)		5,103,313
GI customer list		42,983		—			(5,373	)		—			37,610
Supply agreement		775,241		—			(56,725	)		—			718,516
Grower relationships		1,331,581		—			(79,055	)		—			1,252,526
Intellectual property		23,035,925		—			(1,039,162	)		—			21,996,763
License agreement		1,986,598		(1,885,907	)		(75,610	)		(25,081	)		(0	)
Internal use software		338,893		—			(50,833	)		—			288,060
	$	34,095,827	$	(1,885,907	)	$	(1,719,646	)	$	(162,062	)	$	30,328,212

~~The~~16


	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

On December 23, 2022, the Company ~~acquired Pasture Genetics in February 2020, and recorded goodwill of $1,452,436,~~transferred certain intellectual property rights under a license agreement to Trigall Australia as part of ~~this transaction. The Company performed a quantitative assessment of goodwill at June 30, 2021 on~~ its ~~1 reporting unit~~equity investment in the partnership (see Note 11). Amortization expense totaled $548,438 and ~~determined that goodwill was not impaired~~$.598,399

~~The following table summarizes~~ for the ~~activity of goodwill~~three months ended March 31, 2023 and 2022, respectively. Amortization expense totaled $1,719,646 and $1,798,227 for the nine months ended March 31, 2023 and 2022, ~~and the year ended June 30, 2021,~~ respectively.

Balance at
July 1, 2021

Additions

Impairment

Currency Translation Adjustment

Balance at
March 31, 2022

Goodwill

$
1,651,634

$
0

$
0

$
(2,423
)

$
1,649,211

Balance at
July 1, 2020

Additions

Impairment

Currency Translation Adjustment

Balance at
June 30, 2021

Goodwill

$
1,508,675

$
0

$
0

$
142,959

$
1,651,634

~~Intangible assets consist of the following:~~

Balance at
July 1, 2021

Additions

Impairment

Amortization

Currency Translation Adjustment

Balance at
March 31, 2022

Trade name

$
1,310,489

$
0

$
0

$
(152,569
)

$
(2,289
)

$
1,155,631

Customer relationships

6,302,591

0

0

(281,047
)

(13,754
)

6,007,790

Non-compete

5,058

0

0

(5,058
)

0

0

GI customer list

50,146

0

0

(5,373
)

0

44,773

Supply agreement

850,874

0

0

(56,725
)

0

794,149

Grower relationships

1,436,988

0

0

(79,055
)

0

1,357,933

Intellectual property

24,427,857

0

0

(1,044,266
)

0

23,383,591

License agreement

2,340,269

0

0

(129,612
)

(6,930
)

2,203,727

Internal use software

406,670

0

0

(50,833
)

0

355,837

$
37,130,942

$
0

$
0

$
(1,804,538
)

$
(22,973
)

$
35,303,431

Balance at
July 1, 2020

Additions

Impairment

Amortization

Currency Translation Adjustment

Balance at
June 30, 2021

Trade name

$
1,479,278

$
0

$
0

$
(206,311
)

$
37,522

$
1,310,489

Customer relationships

6,187,086

0

0

(376,431
)

491,936

6,302,591

Non-compete

21,312

0

0

(16,254
)

0

5,058

GI customer list

57,310

0

0

(7,164
)

0

50,146

Supply agreement

926,507

0

(75,633
)

0

850,874

Grower relationships

1,542,393

0

0

(105,405
)

0

1,436,988

Intellectual property

25,415,665

388,499

0

(1,376,307
)

0

24,427,857

In process research and development

380,000

(380,000
)

0

—

0

0

License agreement

2,300,059

0

0

(176,646
)

216,856

2,340,269

Internal use software

474,448

0

0

(67,778
)

0

406,670

$
38,784,058

$
8,499

$
0

$
(2,407,929
)

$
746,314

$
37,130,942

Amortization expense totaled $598,399 and $604,439 for the three months ended March 31, 2022 and 2021, respectively. Amortization expense totaled $1,804,538 and $1,798,227 for the nine months ended March 31, 2022 and 2021, respectively.

Estimated aggregate remaining amortization is as follows:


	2023		2024		2025		2026		2027		Thereafter
Amortization expense	$	527,879	$	2,154,690	$	2,114,725	$	1,975,491	$	1,924,607	$	21,630,820

2022

2023

2024

2025

2026

Thereafter

Amortization expense

$
609,303

$
2,502,920

$
2,480,385

$
2,319,707

$
2,233,290

$
25,157,826

Components of property, plant and equipment were as follows:


							As of			As of
	March 31, 2022			June 30, 2021			March 31, 2023			June 30, 2022
Land and improvements	$	2,296,944		$	2,297,529		$	942,919		$	2,265,087
Buildings and improvements		8,201,738			8,196,593			3,371,017			8,119,960
Machinery and equipment		14,975,940			13,935,053			12,622,765			14,972,462
Vehicles		1,191,797			1,046,937			608,002			1,085,342
Leasehold improvements		552,810			552,810			552,810			552,810
Construction in progress		141,093			48,480			20,000			110,107
Total property, plant and equipment		27,360,322			26,077,402			18,117,513			27,105,768
Less: accumulated depreciation		(9,893,395	)		(8,336,428	)		(7,875,828	)		(10,234,099	)
Property, plant and equipment, net	$	17,466,927		$	17,740,974		$	10,241,685		$	16,871,669

Total debt outstanding is presented on the consolidated balance sheet as follows:


							March 31, 2023			June 30, 2022
	March 31, 2022			June 30, 2021
Current portion of working capital lines of credit
CIBC	$	13,000,000		$	14,500,000		$	18,279,289		$	12,804,611
National Australia Bank Limited		367,734			19,494,800			24,771,500			338,314
National Australia Bank Limited Overdraft Facility		611,014			617,471
Debt issuance costs		(300,605	)		(665,706	)		(267,653	)		(464,028	)
Total current portion of working capital lines of credit, net		13,678,143			33,946,565			42,783,136			12,678,897
Long-term portion of working capital lines of credit, less current portion
National Australia Bank Limited		23,590,666			—			—			21,703,286
Total long-term portion of working capital lines of credit		23,590,666			—			—			21,703,286
Total working capital lines of credit, net	$	37,268,809		$	33,946,565		$	42,783,136		$	34,382,183
Current portion of long-term debt
Finance lease	$	883,251		$	909,413
Finance leases							$	402,164		$	804,309
Term Loan - National Australia Bank Limited								334,750			344,400
Machinery & equipment loans - National Australia Bank Limited								257,963			246,547
Machinery & equipment loans - Hyster								11,897			11,834
Vehicle loans - Ford Credit								51,277			40,341
Secured real estate note - Rooster								—			6,905,995
Debt issuance costs		(2,656	)	$	(5,077	)		—			(36,643	)
Total current portion, net								1,058,051			8,316,783
Long-term debt, less current portion
Finance leases								246,977			500,723
Term loan - National Australia Bank Limited		374,350			374,900			2,343,250			2,410,800
Machinery & equipment loans - National Australia Bank Limited		266,385			160,632			956,029			963,733
Machinery & equipment loans - Hyster		12,720			5,170			18,944			28,722
Vehicle loans - Ford Credit		40,341			—			83,532			88,583
Secured real estate note - Conterra		6,905,995			275,684
Debt issuance costs		(55,705	)		(39,556	)
Total current portion, net		8,424,681			1,681,166
Long-term debt, less current portion
Finance lease		735,257			1,108,709
Debt issuance costs		(163	)		(1,847	)
Term loan - National Australia Bank Limited		2,994,800			2,999,200
Machinery & equipment loans - National Australia Bank Limited		1,101,381			508,641
Machinery & equipment loans - Hyster		34,489			17,923
Vehicle loans - Ford Credit		100,326			—
Secured real estate note - Conterra		0			6,974,356
Debt issuance costs		0			(16,482	)		—			(21	)
Total long-term portion, net		4,966,090			11,590,500			3,648,732			3,992,540
Total debt, net	$	13,390,771		$	13,271,666		$	4,706,783		$	12,309,323

•

on September 22, ~~2020,~~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 the Company's 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;

•

on December ~~30, 2020, May 13, 2021, September 27, 2021~~23, 2022, the CIBC Loan Agreement was amended to, among other things, extend the maturity date of all revolving loans, advances and ~~May 13, 2022. As amended,~~other obligations outstanding under the CIBC Loan Agreement from December 23, 2022 to March 23, 2023; 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.

•

~~Advances under the CIBC Credit Facility are to be used: (i) to finance the Company’s ongoing working capital requirements; and (ii) for general corporate purposes.~~

•

~~All amounts due and owing, including, but not limited to, accrued and unpaid principal and interest due under the CIBC Credit Facility, will be payable in full on December 23, 2022.~~

•

The CIBC Credit Facility generally establishes a borrowing base of up to 85% of eligible domestic accounts receivable (90% of eligible foreign accounts receivable) plus up to the lesser of (i) 65% of eligible inventory, (ii) 85% of the appraised net orderly liquidation value of eligible inventory, and (iii) an eligible inventory sublimit as more fully set forth in the Loan Agreement,appraised net orderly liquidation value of eligible inventory, in each case subject ~~to lender reserves.~~

•

Loans are based on a Base Rate plus 2.0% per annum. In the event of a default, at the option of CIBC, the interest rate on all obligations owing will increase by 2% per annum over the rate otherwise applicable.

•

~~The CIBC Credit Facility is secured by a first priority perfected security interest in substantially all of the Borrowers’ assets (subject to certain exceptions), including intellectual property.~~

•

The Loan Agreement contains customary representations and warranties, affirmative and negative covenants and customary events of default that permit CIBC to accelerate the Company’s outstanding obligations under the CIBC Credit Facility, all as set forth in the Loan Agreement and related documents. The CIBC Credit Facility also contains customary and usual financial covenants imposed by CIBC.

•

on September 22, 2022, the Company entered into an amendment to extend the ~~note’s~~Rooster Note’s maturity date toDecember 23, 2022~~November 30,~~; and

•

on December 23, 2022, ~~and revise~~ the ~~amounts payable under the note. Pursuant~~Company entered into an amendment to the Rooster Note that (i) increased the interest rate on the Rooster Note from 7.75% to 9.25% per annum and (ii) extended the maturity date of the Rooster Note from December ~~2019 amendment,~~23, 2022 to March 1, 2023.

•

The Company sold the equipment to American AgCredit for $2,106,395 million in proceeds. The proceeds were used to pay off in full a note (in the principal amount of $2,081,527, plus accrued interest of $24,868) held by Conterra Agricultural Capital, LLC, which had an interest rate of 9.5% per annum and was secured by, among other things, the equipment.

•

~~The Company entered into a lease agreement with American AgCredit relating to the equipment. The lease agreement has a~~ ~~five-year~~ term and provides for monthly lease payments of $40,023 (representing an annual interest rate of 5.6%). At the end of the lease term, the Company will repurchase the equipment for $1. During January 2021, the Company completed the sale of its NaN Points facility which triggered the Company making a one-time principal pay down of $294,163 on the finance lease agreement.

•

the borrowing base line credit limit under S&W Australia’s seasonal credit facility was increased from AUD $32.0 million (USD $21.4 million as of ~~which are~~March 31, 2023) to AUD $40.0 million (USD $26.8 million as of March 31, 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 March 31, 2023) to AUD $2.0 million (USD $1.3 million as of March 31, 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.

•

~~the borrowing base line credit limit under the seasonal credit facility increased from AUD $26,000,000 (USD $18,722,600 at September 30, 2021), to AUD $32,000,000 (USD $23,958,400 at March 31, 2022);~~

•

the overdraft credit limit under the seasonal credit facility decreased from AUD $3,000,000 (USD $2,160,300 at September 30, 2021) to AUD $2,000,000 (USD $1,497,400 at March 31, 2022). It then further decreased to AUD $1,000,000 (USD $748,700 on April 1, 2022) and will decrease to 0 on July 1, 2022;

•

~~the credit limit under the master asset finance facility increased from AUD $2,000,000 (USD $1,440,200 at September 30, 2021) to AUD $3,000,000 (USD $2,246,100 at March 31, 2022); and~~

•

~~the month in which annual principal repayments are required on the flexible rate loan was adjusted from November to May of each fiscal year.~~

•

S&W Australia finances the purchase of most of its seed inventory from growers pursuant to a seasonal credit facility comprised of two facility lines: (i) an Overdraft Facility having a credit limit of AUD $2,000,000 (USD $1,497,400 at March 31, 2022) and (ii) a Borrowing Base Line having a credit limit of AUD $32,000,000 (USD $23,958,400 at March 31, 2022). As of March 31, 2022, the Borrowing Base Line accrued interest on Australian dollar drawings at approximately 3.61% per annum calculated daily. The Overdraft Facility permits S&W Australia to borrow funds on a revolving line of credit up to the credit limit. Interest accrues daily and is calculated by applying the daily interest rate to the balance owing at the end of the day and is payable monthly in arrears. As of March 31, 2022, the Overdraft Facility accrued interest at approximately 5.47% per annum calculated daily. As of March 31, 2022, AUD $32,816,100 (USD $24,569,414) was outstanding under S&W Australia’s seasonal credit facility with NAB. The seasonal credit facility is secured by a fixed and floating lien over all the present and future rights, property, and undertakings of S&W Australia.

•

S&W Australia has a flexible rate loan, or the Term Loan, in the amount of AUD $4,500,000 (USD $3,369,150 at March 31, 2022). Required annual principal payments of AUD $500,000 on the Term Loan commenced on November 30, 2020, with the remainder of any unpaid balance becoming due on March 31, 2025. As part of the amendment, the November 2021 repayment was deferred to May 2022, with the remaining repayments due in May of each year. Monthly interest amounts outstanding under the Term Loan will be payable in arrears at a floating rate quoted by NAB for the applicable pricing period, plus 2.6%. The Term Loan is secured by a lien on all the present and future rights, property, and undertakings of S&W Australia.

•

S&W Australia finances certain equipment purchases under a master asset finance facility with NAB. The master asset finance facility has various maturity dates through 2029 and have interest rates ranging from 2.86% to 4.29%. The credit limit under the facility is AUD $3,000,000 (USD $2,246,100 at March 31, 2022). As of March 31, 2022, AUD $1,826,855 (USD $1,367,766) was outstanding under S&W Australia’s master asset finance facility.

The annual maturities of ~~short-term and~~ long-term debt, excluding finance lease liabilities, are as follows:


Fiscal Year	Amount
Remainder of 2023	$	76,909
2024		668,649
2025		632,758
2026		2,330,226
2027		161,420
Thereafter		187,682
Total	$	4,057,644

Fiscal Year

Amount

Remaining in 2022

$
685,513

2023

8,502,505

2024

1,076,166

2025

2,596,971

2026

300,969

Thereafter

287,171

Total

$
13,449,295

NOTE 9 – EQUITY

ATM Common Stock Sales

On September 23, 2020, the Company entered into an At Market Issuance Sales Agreement, or ~~cash flows.~~

~~Legal Matters~~

~~The Company~~the ATM Agreement, with B. Riley Securities, Inc., or B. Riley, under which it may ~~be subject to various legal proceedings~~offer and sell from time to ~~time. The results~~time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $17.1 million through B. Riley as its sales agent. On May 17, 2022, the Company amended the ATM Agreement to have an aggregate offering price of $24.6 million.

For the three and nine months ended March 31, 2023, the Company received gross proceeds of approximately $0.2 million from the sale of 102,455 shares of its common stock pursuant to the ATM Agreement. For the three months ended March 31, 2022, the Company received gross proceeds of approximately $6.2 million for the sale of 2,633,052 shares of its common stock pursuant to the ATM agreement. For the nine months ended March 31, 2022, the Company received gross proceeds of approximately $6.2 million for the sale of 2,633,900 shares of its common stock pursuant to the ATM agreement. As of March 31, 2023, the Company had $6.2 million remaining available to sell under the ATM Agreement.

MFP Warrants

On September 22, 2022, the Company entered into a Subordinate Loan and Security Agreement, or the MFP Loan Agreement, with MFP, pursuant to which any ~~future litigation cannot~~draw CIBC may make on the MFP Letter of Credit will be ~~predicted with certainty,~~deemed to be a term loan advance made by MFP to the Company (see Note 7). Pursuant to the terms and ~~regardless~~conditions of the ~~outcome, litigation can have~~MFP Loan agreement, on September 22, 2022, the Company issued to MFP a warrant, or Initial Warrant, to purchase up to 500,000 shares of the Company’s common stock, or Initial Warrant Shares, at $1.60 per share. The Initial Warrant expires five years from its issue date, or September 22, 2027.

In connection with the October 28, 2022 and December 22, 2022 amendments to the MFP Letter of Credit, the Company issued to MFP additional warrants to purchase 166,700 and 666,700 shares of the Company’s common stock, respectively, at an ~~adverse impact~~exercise price of $1.60 per warrant share. The warrants will each expire five years from the date of issuance.

In connection with the MFP Amendment, on March 22, 2023, the Company issued to MFP a warrant to purchase 1,300,000 shares of the Company’s common stock at an exercise price of $2.15 per MFP warrant share. The warrants will expire five years from the date of issuance.

In total, warrants to purchase 2,633,400 shares of the Company’s common stock were issued to MFP in connection with the MFP Loan Agreement, or MFP Warrants, during the nine months ended March 31, 2023. The stated purchase prices of all of the MFP Warrants are subject to adjustment in connection with any stock dividends and splits, distributions with respect to common stock and certain fundamental transactions as described in the MFP Warrant. The MFP Warrants were valued using the Black-Scholes-Merton model as of the respective issue dates and recorded as financial commitment assets within the caption "Prepaid expenses and other current assets" on the ~~Company because~~condensed consolidated balance sheet. The MFP Warrants financial commitment assets are amortized on a straight-line basis over the period from their initial issue dates through the end of ~~defense~~the related MFP Letter of Credit commitment periods. During the nine months ended March 31, 2023, an aggregate value of $1,894,901 related to the MFP Warrants was capitalized, of which $626,141 was amortized as interest expense.

MFP is the Company’s largest shareholder. One of the Company’s directors, Alexander C. Matina, is Vice President and ~~settlement costs, diversion~~Portfolio Manager of ~~management resources, and other factors. Any current litigation is considered immaterial and counter claims have been assessed as remote.~~MFP Investors LLC, the general partner of MFP.

NOTE 1110 - EQUITY-BASED COMPENSATION

~~Equity Incentive Plans~~Stock Options

In October 2009 and January 2010, the Company's Board of Directors and stockholders, respectively, approved the 2009 Equity Incentive Plan, or as amended and/or restated from time to time, the 2009 Plan. The plan authorized the grant and issuance of options, restricted shares and other equity compensation to the Company's directors, employees, officers and consultants, and those of the Company's subsidiaries and parent, if any. In October 2012 and December 2012, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 1,250,000 shares. In September 2013 and December 2013, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 1,700,000 shares. In September 2015 and December 2015, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 2,450,000 shares.

In December 2018 and January 2019, the Company's Board of Directors and stockholders, respectively, approved the 2019 Equity Incentive Plan, or the 2019 Plan, as a successor to and continuation of the 2009 Plan. In October 2020 and December 2020, the Company’s Board of Directors and stockholders approved, respectively, the amendment to the 2019 Plan to increase the number of shares available for issues as grants and awards by 4,000,000 shares. Subject to adjustment for certain changes in the Company's capitalization, the aggregate number of shares of the Company's common stock that may be issued under the 2019 Plan, as amended, will not exceed 8,243,790 shares, which is the sum of (i) 4,000,000 new shares, (ii) 2,750,000 additional shares that were reserved as of the effective date of the 2019 Plan, (iii) 350,343 shares (the number of unallocated shares that were available for grant under the 2009 Plan as of January 16, 2019, the effective date of the 2019 Plan), and (iv) 1,143,447 shares, which is the number of shares subject to outstanding stock awards granted under the 2009 Plan that on or after the effective date of the 2019 Plan may expire or terminate for any reason prior to exercise or settlement, are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to us, or are reacquired, withheld or not issued to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award.

The term of incentive stock options granted under the Company’s equity incentive plans may not exceed ten years, or five years for incentive stock options granted to an optionee owning more than 10% of the Company's voting stock. The exercise price of options granted under the Company’s equity incentive plans must be equal to or greater than the fair market value of the shares of the common stock on the date the option is granted. An incentive stock option granted to an optionee owning more than 10% of voting stock must have an exercise price equal to or greater than 110% of the fair market value of the common stock on the date the option is granted.

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Stock options issued to non-employees are accounted for at their estimated fair value. The fair value of options granted to non-employees is re-measured as they vest. The Company amortizes stock-based compensation expense on a straight-line basis over the requisite service period.

The Company utilizes a Black-Scholes-Merton option pricing model, which includes assumptions regarding the risk-free interest rate, dividend yield, life of the award, and the volatility of the Company's common stock to estimate the fair value of employee options grants.

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

March 31,

2022

2021

Risk free rate

0.8% - 1.1%

0.2% - 0.3%

Dividend yield

0
%

0
%
Volatility

61.8% - 62.4%

55.2% - 58.1%

Average forfeiture assumptions

2.8%

2.3%

During the nine months ended March 31, ~~2022,~~2023, the Company granted options to purchase ~~944,725~~1,289,675 shares of its common stock to certain of its ~~Directors,~~directors, members of the executive management team, ~~and~~ other employees, and non-employee service providers at exercise prices ranging from ~~$2.64~~$0.81 - ~~$3.39~~$1.89 per share. These options vest in either quarterly or annual periods over one to three years and expire ten years from the date of grant.

A summary of stock option activity for the nine months ended March 31, ~~2022~~2023 and the year ended June 30, ~~2021~~2022 is presented below:

	Number Outstanding			Weighted - Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2020		2,875,894		$	2.74		8.6	$	22,409
Granted		976,924			2.41		—		—
Exercised		(65,990	)		2.48		—		—
Canceled/forfeited/expired		(10,260	)		2.94		—		—
										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		944,725			2.69		—		—		994,725			2.63
Exercised		(38,774	)		2.33		—		—		(38,774	)		2.33
Canceled/forfeited/expired		(67,919	)		2.86		—		—		(95,419	)		2.82
Outstanding at March 31, 2022		4,614,600			2.65		6.8		—
Options vested and exercisable at March 31, 2022		2,966,330			2.72		5.7		—
Options vested and expected to vest as of March 31, 2022		4,609,186		$	2.65		6.8	$	—
Outstanding at June 30, 2022											4,637,100		$	2.64		6.6	$	—
Granted											1,289,675			1.26
Exercised											(1,050	)		0.95
Canceled/forfeited/expired											(844,545	)		2.79
Outstanding at March 31, 2023											5,081,180		$	2.27		7.2	$	459,346

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 ~~outstanding at~~nine months ended March 31, ~~2022~~2023 was ~~$1.13. At~~$0.70. On March 31, ~~2022,~~2023, the Company had ~~$1,414,086~~$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 ~~Plans,~~Equity Incentive Plan, or 2019 Plan, which will be recognized over the weighted average remaining service period of ~~1.9~~ 1.41 years. The Company settles employee stock option exercises with newly issued shares of common stock.

Restricted Stock Units

During the nine months ended March 31, ~~2022,~~2023, the Company issued ~~294,421~~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~~.three-years. The fair value of the awards granted during the nine months ended March 31, 2023 and 2022 totaled $563,446and ~~2021 totaled $829,780 and $714,368,~~$829,780, respectively, and was based on the closing stock price on the date of grants.

~~The Company recorded $807,587 and $640,350 of stock-based compensation expense associated with grants of restricted stock units during the nine months ended March 31, 2022 and 2021, respectively.~~ 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)
Nonvested restricted units outstanding at June 30, 2020		396,803		$	2.33		1.6
Granted		291,206			2.59		1.9
Vested		(326,439	)		2.36		—
Forfeited		—			—		—
								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		294,421			2.82		2.9		304,421			2.78		—
Vested		(361,245	)		2.62		—		(391,036	)		2.62		—
Forfeited		(7,036	)		2.35		—		(7,036	)		2.35		—
Nonvested restricted units outstanding at March 31, 2022		287,710		$	2.69		1.3
Nonvested restricted units outstanding at June 30, 2022									267,919		$	2.66		1.2
Granted									495,196			1.14		1.6
Vested									(224,164	)		2.55		—
Forfeited									(8,750	)		2.50		—
Nonvested restricted units outstanding at March 31, 2023									530,201		$	1.29		1.7

~~Stock-based compensation expense recorded for stock options, restricted stock grants and restricted stock units~~Weighted-average assumptions used in the Black-Scholes-Merton model are set forth below for the periods indicated:


	March 31, 2023		March 31, 2022
Risk free rate	2.9% - 4.4%		0.8% - 1.1%
Dividend yield		—		—
Volatility	64.7% - 66.1%		61.8% - 63.8%
Average forfeiture assumptions	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, ~~totaled $413,293 and $421,814, respectively. Stock-based compensation expense recorded~~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 ~~stock options, restricted stock grants and restricted stock units 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, ~~2022 and 2021, totaled $1,821,808 and $1,303,439, respectively.~~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 12 – SERIES B CONVERTIBLE PREFERRED STOCK

~~On February 18, 2022,~~The terms and conditions of the ~~Company entered into a Securities Purchase Agreement, or the Purchase Agreement, with MFP, pursuant to which the Company sold and issued to MFP, in a private placement, 1,695 shares of its~~Company’s Series B ~~Redeemable~~ Convertible ~~Non-Voting Preferred Stock, par value $0.001 per share, or the Series B~~ Preferred Stock and an accompanying ~~warrant, or~~Warrant are presented in Note 14 to the ~~Warrant, to purchase up to 559,350 shares of~~Consolidated Financial Statements in the Company’s ~~common stock, or the Common Stock, par value $0.001 per share, at a combined unit price of $2,950 per share, or the Stated Value,~~Annual Report on Form 10-K for ~~aggregate gross proceeds of approximately $5.0 million.~~

The Warrant first becomes exercisable on the date that is six months after the date of issuance, at an exercise price of $5.00 per share (subject to adjustment in connection with any stock dividends and splits, distributions with respect to Common Stock and certain fundamental transactions as described in the Warrant) and will expire five years from the date it first becomes exercisable.

The Series B Preferred Stock is initially convertible into shares of Common Stock at the rate of 1,000 shares of Common Stock per share of Series B Preferred Stock, at any time at the option of the holder of such shares, subject to the following limitations: (i) unless a holder was a stockholder of the Company as of February 18, 2022 (in which case such limitation shall not apply), the Company shall not affect any conversion of Series B Preferred Stock to the extent that, after giving effect to an attempted conversion, such holder, together with its affiliates, would beneficially own a number of shares of Common Stock in excess of 4.99% of the total number of shares of Common Stock outstanding immediately after giving effect to the issuance of such shares, which limit may be decreased or increased (not to exceed 19.99%) upon written notice to the Company, with any increase not becoming effective until at least 61 days after such notice; (ii) a holder may not acquire shares of Common Stock upon conversion of Series B Preferred Stock if such conversion would result in the total number of shares of Common Stock issued or issuable upon conversion or exercise of the securities issued pursuant to the Purchase Agreement to exceed 7,777,652 shares, or 19.99% of the outstanding shares of Common Stock as of the date of the Purchase Agreement; and (iii) to the extent Nasdaq Listing Rule 5635(c) is applicable or deemed applicable to a holder, such holder may not acquire shares of Common Stock upon conversion of Series B Preferred Stock that would exceed the maximum number of all shares of Common Stock that could be issued by the Company to such holder without requiring stockholder approval pursuant to Nasdaq Listing Rule 5635(c). Upon receiving shareholder approval of a proposal to be submitted to the shareholders of the Company for the purpose of approving the transactions contemplated by the Purchase Agreement, pursuant to Nasdaq Listing Rules 5635(a), (c) and (d), the foregoing limitations in (ii) and (iii) above shall no longer have any force or effect.

Pursuant to the Purchase Agreement, the Company agreed to use its reasonable best efforts to solicit the approval of its shareholders for the issuance of all shares of Common Stock otherwise issuable upon the conversion of the Series B Preferred Stock, or the Requisite Approval, at the next annual meeting of the Company’s shareholders, and at each annual meeting of shareholders thereafter, if necessary, until the Requisite Approval is obtained.

A holder of Series B Preferred Stock is entitled to receive cumulative cash dividends of 5% per annum, payable semi-annually in arrears on the last day of March and September of each calendar year. In lieu of paying such cash dividends, the Company may elect to add an amount to the Stated Value, provided that the dividend rate shall be 7% per annum, calculated semi-annually in arrears on the last day of March and September of each calendar year. A holder of Series B Preferred Stock is also entitled to receive any dividend declared and paid to holders of the Common Stock as if such Series B Preferred Stock had been converted into Common Stock. In addition, a holder of Series B Preferred Stock is entitled to a liquidation preference equal to the greater of (i) the Stated Value, plus any cash dividends accrued but unpaid thereon, and (ii) the payment such holder would have received had the Series B Preferred Stock been converted into shares of Common Stock immediately prior to such liquidation event.

Unless prohibited by Nevada law governing distributions to stockholders, the Series B Preferred Stock is redeemable, at any time after August 18, 2025, upon written request from the holders of a majority of the outstanding shares of Series B Preferred Stock, at a price equal to the Stated Value, plus any cash dividends accrued but unpaid thereon.

The Series B Preferred Stock is non-voting except with respect to certain matters affecting the Series B Preferred Stock. In addition, the approval of a majority of the outstanding shares of Series B Preferred Stock is required if after February 18, 2022 the Company seeks to issue Common Stock, pursuant to the Sales Agreement, dated September 27, 2021, between the Company and B. Riley Securities, for cumulative gross proceeds in excess of $6.1 million.

Since the holder has the option to redeem their shares of Series B Preferred Stock at any time after August 18, 2025, the stock is considered contingently redeemable and, accordingly, is classified as temporary equity, net of the relative fair value assigned to the warrant of $361,709 recorded in the Statement of Equity, on the Consolidated Balance Sheet as of March 31, 2022. Over the initial 42-month term the $4,638,521 relative fair value of the Series B Preferred Stock will be accreted to its redemption value of $5,000,250. Dividends will be accrued and recognized through retained earnings.

~~The following summarizes changes to our Series B Preferred Stock:~~

Balance at June 30, 2021

$
—

Issuance of preferred stock

$
4,638,521

Dividends accrued

$
40,276

Accretion of discount for warrants

12,919

Balance at March 31, 2022

$
4,691,716

~~NOTE 13 – EQUITY~~

On September 23, 2020, the Company entered into an At Market Issuance Sales Agreement, or the ATM Agreement, with B. Riley Securities, Inc., or B Riley, under which the Company may offer and sell from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $14.0 million through B. Riley as its sales agent. The Company agreed to pay B. Riley a commission of 3.5% of the gross proceeds of the sales price per share of any common stock sold through B. Riley under the ATM Agreement. ~~For~~ the year ended June 30, ~~2021, the Company received gross proceeds~~2022. No issuances or conversions of ~~approximately $10.9 million from the sale of 3,008,015 shares of its common stock pursuant to the ATM Agreement.~~

~~On September 27, 2021, the Company entered into an amendment to the ATM Agreement, under which the aggregate offering price was increased from $14.0 million to $17.1 million.~~ ~~For~~Series B Convertible Preferred Stock occurred during the nine months ended March 31, ~~2022,~~2023. Activity in the ~~Company received gross proceeds~~period consisted of ~~approximately $6.2 million from~~accrual of dividends and accretion of the ~~sale of 2,633,900 shares of its common stock pursuant~~discount on the Warrants.

The following summarizes changes to the ~~ATM Agreement. As of March 31, 2022, the Company had $0 million remaining under the ATM Agreement.~~Series B Convertible Preferred Stock:


Balance at June 30, 2021	$	—
Issuance of preferred stock		4,638,521
Dividends accrued		127,541
Accretion of discount for warrants		38,757
Balance at June 30, 2022	$	4,804,819
Dividends accrued		271,746
Accretion of discount for warrants		77,514
Balance at March 31, 2023	$	5,154,079

On October 14, 2021, the Company entered into a Securities Purchase Agreement with MFP Partners, L.P., or MFP, the Company’s largest stockholder, Starlight 4, LLLP, an entity affiliated with Mark W. Wong, the Company’s Chief Executive Officer and a member of its board of directors, and Alan D. Willits, Charles B. Seidler and Robert Straus, each a member of its board of directors, pursuant to which the Company sold and issued an aggregate of 1,847,343 shares of its common stock at a purchase price of $2.73 per share,

~~for aggregate gross proceeds of approximately $5.0 million.~~ ~~Alexander C. Matina, a member of the Company’s board of directors, is Vice President of Investments of the general partner of MFP.~~

NOTE 1413 - NON-CASH ACTIVITIES FOR STATEMENTS OF CASH FLOWS

The below table represents supplemental information to the Company’s condensed consolidated statements of cash flows for non-cash activities during the nine months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively.


	Nine Months Ended March 31,
	2023			2022
Non-cash investing activities:
ROU assets financed by lease liabilities	$	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		1,894,901			—
Dividends accrued for participating securities		271,746			40,276
Accretion of discount for Series B preferred stock warrants		77,514			12,919

Nine Months Ended
March 31,

2022

2021

Purchases of equipment classified as finance lease

$
(271,524
)

$
(381,464
)
Dividends accrued for participating securities and accretion

$
(53,195
)

$
0

~~NOTE 15 – SUBSEQUENT EVENTS~~

On May 13, 2022, the Company entered into a Fifth Amendment to Loan and Security Agreement with CIBC, which amended the Loan Agreement. Pursuant to the amendment, among other things (i) the total revolving commitment provided under the Loan Agreement has been reduced to $20,000,000, from $25,000,000; (ii) CIBC waived noncompliance with the Company’s fixed charge coverage ratio financial covenant as of March 31, 2022; (iii) the fixed charge coverage ratio financial covenant has been eliminated for future periods after March 31, 2022; and (iv) the minimum liquidity financial covenant has been adjusted to require maintenance of no less than $1,000,000 in Liquidity (as defined in the Loan Agreement) through June 29, 2022 and, thereafter, no less than $2,500,000 for the remainder of the Loan Agreement, in each case tested weekly. Except as modified by the foregoing amendment, all terms and condition of the Loan Agreement remain in full force and effect.

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 ~~on page 2 of~~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, ~~2021,~~2022, particularly in Part I, Item ~~1A,~~1A., “Risk ~~Factors”.~~Factors.”

~~Executive Overview~~Strategic Review

We are a global multi-crop, middle-market agricultural company. We are market leaders in the breeding, production and sale of alfalfa seed and sorghum seed. We also have a commercial market presence in sunflower, wheat and pasture seed and maintain an active stevia development program.

Our seed platform develops and supplies high quality germplasm designed to produce higher yields for farmers worldwide. We sell over 500 seed products in more than 40 countries. We maintain an active product pipeline and expect to introduce more than 20 new products during the 2022-2023 fiscal years.

~~Founded in 1980, we began our operations as a~~ ~~limited producer of non-dormant alfalfa seed varieties bred for warm climates and high-yields, including varieties that can thrive in poor, saline soils. Over the years we~~ ~~have built a diversified, global agricultural platform through a combination of organic growth and strategic acquisitions and collaborations, including:~~

•

Our 2012 acquisition of Imperial Valley Seeds, Inc., which enabled us to expand production of non-GMO alfalfa seed into California's Imperial Valley, thereby ensuring a non-GMO uncontaminated source of alfalfa seed due to the prohibition on growing GMO crops in the Imperial Valley, as well as enabling us to diversify our production areas and distribution channels;

•

~~Our 2012 acquisition of a portfolio of dormant alfalfa germplasm, which launched our entry into the dormant alfalfa market;~~

•

Our 2013 acquisition of Seed Genetics International Pty Ltd (now S&W Seed Company Australia Pty Ltd, or S&W Australia), the leading producer of non-dormant alfalfa seed in South Australia, which made us the largest non-dormant alfalfa seed company in the world, with production capabilities in both hemispheres;

•

Our 2014 acquisition of alfalfa production and research facility assets and conventional (non-GMO) alfalfa germplasm from Pioneer Hi-Bred International, Inc., or Pioneer (now a subsidiary of Corteva Agriscience, Inc., or Corteva), which substantially broadened and improved our dormant alfalfa germplasm portfolio and deepened our production, research and product development capabilities;

•

Our 2016 acquisition of the business and assets of SV Genetics Pty Ltd, a developer of proprietary hybrid sorghum and sunflower seed germplasm, which expanded our crop focus into two areas which we believe have high global growth potential;

•

Our 2018 acquisition of the assets of Chromatin, Inc. and related companies, which positioned us to become a global leader in the hybrid sorghum seed market and enhanced our distribution channels both internationally and within a U.S.-based farmer-dealer network;

•

Our 2018 joint venture with AGT Foods Africa Proprietary Limited and 2019 joint venture with Zaad Holdings Limited, both based in South Africa, each of which were formed to produce our hybrid sunflower, grain sorghum and forage sorghum seed in Africa for sale in Africa, the Middle East and Europe;

•

~~Our 2019 license of commercialized and developmental wheat germplasm from Corteva, through which we entered the largest grain crop market in Australia;~~

•

Our 2020 acquisition of Pasture Genetics Ltd., or Pasture Genetics, the third largest pasture seed company in Australia, which further diversified our product offerings in Australia and strengthened our Australian sales team and distribution relationships;

•

Our 2020 collaboration with ADAMA Ltd., or ADAMA, a subsidiary of China National Chemical Engineering Co Ltd., or ChemChina, to bring to the U.S. sorghum market the DoubleTeam™ grassy weed management system, consisting of ADAMA’s proprietary herbicides and our non-GMO, herbicide tolerant sorghum hybrids; and

•

Our 2020 licensing agreement with The Agricultural Alumni Seed Improvement Association, Inc., an affiliate of Purdue University in West Lafayette, IN, to develop and commercialize worldwide a non-GMO, dhurrin-free trait in sorghum species, which essentially eliminates potential livestock death from hydrogen cyanide poisoning when grazing sorghum.

~~In 2019, we restructured our relationship with Corteva, under which, among other things:~~

•

~~We received $45.0 million in fiscal 2019, $16.7 million in fiscal 2020, and approximately $8.3 million in fiscal 2021.~~

•

Corteva received a fully pre-paid, exclusive license to produce and distribute certain of our alfalfa varieties world-wide (except South America). The licensed varieties include certain of our existing commercial conventional (non-GMO) alfalfa varieties and six pre-commercial dormant alfalfa varieties. Corteva received no license to our other commercial alfalfa varieties or pre-commercial alfalfa pipeline products and no rights to any future products developed by us.

•

~~We assigned to Corteva grower production contract rights, and Corteva assumed grower production contract obligations, related to the licensed and certain other alfalfa varieties.~~

•

Our prior Distribution Agreement, related to conventional (non-GMO) alfalfa varieties, and Contract Alfalfa Production Services Agreement, related to GMO-traited alfalfa varieties, with Corteva both terminated. Under the Distribution Agreement, Corteva was obligated to make minimum annual purchases from us.

As a result of the 2018 Chromatin acquisition, the 2019 restructuring of our relationship with Corteva, and our February 2020 acquisition of Pasture Genetics, we expect that our results of operations for fiscal 2022 and future periods will differ significantly from prior periods as the mix of our product portfolio rebalances away from a reliance on alfalfa sales (sales of alfalfa seed to Corteva totaled $14.2 million and $19.7 million during the year ended June 30, 2021 and 2020) to a more diverse product mix. We do not expect any other significant revenue from sales to Corteva in the future.

~~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 ~~U.S.~~ sorghum technology operations (led by Double Team™, our non-GMO herbicide tolerant sorghum solution), international forage operations, U.S. forage operations and our specialty ~~crop and U.S. alfalfa businesses.~~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 ~~May 11, 2022,~~January 3, 2023, we and Trigall Genetics S.A., or Trigall Genetics, a leader in transgenic wheat, announced ~~that~~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, we ~~have~~ entered into ~~preliminary, nonbinding discussion~~a Contribution and Membership Interest Purchase Agreement, or Shell Partnership Agreement, with Equilon Enterprises LLC (dba Shell Oil Products US, or Shell), relating to ~~potentially combine~~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:

•

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 $13.2 million cash contribution to Vision Bioenergy; (ii) paid $7.0 million to us; and (iii) paid off our ~~respective wheat operations through~~outstanding approximately $6.8 million Rooster Note (as defined below), which was secured by a ~~joint venture~~priority security interest in ~~Australia. While~~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 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 we ~~believe this joint venture could be beneficial~~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 ~~a number of respects, there can be no assurance that these preliminary, nonbinding discussions will result in a consummated transaction.~~

Vision Bioenergy. In addition, we ~~intend~~have a one-time option, exercisable at any time on or before the 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.

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 ~~$5.0 million, including through efforts~~$4.0 to ~~streamline~~5.0 million. In addition to the above partnerships, we have:

•

streamlined our European sunflower operations by closing our facilities in Hungary, which we ~~estimate could result in~~expect to decrease operating expense ~~reductions of~~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

~~The~~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 ~~conflicts~~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 continues to rapidly evolve and cause disruptions in the various markets in which we operate. In addition, although we have not been materially impacted to date, the military conflict in Russia and Ukraine, and related sanctions imposed against Russia, could lead to disruption, instability and volatility in global markets and industries that could negatively impact our operations.

~~The COVID-19 pandemic has~~ negatively impacted our operations and financial ~~results. Beginning~~results in 2021 and ~~continuing into~~ 2022, ~~ongoing strong demand for consumer goods and the effects of COVID-19 mitigation strategies have led~~due to broad-based supply chain disruptions across the U.S. and ~~globally, including inflation on many consumer products, labor shortages~~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 ~~demand outpacing supply.~~collection cycle. In 2023, we experienced a 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 ours. We continue to work closely with our customers, business units, 3^rdthird party contractors and suppliers, and other external business partners to minimize the potential impact on our business.

As the COVID-19 pandemic continues to affect the areas in which we operate, we believe the outbreak has and will continue to 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 ~~outbreak, impact on~~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, ~~2021~~2022 and the ~~three and~~ nine months ended March 31, ~~2022,~~2023, we experienced numerous logistical challenges due to limited availability of trucks for product deliveries, congestion at the ports, and overall ~~rising costs~~volatility of shipping and transportation costs. We expect these logistical challenges to persist throughout fiscal ~~2022,~~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 ~~including~~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 ~~spread of COVID-19 variance~~pandemic or ~~resurgences,~~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 ~~and Cost of Revenue~~

~~Product and Other 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 ~~the COVID-19 pandemic,~~current geopolitical and macroeconomic events, our product revenue has fluctuated, and our ability to recognize revenues within a particular fiscal period has been impacted. We expect our product revenue will fluctuate from period to period as a result of the ~~COVID-19 pandemic.~~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 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 ~~construed~~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.

~~Selling, General and Administrative Expenses~~

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, ~~change~~gains on disposal of intangible assets and equity investments, changes in contingent consideration obligation, interest expense and interest expense ~~in connection with~~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 Conterra Agricultural Capital, LLC, or Conterra.~~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. In the fourth quarter of fiscal year 2017, we recorded a valuation allowance against all of our deferred tax assets. The full valuation allowance was recorded during the fiscal year 2017 as a result of changes to our operating results and futureBased on financial projections, ~~resulting from a decline in export sales to Saudi Arabia. As a result,~~ we do not believe that it is more likely than not that our U.S. deferred tax assets will be ~~realized.~~realized, and a full valuation allowance is recorded against them.

Results of Operations

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

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


	Three Months Ended March 31,
	2023						2022						Change
	$			% of Revenue(1)			$			% of Revenue(1)			$			% Change
Revenue	$	17,662,307			100.0	%	$	23,186,877			100.0	%	$	(5,524,570	)		(23.8	)%
Cost of revenue		13,231,836			74.9	%		20,481,463			88.3	%		(7,249,627	)		(35.4	)%
Gross profit		4,430,471			25.1	%		2,705,414			11.7	%		1,725,057			63.8	%
Operating expenses
Selling, general and administrative expenses		5,990,651			33.9	%		5,582,060			24.1	%		408,591			7.3	%
Research and development expenses		1,208,038			6.8	%		1,904,631			8.2	%		(696,593	)		(36.6	)%
Depreciation and amortization		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		8,343,220			47.2	%		8,916,343			38.5	%		(573,123	)		(6.4	)%
Loss from operations		(3,912,749	)		(22.2	)%		(6,210,929	)		(26.8	)%		2,298,180			(37.0	)%
Other (income) expense
Foreign currency loss		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		—			—			(185,800	)		(0.8	)%		185,800			(100.0	)%
Change in contingent consideration obligation		697,840			4.0	%		246,801			1.1	%		451,039			182.8	%
Interest expense - amortization of debt discount		1,163,533			6.6	%		592,853			2.6	%		570,680			96.3	%
Interest expense, net		—			—			(68,967	)		(0.3	)%		68,967			(100.0	)%
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 ~~Cost~~analysis presented below is concerned with material changes in our results of ~~Revenue~~

~~Revenue for~~operations between the three months ended March 31, ~~2022 was $23.2 million compared to $32.4 million for~~2023 and the three months ended 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 ~~$9.2 million~~year-over-year decrease in revenue ~~for the three months ended March 31, 2022~~ was primarily due to ~~the decrease in product revenue from Pioneer of $8.5 million and~~ a ~~$0.7~~$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 ~~alfalfa revenue~~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 ~~Middle East, Argentina~~United States, and ~~South Africa and pasture products in Australia. During the three months ended March 31, 2022 we recorded no sales to Pioneer, compared to $8.5~~a $0.1 million ~~for the three months ended March 31, 2021.~~

Core Revenue (which we define as total revenue, excluding product revenue attributable to Pioneer) for the three months ended March 31, 2022 was $23.2 million compared to Core Revenue for the three months ended March 31, 2021 of $23.9 million, representing a decrease of $0.7 million or (-3)%. Due to the revised agreements with Pioneer in May 2019, we plan to provide Core Revenue as a metric to track performance of our business until product revenue attributable to our revised agreements with Pioneer is no longer reflected in comparisons between fiscal periods. The decrease in Core Revenue for the three months ended March 31, 2022 can be attributed to primarily to the decrease in pasture products in Australia of $2.6 million, partially offset by an increase in sorghum productservice revenue in the United ~~States by $2.1 million.~~

~~Sales into~~States. Much of this decline in sales to international markets ~~represented 60%~~was due to a wet La Nina spring in Australia and ~~52%~~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 ~~our total~~conventional sorghum. These revenue decreases were partially offset by a $1.5 million increase 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 LATAM region.

Cost of Revenue and Gross Margin

The cost of revenue 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 Double Team sorghum in the United States, reduced lower margin dormant alfalfa sales in the United States, and lower inventory write-downs in fiscal 2023. Inventory write-downs during the three months ended March 31, 2022 and 2021, respectively. Domestic revenue accounted for 40% and 48% of our total revenue for the three months ended March 31, 2022 and 2021, respectively. The decrease in domestic revenue as a percentage of total revenue is primarily attributable2023, decreased to ~~the termination of the Pioneer and Corteva agreement mentioned above.~~

~~The following table shows revenue~~$0.4 million from ~~external sources by destination country:~~

Three Months Ended March 31,

2022

2021

United States

$
9,270,851

40
%

$
15,672,861

48
%
Australia

8,846,660

38
%

11,426,369

35
%
Saudi Arabia

1,168,502

5
%

324,000

1
%
Pakistan

602,060

3
%

444,353

1
%
China

929,335

4
%

1,366,381

4
%
South Africa

265,292

1
%

946,631

3
%
Argentina

—

0
%

—

0
%
Libya

—

0
%

306,000

1
%
Egypt

557,510

2
%

79,890

0
%
Sudan

—

0
%

—

0
%
Other

1,546,667

7
%

1,810,212

7
%
Total

$
23,186,877

100
%

$
32,376,697

100
%

Cost of revenue of $20.5 million for the three months ended March 31, 2022 was equal to 88.3% of total revenue for the three months ended March 31, 2022, while the cost of revenue of $26.2 million for the three months ended March 31, 2021 was equal to 80.9% of total revenue for the three months ended March 31, 2021. Cost of revenue for the three months ended March 31, 2022 and 2021 included inventory write-downs of $1.1 million ~~and $0.3 million, respectively. The write-down~~in the previous year quarter when we experienced a higher level of ~~inventory during the three months ended March 31, 2022 and 2021 related to~~ certain inventory lots that had deteriorated in quality and germination ~~rates during the quarter has been reserved for as an estimated amount that is expected to deteriorate in quality and germination before being saleable.~~rates.

Gross profit margin for the three months ended March 31, 2022 was 11.7% compared to 19.1% for the three months ended March 31, 2021. The decrease in gross margin for the three months ended March 31, 2022 is primarily driven by the increase in inventory reserves, coupled with higher production costs, offset by pasture product sales and higher margins on DoubleTeam™ grain sorghum sales. During the three months ended March 31, 2022, the Company experienced numerous logistical challenges due to limited availability of trucks for product deliveries, congestion at the ports, and overall rising costs increases of shipping and transportation costs. The Company expects these logistical challenges to persist throughout the remainder of fiscal 2022.32

Selling, General and Administrative Expenses

~~Selling, General~~The $0.4 million increase in selling, general and ~~Administrative, or SG&A,~~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 ~~for~~as a result of the ~~three months ended March 31, 2022 totaled $5.6~~accelerated vesting of equity awards of a former executive officer, offset by a $0.3 million ~~compared to $5.8~~decrease in compensation and other employee related expenses and a $0.2 million ~~for the three months ended March 31, 2021. As a percentage of revenue, SG&A expenses were 24.1% for the three months ended March 31, 2022, compared to 17.9% for the three months ended March 31, 2021.~~decrease in other cost reduction efforts.

Research and Development Expenses

~~Research~~The $0.7 million year-over-year decrease in research and development expenses ~~for the three months ended March 31, 2022 totaled $1.9~~is attributable to a $0.2 million ~~compared to $2.4~~reduction in field trial related expenses, a $0.2 million ~~for the three months ended March 31, 2021. We expect that~~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 ~~costs will total approximately $8.0 million for the year ended June 30, 2022.~~expenses.

Depreciation and Amortization

Depreciation and amortization ~~expense for~~expenses decreased by $0.3 million following contributions of intangible and fixed assets to the three months ended March 31, 2022 was $1.4 million compared to $1.3 million for the three months ended March 31, 2021. Included in these amounts was amortization expense for intangible assets, which totaled $0.6 million for the three months ended March 31, 2022Trigall and ~~$0.5 million for the three months ended March 31, 2021.~~Vision Bioenergy partnerships.

Foreign Currency ~~Gain~~Loss

~~We recorded a~~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 ~~$(0.1)~~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 ~~three months ended March 31, 2022 compared~~66% interest plus the proportionate valuation of our retained 34% interest, less the carrying value of the assets we contributed to ~~a loss of $(0.1) million for the three months ended March 31, 2021. The foreign currency gains and losses are primarily associated with S&W Australia and S&W Hungary, our wholly-owned subsidiaries.~~Vision Bioenergy.

Change in Contingent Consideration Obligation

The ~~contingent consideration obligation is considered a level 3 fair value financial instrument and will be measured at each reporting period. The $0.2 million gain~~decrease in benefit to non-cash change in contingent consideration ~~obligation for~~compared to the ~~quarter ended March 31,~~prior year period is due to the February 2022 ~~represents the~~ ~~decrease in the estimated fair value~~final valuation of the contingent consideration obligation ~~associated with~~from the ~~February~~ 2020 acquisition of Pasture Genetics ~~acquisition.~~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

~~Non-cash~~The increased debt amortization expense in the third quarter of ~~debt discount expense for the three months ended March 31, 2022 was $0.2 million~~fiscal 2023 compared to ~~$0.1 million for~~ the ~~three months ended March 31, 2021. The expense in both periods represents~~prior year period was due to the amortization of the ~~debt issuance~~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 ~~working capital facilities, our secured property note, and our equipment capital leases.~~CIBC Credit Facility.

Interest Expense, Net

Interest expense for the three months ended March 31, ~~2022 totaled $0.6 million compared to $0.6 million for the three months ended March 31, 2021. Interest expense for the three months ended March 31, 2022~~2023 and ~~2021~~2022 primarily consisted of interest incurred on the working capital credit facilities, the ~~secured property loan entered into in November 2017,~~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 ~~Taxes~~Tax Benefit

~~Income~~The income tax ~~expense~~provision (benefit) totaled ~~$0.3~~($0.5) million for the three months ended March 31, ~~2022~~2023, compared to a $0.3 million income tax ~~benefit of $0.3 million~~provision for the three months ended March 31, ~~2021.~~2022. Our effective tax rate ~~was (4.65)%~~ for the three months ended March 31, ~~2022 compared~~2023 was (1.7%) due primarily to ~~an effective~~the valuation allowance recorded against substantially all of our U.S. deferred tax ~~rate of 11.8% for the three months ended March 31, 2021. Our~~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 ~~(4.65)%~~(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 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 nine months ended 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 $1.0 million increase in 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 $0.2 million of increased travel expenses.

Research and Development Expenses

The year-over-year decrease in research and development expenses is attributable to $0.6 million in reduced salaries, wages and related employment expenses as a result of management’s cost reduction efforts,$0.4 million in reduced United States field trial related expenses, $0.3 million in reduced consulting and professional 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

Depreciation and amortization expenses decreased by $0.4 million following contributions of intangible and fixed assets to the Trigall and Vision Bioenergy partnerships.

Foreign Currency Loss

The increase in foreign currency loss for 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, as a result of the contribution of 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 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.

Interest Expense, Net

Interest expense for the nine 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 $0.7 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 nine 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 ($0.9) million for the nine months ended March 31, 2023, compared to a $0.4 million income tax provision for the nine months ended March 31, 2022. Our effective tax rate was (4.4%) during the nine months ended March 31, 2023 compared to (1.8)% for the nine months ended March 31, 2022. Our effective tax rate for the nine months ended March 31, 2023 was due primarily to the valuation allowance recorded against substantially all of our deferred tax assets, the tax effects of the partnership with Trigall Genetics entered into during the 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 ~~operating~~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~~

Equity in Loss of Equity Method Investees, Net of Tax

The loss on equity investments of $0.4 million was related to our ~~foreign operations and minor state taxes.~~

~~Nine months ended March 31, 2022 Compared to the Nine Months Ended March 31, 2021~~

~~Revenue~~ ~~and Cost~~proportionate share of ~~Revenue~~

~~Revenue for the nine months ended March 31, 2022 was $51.3 million compared to $61.3 million for the nine months ended March 31, 2021.~~ ~~The $10.0 million decrease~~loss from our 34% interest in revenue for the nine months ended March 31, 2022 was primarily due to the $14.2 million decrease in product revenue received from Pioneer (subsidiary of Corteva), offset by a $4.2 million increase in core product revenue in alfalfa and pasture products. During the nine months ended March 31, 2022 we recorded no sales to Pioneer, compared to $14.2 million for the nine months ended March 31, 2021.

Core Revenue (which we define as total revenue, excluding product revenue attributable to Pioneer) for the nine months ended March 31, 2022 was $51.3 million compared to Core Revenue for the nine months ended March 31, 2021 of $47.1 million, representing an increase of $4.2 million or 8.9%. Due to revised agreements with Pioneer in May 2019, S&W plans to provide Core Revenue as a metric to track performance of our business until product revenue attributable to our revised agreements with Pioneer is no longer reflected in comparisons between fiscal periods. The increase in Core Revenue for the nine months ended March 31, 2022 can be attributed to an increase in sorghum products in the United States, alfalfa revenues in the Middle East, Argentina and the North and South Africa regions and pasture products in Australia.

Sales into international markets represented 70% and 55% of our total revenue during the nine months ended March 31, 2022 and 2021, respectively. Domestic revenue accounted for 30% and 45% of our total revenue for the nine months ended March 31, 2022 and 2021, respectively. The decrease in domestic revenue as a percentage of total revenue was primarily attributable to the termination of the Pioneer and Corteva agreement mentioned above.

~~The following table shows revenue from external sources by destination country:~~

Nine Months Ended March 31,

2022

2021

United States

$
15,340,257

30
%

$
27,773,152

45
%
Australia

14,526,512

28
%

16,268,261

27
%
Saudi Arabia

6,316,258

12
%

2,383,192

4
%
Pakistan

2,833,622

6
%

2,041,548

3
%
China

1,668,044

3
%

1,847,007

3
%
South Africa

1,644,073

3
%

1,923,525

3
%
Argentina

1,409,147

3
%

1,183,667

2
%
Libya

1,088,000

2
%

718,960

1
%
Egypt

959,810

2
%

472,970

1
%
Sudan

819,618

2
%

484,645

1
%
Other

4,744,626

9
%

6,186,487

10
%
Total

$
51,349,967

100
%

$
61,283,414

100
%

Cost of revenue of $43.9 million for the nine months ended March 31, 2022 was equal to 85.4% of total revenue for the nine months ended March 31, 2022, while the cost of revenue of $51.3 million for the nine months ended March 31, 2021 was equal to 83.7% of total revenue for the nine months ended March 31, 2021. Cost of revenue for the nine months ended March 31, 2022 and 2021 included inventory write-downs of $1.9 million and $1.3 million, respectively. The write-down of inventory during the nine months ended March 31, 2022 and 2021, respectively, related to certain inventory lots that deteriorated in quality and germination rates during the period or has been reserved for as an estimated amount that is expected to deteriorate in quality and germination before being saleable.

Total gross profit margin for the nine months ended March 31, 2022 was 14.6% compared to 16.3% in the nine months ended March 31, 2021. The decrease in gross margin for the nine months ended March 31, 2022 is primarily driven by the increase in inventory reserves, coupled with higher production costs, offset by higher margin alfalfa seed, DoubleTeam™ grain sorghum and pasture product sales. During the nine months ended March 31, 2022, the Company experienced numerous logistical challenges due to limited availability of trucks for product deliveries, congestion at the ports, and overall rising costs increases of shipping and transportation costs. The Company expects these logistical challenges to persist throughout the remainder of fiscal 2022.

~~Selling, General and Administrative Expenses~~

SG&A expense for the nine months ended March 31, 2022 totaled $18.3 million compared to $16.4 million for the nine months ended March 31, 2021. The $1.9 million increase in SG&A expense versus the comparable period of the prior year was primarily due to a $0.6 million change in our incentive compensation accruals, $0.7 million incurred for the change in CFO during November 2021, $0.5 million increase in our stock-based compensation and a $0.3 million increase in other expenses including professional fees, travel, rent and salaries and wages. As a percentage of revenue, SG&A expenses were 35.6% for the nine months ended March 31, 2022, compared to 26.8% for the nine months ended March 31, 2021.

~~Research and Development Expenses~~

Research and development expenses for the nine months ended March 31, 2022 totaled $6.0 million compared to $6.5 million for the nine months ended March 31, 2021. We expect that research and development costs will total approximately $8.0 million for the year ended June 30, 2022.

~~Depreciation and Amortization~~

Depreciation and amortization expense for the nine months ended March 31, 2022 was $4.1 million compared to $4.1 million for the nine months ended March 31, 2021. Included in these amounts was amortization expense for intangible assets, which totaled $1.8 million for the nine months ended March 31, 2022 and $1.7 million for the nine months ended March 31, 2021.

~~Foreign Currency Loss~~

We recorded a foreign currency loss of $0.6 million for the nine months ended March 31, 2022 compared to no gain or loss for the nine months ended March 31, 2021. The foreign currency gains and losses are primarily associated with S&W Australia and S&W Hungary, our wholly-owned subsidiaries.

~~Change in Contingent Consideration Obligation~~

The contingent consideration obligation is considered a level 3 fair value financial instrument and will be measured at each reporting period. The $0.7 million benefit to non-cash change in contingent consideration obligation for the nine months ended March 31, 2022 represents the de~~crease in the estimated fair value of the contingent consideration obligation associated with the February 2020 Pasture Genetics acquisition.~~

~~Interest Expense - Amortization of Debt Discount~~

Non-cash amortization of debt discount expense for the nine months ended March 31, 2022 was $0.7 million compared to $0.5 million for the nine months ended March 31, 2021. The expense in both periods represents the amortization of the debt issuance costs associated with our working capital facilities, our secured property note,Vision Bioenergy and our ~~equipment capital leases.~~20% interest in Trigall.

~~Interest Expense~~

Interest expense for the nine months ended March 31, 2022 totaled $1.7 million compared to $1.7 million for the nine months ended March 31, 2021. Interest expense for the nine months ended March 31, 2022 and 2021 primarily consisted of interest incurred on the working capital credit facilities, the secured property loan entered into in November 2017, and equipment capital leases.

~~Provision for Income Taxes~~

Income tax expense totaled $0.4 million for the nine months ended March 31, 2022 compared to income tax benefit of $0.2 million for the nine months ended March 31, 2021. Our effective tax rate was (1.8)% for the nine months ended March 31, 2022 compared to 1.2% for the nine months ended March 31, 2021. Our effective tax rate for the nine months ended March 31, 2022 was (1.8)% due to the valuation allowance recorded against substantially all of our deferred tax assets. Due to the valuation allowance, we do not record the income tax expense or benefit related to substantially all of our current year operating 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.

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, ~~this~~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 ~~the second, third and fourth fiscal quarters based on timing of payments to growers in the second through fourth quarters.~~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 ~~expense~~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 ~~South~~ 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, our debt facilities and issuances of equity securities or debt offerings, among other sources of

capital. Our ~~loan~~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 ~~security~~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 nine months ended March 31, 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 $25.0 million credit facility. The following amendments to the CIBC Loan Agreement occurred during the nine months ended March 31, 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 ~~our secured promissory note with Conterra, which mature~~ (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 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 March 31, 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; and

•

The 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 $21.4 million as of March 31, 2023) to AUD $40.0 million (USD $26.8 million as of March 31, 2023), with a one-year maturity date extension to September 30, 2024;

•

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 $32.8 million as of March 31, 2023) of credit. The NAB finance agreement is guaranteed by S&W Seed Company up to a maximum of AUD $15.0 million (USD $10.0 million as of March 31, 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. 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 March 31, 2023, the Company was in compliance with all NAB Finance Agreement covenants. As of March 31, 2023, approximately AUD $5.3 million (USD $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, ~~respectively,~~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. 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.

Concurrent 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 Creditfrom 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, and is secured by substantially all of 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.

Summary

The CIBC Loan Agreement and our debt facilities with NAB contain various operating and financial covenants. ~~The COVID-19 pandemic~~Adverse geopolitical and ~~other factors affecting our results of operations~~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 ~~or Conterra~~ to invoke default remedies. We were not in compliance with certain ~~of these~~ covenants in the CIBC Loan Agreement as of June 30, 2021, December 31, 2021, ~~and~~ March 31, 2022, June 15, 2022, and June 30, 2022 and were required to obtain waivers and/or amendments from ~~CIBC and Conterra.~~CIBC. In particular, the CIBC Loan Agreement as presently in effect requires us to maintain minimum liquidity of no less than ~~$1,000,000 through June 29, 2022~~$1.0 million and $2,500,000 thereafter, in each case tested weekly. We do not currently expect we will be able to generate sufficient cash flow from operations or maintain sufficient liquidity to meet these covenants in certain periods prior to maturity. We will need to either raise additional capital, secure future waivers and/or amendments from our lenders, obtain financing from new lenders, and/or accomplish some combination of these itemsthe NAB Finance Agreement, as amended, includes an undertaking that requires us to maintain ~~sufficient liquidity. We are actively pursuing refinancing~~a net related entity position of ~~the CIBC loan facility.~~not more than USD $18.5 million.

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.

•

~~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;~~

•

~~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 the COVID-19 pandemic.~~

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, ~~Conterra~~NAB, or our other lenders, ~~renewing or refinancing our existing debt,~~ 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.

~~Below is a summary of our material sources of capital in recent periods:~~

~~Debt Financings~~

~~Loan and Security Agreement with CIBC~~

On December 26, 2019, we entered into a Loan and Security Agreement with CIBC, or the Loan Agreement, which we amended on September 22, 2020, December 30, 2020, May 12, 2021, September 27, 2021 and May 13, 2022. As amended, the Loan Agreement provides for a $20.0 million credit facility, or the CIBC Credit Facility. As of March 31, 2022, there was approximately $2.3 million of unused availability on the CIBC Credit Facility. As of May 13, 2022, we had a combined aggregate of $1.5 million of cash on hand and availability under the CIBC Credit Facility.

~~The key terms of the amended Loan Agreement include the following:~~

•

Advances under the CIBC Credit Facility are to be used: (i) to finance our ongoing working capital requirements; and (ii) for general corporate purposes. We may also use a portion of the CIBC Credit Facility to finance permitted acquisitions and related costs.

•

~~All amounts due and owing, including, but not limited to, accrued and unpaid principal and interest due under the CIBC Credit Facility, will be payable in full on December 23, 2022.~~

•

~~The CIBC Credit Facility is secured by a first priority perfected security interest in substantially all of our assets (subject to certain exceptions), including intellectual property~~.

•

The Loan Agreement contains customary representations and warranties, affirmative and negative covenants and customary events of default that permit CIBC to accelerate our outstanding obligations under the Credit Facility, all as set forth in the Loan Agreement and related documents. The CIBC Credit Facility also contains customary and usual financial covenants imposed by CIBC.

Pursuant to the May 13, 2022 amendment, among other things, (i) the total revolving commitment provided under the Loan Agreement has been reduced to $20,000,000 from $25,000,000; (ii) CIBC waived noncompliance with the Company’s fixed charge coverage ratio financial covenant as of March 31, 2022; (iii) the fixed charge coverage ratio financial covenant has been eliminated for periods after March 31, 2022; (iv) the minimum liquidity financial covenant has been adjusted to require maintenance of no less than $1,000,000 of Liquidity (as defined in the Loan Agreement) (reduced from $3,000,000) through June 29, 2022 and, thereafter, no less than $2,500,000 for the remainder of the Loan Agreement, in each case tested weekly. We were not in compliance with the fixed charge coverage ratio financial covenant as of March 31, 2022; however, pursuant to the May 2022 amendment, we obtained a waiver from CIBC to continue to be in compliance with the financial covenants under the Loan Agreement.

We cannot guarantee that we will be able to comply with our covenants in the Loan Agreement in the future, or secure additional waivers if or when required. If we are unable to comply with or obtain a waiver of any noncompliance under the Loan Agreement, CIBC could declare an event of default or require us to further renegotiate the Loan Agreement on terms that may be significantly less favorable to us, or we may be required to seek additional or alternative financing.

We are actively engaging with potential lenders to refinance the Loan Agreement prior to its maturity on December 23, 2022. However, we cannot assure you that we will succeed in securing such refinancing on commercially reasonable terms, if at all, and

~~whether such terms may be more restrictive than the provisions governing the Loan Agreement~~. In addition, we cannot assure you that we will not experience an event of default or be required to further renegotiate with, or seek additional waivers from, CIBC, including on terms that may be significantly less favorable to us, before we are able to refinance the Loan Agreement, if ever. Any declaration by CIBC of an event of default could significantly harm our liquidity, financial condition, operating results, business, and prospects and cause the price of our securities to decline.

~~Debt Facilities with National Australia Bank~~

At March 31, 2022, S&W Australia has debt facilities with National Australia Bank, or NAB, all of which are guaranteed by S&W Seed Company up to a maximum of AUD $15,000,000 (USD $11,230,500) and cross-guaranteed by S&W Australia.

~~On November 11, 2021,~~ ~~S&W Australia amended its debt facility with NAB pursuant to which:~~

•

the overdraft credit limit under the seasonal credit facility decreased from AUD $3,000,000 (USD $2,160,300 at September 30, 2021) to AUD $2,000,000 (USD $1,497,400 at March 31, 2022). It then further decreased to AUD $1,000,000 (USD $748,700) on April 1, 2022 and will decrease to zero on June 30, 2022;

•

~~the credit limit under the master asset finance facility increased from AUD $2,000,000 (USD $1,440,200~~ ~~at September 30, 2021) to AUD $3,000,000 (USD $2,246,100 at March 31, 2022); and~~

•

~~the month in which annual principal repayments are required on the flexible rate loan was adjusted from November to May of each fiscal year.~~

~~After the amendment, the consolidated debt facilities with NAB provide for up to an aggregate of AUD $41,500,000 (USD $31,071,050) of credit as of March 31, 2021, and include the following~~:

•

S&W Australia finances the purchase of most of its seed inventory from growers pursuant to a seasonal credit facility comprised of two facility lines: (i) an Overdraft Facility having a credit limit of AUD $2,000,000 (USD $1,497,400 at March 31, 2022) and (ii) a Borrowing Base Line having a credit limit of AUD $32,000,000 (USD $23,958,400 at March 31, 2022). The seasonal credit facility expires on March 31, 2022. As of March 31, 2022, the Borrowing Base Line accrued interest on Australian dollar drawings at approximately 3.61% per annum calculated daily. The Overdraft Facility permits S&W Australia to borrow funds on a revolving line of credit up to the credit limit. Interest accrues daily and is calculated by applying the daily interest rate to the balance owing at the end of the day and is payable monthly in arrears. As of March 31, 2022, the Overdraft Facility accrued interest at approximately 5.47% per annum calculated daily. As of March 31, 2022, AUD $32,816,100 (USD $24,569,414) was outstanding under S&W Australia’s seasonal credit facility with NAB. The seasonal credit facility is secured by a fixed and floating lien over all the present and future rights, property, and undertakings of S&W Australia.

•

S&W Australia has a flexible rate loan, or the Term Loan, in the amount of AUD $4,500,000 (USD $3,369,150 at March 31, 2022). Required annual principal payments of AUD $500,000 (USD $374,350 at March 31, 2022) on the Term Loan commenced on November 30, 2020, with the remainder of any unpaid balance becoming due on March 31, 2025. As part of the amendment, the November 2021 repayment was deferred to May 2022, with the remaining repayments due in May of each year. Monthly interest amounts outstanding under the Term Loan will be payable in arrears at a floating rate quoted by NAB for the applicable pricing period, plus 2.6%. The Term Loan is secured by a lien on all the present and future rights, property, and undertakings of S&W Australia.

•

~~S&W Australia was in compliance with all debt covenants under its debt facilities with NAB at March 31, 2022.~~

~~Secured Note with Conterra~~

In November 2017, we entered into a secured note financing transaction with Conterra for $12.5 million in gross proceeds. Pursuant to this transaction, we issued a secured real estate note to Conterra in the principal amount of $10.4 million, which bears interest of

7.75% per annum and is secured by a first priority security interest in the property, plant and fixtures located at our Nampa, Idaho production facilities and our Nampa, Idaho research facilities. We may prepay the secured note, in whole or in part, at any time. In January 2021, the Company completed the sale of its Five Points facility which resulted in the Company making a one-time principal pay-down of $1,706,845 on the secured real estate note. We are required to make our last semi-annual principal and interest payment of approximately $388,045, on July 1, 2022 and a one-time final payment of approximately $7,184,109 on November 30, 2022. We were in compliance with all debt covenants as of March 31, 2022. We are actively engaging with Conterra and potential lenders to refinance the Conterra note prior to the final payment under the Conterra note coming due. However, we cannot assure you that we will succeed in securing such refinancing on commercially reasonable terms, if at all, and whether such terms may be more restrictive than the provisions governing the Conterra note. In addition, we cannot assure you that we will not experience an event of default or be required to further renegotiate with, or see additional waivers from, Conterra, including on terms that may be significantly less favorable to us, before we are able to refinance the Conterra note, if ever.

~~Equity Issuances~~

On September 23, 2020 and as amended on September 27, 2021, we entered into an At Market Issuance Sales Agreement, or the ATM Agreement, with B. Riley Securities, Inc., or B Riley, under which we may offer and sell from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $17.1 million through B. Riley as our sales agent.

~~For the nine months ended March 31, 2022, we received gross proceeds of approximately $6.2 million from the sale of 2,633,900~~

~~shares of our common stock pursuant to the ATM Agreement.~~ For the year ended June 30, 2021, we received gross proceeds of approximately $10.9 million from the sale of 3,008,015 shares of our common stock pursuant to the ATM Agreement. As of March 31, 2022, we had no availability remaining under the ATM Agreement.

On October 14, 2021, we entered into a Securities Purchase Agreement, or the Purchase Agreement, with the purchasers named therein, or the Purchasers, pursuant to which we agreed to sell and issue to the Purchasers an aggregate of~~1,847,343 shares of our common stock, or the Shares, at a purchase price of $2.73 per share, for aggregate gross proceeds of approximately $5.0 million.~~

The Purchasers included MFP Partners, L.P., our largest stockholder, Starlight 4, LLLP, an entity affiliated with Mark W. Wong, our Chief Executive Officer and a member of our board of directors, and Alan D. Willits, Charles B. Seidler and Robert Straus, each a member of our board of directors. Alexander C. Matina, a member of our board of directors, is Vice President of Investments of the general partner of MFP.

On February 18, 2022, we entered into a Securities Purchase Agreement with MFP, pursuant to which we sold and issued to MFP, in a private placement, 1,695 shares of our Series B Redeemable Convertible Non-Voting Preferred Stock, par value $0.001 per share, an accompanying warrant to purchase up to 559,350 shares of our common stock, at a combined unit price of $2,950 per share, for aggregate gross proceeds of approximately $5.0 million.

Summary of Cash Flows

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


	Nine Months Ended March 31,
	2023			2022
Cash flows from operating activities	$	(15,828,395	)	$	(18,006,419	)
Cash flows from investing activities		8,360,648			(569,181	)
Cash flows from financing activities		6,565,494			17,899,513
Effect of exchange rate changes on cash		415,208			290,069
Net decrease in cash and cash equivalents		(487,045	)		(386,018	)
Cash and cash equivalents, beginning of period		2,056,508			3,527,937
Cash and cash equivalents, end of period	$	1,569,463		$	3,141,919

OperatingActivities

Nine Months Ended March 31,

2022

2021

Cash flows from operating activities

$
(18,006,419
)

$
(9,849,361
)
Cash flows from investing activities

(569,181
)

2,091,516

Cash flows from financing activities

17,899,513

6,664,784

Effect of exchange rate changes on cash

290,069

334,478

Net increase (decrease) in cash and cash equivalents

(386,018
)

(758,583
)
Cash and cash equivalents, beginning of period

3,527,937

4,123,094

Cash and cash equivalents, end of period

$
3,141,919

$
3,364,511

For the nine months ended March 31, 2023, operating activities used $15.8 million in cash. Of this, the net loss excluding non-cash items as detailed on the statement of cash flows used $14.3 million in cash and changes in operating assets and liabilities as detailed on the statement of cash flows used $1.6 million in cash. The decrease in cash from changes in operating assets and liabilities was primarily driven by a $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.

~~OperatingActivities~~

For the nine months ended March 31, 2022, operating activities used $18.0 million in cash. Net loss plus and minus the adjustments for non-cash items as detailed on the statement of cash flows used $15.5 million in cash, and changes in operating assets and liabilities as detailed on the statement of cash flows used $2.5 million in cash. The 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 $2.7 million.

Investing Activities

~~For~~Investing activities during the nine months ended March 31, ~~2021, operating activities used $9.8 million in cash. Net loss plus and minus the adjustments for non-cash items as detailed on the statement of cash flows used $12.2~~2023, provided $8.4 million in cash, ~~and changes in operating assets and liabilities as detailed on the statement of cash flows provided $2.3~~which resulted from $7.0 million in ~~cash. The increase~~proceeds from the partnership transaction with Vision Bioenergy, $2.0 million in ~~cash~~proceeds from ~~changes~~the partnership transaction between Trigall and S&W Australia, and $0.4 million in ~~operating assets and liabilities was primarily driven by an increase in accounts payable~~proceeds from the sale of ~~$13.6 million, partially~~our remaining shares of Bioceres stock, offset by ~~a increase~~$0.9 million in ~~accounts receivable of $3.9~~additions to property, plant and equipment for our United States and Australian facilities and $0.1 million ~~an increase~~ in ~~inventory of $1.4 million, a decrease in deferred revenue of $4.4 million and a decrease in accrued expenses and other current liabilities of $2.0 million.~~capital contributions to Trigall.

~~Investing Activities~~

Investing activities during the nine months ended March 31, 2022, used $0.6 million in cash. Additions to property, plant and 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

~~Investing~~Financing activities during the nine months ended March 31, ~~2021~~2023, provided ~~$2.1~~$6.6 million in ~~cash. Proceeds~~cash, consisting of $7.8 million in net borrowings on the working capital lines of credit, $0.3 million of borrowings of long-term debt, and $0.2 million in proceeds from ~~the~~ sale of ~~our Five Points processing facility~~common stock, partially offset by repayments of long-term debt of $1.4 million and ~~the disposal~~debt issuance costs of ~~other property, plant and equipment accounted for $2.9 million of the cash provided in investing activities. We also had additions to property, plant and equipment of $0.8~~$0.3 million.

~~Financing Activities~~

Financing activities during the nine months ended March 31, 2022, provided $17.9 million in cash. During the nine months ended March 31, 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 $3.6 million, partially offset by net repayments of long-term debt of $1.0 million.

Financing activities during the nine months ended March 31, 2021 provided $6.7 million in cash. During the nine months ended March 31, 2021, we had net proceeds from the sale of common stock of $5.1 million, net borrowings on the working capital lines of credit and borrowings of long-term debt of $5.9 million, partially offset by net repayments of long-term debt of $4.2 million.

Inflation Risk

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

~~Off Balance Sheet Arrangements~~

~~We did not have any off-balance sheet arrangements during the three and nine months ended March 31, 2022.~~

Critical Accounting ~~Policies~~Estimates

~~The accounting policies~~This discussion of our financial condition and ~~the use~~results of ~~accounting estimates are set forth in the footnotes to~~operations is based upon our unaudited condensed consolidated financial ~~statements.~~

~~In preparing our~~statements, which are prepared in accordance with GAAP. The preparation of these financial statements we must select and apply various accounting policies. Our most significant policies are described in Note 2 – Summary of Significant Accounting Policies of the footnotes to the consolidated financial statements. In order to apply our accounting policies, we often needrequires us to make estimates, ~~based on~~ judgments ~~about future events. In making such~~and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures. On an ongoing basis, we evaluate our estimates, ~~we rely~~judgments and assumptions. We base our estimates of the carrying value of certain assets and liabilities on historical experience ~~market and other conditions,~~ and on various other assumptions that we believe to be reasonable. ~~However, the~~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 ~~process~~uncertainty and has had or is ~~by its nature uncertain given that estimates depend~~reasonably likely to have a material impact on ~~events over which we may not have control. If market and other conditions change from those that we anticipate,~~ our financial condition or results of ~~operations,~~operations. 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 changes in financial condition may be materially affected. In addition, if our assumptions change, we may need to revise our estimates, or to take other corrective actions, either of which may also have a material effect on our results of operations, financial condition or changes in financial condition. Members of our senior management have discussed the development and selection of our critical accounting estimates, and our disclosure regarding them, with the audit committee of our board of directors, and do so on a regular basis.

We believe that the following estimates have a higher degree of inherent uncertainty and require our most significant judgments. In addition, had we used estimates different from any of these, our results of operations, financial condition or changes in financial condition for the current period could have been materially different from those presented.

~~Goodwill~~

Goodwill is assessed annually for impairment or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit. We adopted Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment, or ASU 2017-04, effective July 1, 2018. This standard eliminates Step 2 from the goodwill impairment test. Instead, we perform our annual or interim goodwill impairment test by comparing the fair value of our one reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

The goodwill balance at March 31, 2022 and June 30, 2021 relates to our February 2020 acquisition of Pasture Genetics. Upon completing the impairment test on our one reporting unit, there was no impairment for the year ended June 30, 2021.

~~Intangible Assets~~

All amortizable intangible assets are assessed for impairment whenever events indicate a possible loss. Such an assessment involves estimating undiscounted cash flows over the remaining useful life of the intangible. If the review indicates that undiscounted cash flows are less than the recorded value of the intangible asset, the carrying amount of the intangible is compared to its fair value, with an impairment loss recognized if the fair value is below carrying value. Fair values are typically estimated using discounted cash flow techniques. Significant changes in key assumptions about the business, market conditions and prospects for which the intangible asset is currently utilized or expected to be utilized could result in an impairment charge.

~~Stock-Based Compensation~~

We account for stock-based compensation in accordance with FASB Accounting Standards Codification Topic 718 Stock Compensation, which establishes accounting for equity instruments exchanged for employee services. Under such provisions, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense, under the straight-line method, over the employee’s requisite service period (generally the vesting period of the equity grant).

We account for equity instruments, including stock options issued to non-employees, in accordance with authoritative guidance for equity-based payments to non-employees (FASB ASC 505-50). Stock options issued to non-employees are accounted for at their estimated fair value. The fair value of options granted to non-employees is re-measured as they vest.

We utilize the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under share-based compensation plans. The Black-Scholes-Merton model requires us to estimate a variety of factors including, but not limited to, the expected term of the award, stock price volatility, dividend rate, risk-free interest rate. The input factors to use in the valuation model are based on subjective future expectations combined with management judgment. The expected term used represents the weighted-average period that the stock options are expected to be outstanding. We have used the historical volatility for our stock for the expected volatility assumption required in the model, as it is more representative of future stock price trends. We use a risk-free interest rate that is based on the implied yield available on U.S. Treasury issued with an equivalent remaining term at the time of grant. We have not paid dividends in the past and currently do not plan to pay any dividends in the foreseeable future, and as such, dividend yield is assumed to be zero for the purposes of valuing the stock options granted. We evaluate the assumptions used to value stock awards on a quarterly basis. If factors change, and we employ different assumptions, share-based compensation expense may differ significantly from what we have recorded in the past. When there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense. To the extent that we grant additional equity securities to employees, our share-based compensation expense will be increased by the additional unearned compensation resulting from those additional grants.

~~Income Taxes~~

We regularly assess the likelihood that deferred tax assets will be recovered from future taxable income. To the extent management believes that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established. When a valuation allowance is established or increased, an income tax charge is included in the consolidated financial statements and net deferred tax assets are adjusted accordingly. Changes in tax laws, statutory tax rates and estimates of our future taxable income levels could result in actual realization of the deferred tax assets being materially different from the amounts provided for in the consolidated

financial statements. If the actual recovery amount of the deferred tax asset is less than anticipated, we would be required to write-off the remaining deferred tax asset and increase the tax provision, resulting in a reduction of earnings and stockholders’ equity.

~~Inventories~~

All inventories are accounted for on a lower of cost or net realizable value. Inventories consist of raw materials and finished goods. Depending on market conditions, the actual amount received on sale could differ from our estimated value of inventory. In order to determine the value of inventory at the balance sheet date, we evaluate a number of factors to determine the adequacy of provisions for inventory. The factors include the age of inventory, the amount of inventory held by type, future demand for products and the expected future selling price we expect to realize by selling the inventory. Our estimates are judgmental in nature and are made at a point in time, using available information, expected business plans and expected market conditions. We perform a review of our inventory by product line on a quarterly basis.

operations. During the nine months ended March 31, ~~2022,~~2023, there were changes in our critical accounting estimates related to the Vision Bioenergy partnership transaction affecting the below financial statement line items:

Other Assets

The Purchase Option we ~~recognized~~received in connection with the Vision Bioenergy partnership transaction (referenced in Note 2) is currently valued at $0.6 million using a ~~write-down~~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 ~~inventory~~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 ~~amount~~partnership and on current and future payments and contributions to us and to the partnership by Shell. The valuation of ~~$1.9 million which is~~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 ~~Cost of Revenue in~~our Annual Report on Form 10-K for the ~~Consolidated Statement of Operations. The write-down of inventory during~~year ended June 30, 2022, as filed with the ~~nine months ended March 31, 2022 was primarily related to certain inventory lots that deteriorated in quality / germination rates during the period~~ ~~or has been reserved for as an estimated amount that is expected to deteriorate in quality and germination before being saleable~~SEC on September 28, 2022..

During the nine months ended March 31, 2021, we recognized a write-down of inventory in the amount of $1.3 million which is included in Cost of Revenue in the Consolidated Statement of Operations. The write-down of inventory during the nine months ended March 31, 2021 was primarily related to certain inventory lots that deteriorated in quality / germination rates during the period.

~~Allowance for Doubtful Accounts~~

We regularly assess the collectability of receivables and provide an allowance for doubtful trade receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer’s trade accounts receivable.41Our estimates are judgmental in nature and are made at a point in time. Management believes the allowance for doubtful accounts is appropriate to cover anticipated losses in our accounts receivable under current conditions; however, unexpected, significant deterioration in any of the factors mentioned above or in general economic conditions could materially change these expectations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk.~~

We are a smaller reporting company and, therefore, we are not required to provide information ~~required by~~typically disclosed under this ~~item of Form 10-Q.~~item.

Item 4. Controls and Procedures.

~~Item 4.~~

~~Controls and Procedures.~~

Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, ~~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 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.

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.

~~Legal Proceedings.~~

~~None.~~

Item 1A. Risk Factors.

~~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.

~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

~~None.~~

Item 3. Defaults Upon Senior Securities.

None.

~~Defaults Upon Senior Securities.~~

~~None.~~

Item 4. Mine Safety Disclosures.

~~Item 4.~~

~~Mine Safety Disclosures.~~

Not applicable.

~~Item 5.~~

~~Other Information.~~

On May 13, 2022, we entered into a Fifth Amendment to Loan and Security Agreement with CIBC, which amended the Loan Agreement. Pursuant to the amendment, among other things (i) the total revolving commitment provided under the Loan Agreement has been reduced to $20,000,000 from $25,000,000; (ii) CIBC waived noncompliance with our fixed charge coverage ratio financial covenant as of March 31, 2022; (iii) the fixed charge coverage ratio financial covenant has been eliminated for future periods after March 31, 2022; and (iv) the minimum liquidity financial covenant has been adjusted to require maintenance of no less than $1,000,000 in Liquidity (as defined in the Loan Agreement) through June 29, 2022 and, thereafter, no less than $2,500,000 for the remainder of the Loan Agreement, in each case tested weekly. Except as modified by the foregoing amendment, all terms and condition of the Loan Agreement remain in full force and effect.Item 5. Other Information.

None.

Item 6. Exhibits.

~~Exhibits.~~


Exhibit No.		Description

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

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

3.3⁽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⁾(4)		Form of Common Stock Certificate.

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

~~10.1~~⁽⁶⁾4.4(6)		~~Securities~~Common Stock Purchase ~~Agreement, dated February 18, 2022, by and among the Registrant and~~Warrant issued to MFP Partners, L.P. ~~(“MFP”)~~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.

4.7		Common Stock Purchase Warrant issued to MFP Partners, L.P. on March 22, 2023.

~~10.2~~⁽⁷⁾10.1 †+(9)		~~Registration Rights~~Contribution and Membership Interest Purchase Agreement, dated February ~~18, 2022,~~6, 2023, by and ~~among the Registrant~~between S&W Seed Company and ~~MFP.~~Equilon Enterprises LLC (dba Shell Oil Products US).

~~10.3~~10.2†		~~Fifth~~Amendment and Restated Loan and Security Agreement, dated March 22, 2023, by and among S&W Seed Company and CIBC Bank USA.

10.3		Third Amendment to Loan and Security Agreement, dated ~~May 13, 2022,~~March 22, 2023, by and among ~~the Registrant,~~S&W Seed ~~Holding, LLC, Stevia California, LLC~~Company and ~~CIBC Bank USA.~~MFP Partners, L.P..

~~31.1~~10.4		Amendment Deed, dated February 8, 2023, by and between National Australia Bank Limited and S&W Seed Company 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.LAB~~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

~~101.DEF~~104		~~Inline XBRL Taxonomy Extension Definition 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).~~

(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.

†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 exhibit will be furnished to the Securities and Exchange Commission or its staff upon request.

+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.

~~Incorporated by reference to Exhibit 3.3 to the Registrant’s Quarterly Statement 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 10.1 to the Registrant’s Current Report on Form 8-K, filed on February 23, 2022 (File No. 001-34719).~~

~~(7)~~

~~Incorporated by reference to Exhibit 10.2 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.

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: May ~~16, 2022~~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)

4846


ASSETS	March 31, 2022			June 30, 2021				March 31, 2023			June 30, 2022
CURRENT ASSETS							CURRENT ASSETS
Cash and cash equivalents	$	3,141,919		$	3,527,937			$	1,569,463		$	2,056,508
Accounts receivable, net		23,559,952			19,389,213				20,424,589			19,051,236
Inventories, net		71,917,710			63,395,256				55,666,627			54,515,894
Prepaid expenses and other current assets		1,181,307			1,555,530				10,748,580			1,605,987
TOTAL CURRENT ASSETS		99,800,888			87,867,936				88,409,259			77,229,625
Property, plant and equipment, net		17,466,927			17,740,974				10,241,685			16,871,669
Intangibles, net		35,303,431			37,130,942				30,328,212			34,095,827
Goodwill		1,649,211			1,651,634
Right of use assets - operating leases									3,344,109			4,094,253
Equity method investments									24,121,771			367,970
Other assets		5,936,816			7,079,490				2,038,618			1,128,507
TOTAL ASSETS	$	160,157,273		$	151,470,976			$	158,483,654		$	133,787,851
LIABILITIES, SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	25,004,563		$	15,947,918			$	17,441,428		$	15,901,116
Deferred revenue		3,056,588			385,328				1,411,651			605,960
Accrued expenses and other current liabilities		9,497,053			9,134,869				8,686,623			10,788,740
Current portion of working capital lines of credit, net		13,678,143			33,946,565				42,783,136			12,678,897
Current portion of long-term debt, net		8,424,681			1,681,166				1,058,051			8,316,783
TOTAL CURRENT LIABILITIES		59,661,028			61,095,846				71,380,889			48,291,496
Long-term working capital lines of credit, less current portion		23,590,666			0				—			21,703,286
Long-term debt, net, less current portion		4,966,090			11,590,500				3,648,732			3,992,540
Contingent consideration obligation		0			741,552
Other non-current liabilities		3,430,750			3,649,885				2,575,442			3,587,041
TOTAL LIABILITIES		91,648,534			77,077,783				77,605,063			77,574,363
SERIES B CONVERTIBLE PREFERRED STOCK
Preferred stock, $0.001 par value; 3,323 shares authorized; 1,695 shares issued and outstanding		4,691,716			0
TOTAL SERIES B CONVERTIBLE PREFERRED STOCK		4,691,716			0
MEZZANINE EQUITY
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									5,154,079			4,804,819
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 41,565,768 issued and 41,540,768 outstanding at March 31, 2022; 36,772,983 issued and 36,747,983 outstanding at June 30, 2021;		41,566			36,773
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		162,342,148			149,684,357				167,297,153			163,892,575
Accumulated deficit		(92,865,104	)		(69,311,909	)			(84,598,398	)		(105,873,557	)
Accumulated other comprehensive loss		(5,578,324	)		(5,850,826	)			(6,908,157	)		(6,560,600	)
Noncontrolling interests		10,933			(31,006	)
Non-controlling interests									25,196			41,838
TOTAL STOCKHOLDERS' EQUITY		63,817,023			74,393,193				75,724,512			51,408,669
TOTAL LIABILITIES, SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY	$	160,157,273		$	151,470,976
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY								$	158,483,654		$	133,787,851


	Nine Months Ended March 31,						Nine Months Ended March 31,
	2022			2021			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(23,458,061	)	$	(17,430,206	)
Adjustments to reconcile net loss from operating activities to net
cash used in operating activities
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		1,821,808			1,303,439			1,382,895			1,821,808
Change in allowance for doubtful accounts		200,458			(234,270	)
Allowance for doubtful accounts								(76,575	)		200,458
Inventory write-down		1,877,229			1,253,073			1,125,715			1,877,229
Depreciation and amortization		4,084,554			4,126,776			3,697,544			4,084,554
Loss (gain) on disposal of property, plant and equipment		13,957			(1,353,415	)
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	)		—
Equity in loss of equity method investees, net of tax								406,678			—
Government grant income								(1,444,044	)		—
Change in deferred tax provision								(915,449	)		—
Change in foreign exchange contracts		46,157			(94,123	)		(167,688	)		46,157
Foreign currency transactions								(1,320,052	)		—
Change in contingent consideration obligation		(714,429	)		(248,092	)		—			(714,429	)
Amortization of debt discount		660,191			501,601			1,559,595			660,191
Changes in:								—
Accounts receivable		(4,272,470	)		(3,934,992	)		(347,874	)		(4,272,470	)
Unbilled accounts receivable								(149,735	)		—
Inventories		(10,256,441	)		(1,410,638	)		(2,961,203	)		(10,256,441	)
Prepaid expenses and other current assets		363,963			475,607			1,470,258			363,963
Other non-current asset		(152,621	)		53,924
Other non-current assets								(786,506	)		(152,621	)
Accounts payable		8,866,376			13,560,980			1,868,140			8,866,376
Deferred revenue		2,670,287			(4,425,381	)		806,691			2,670,287
Accrued expenses and other current liabilities		360,147			(1,951,704	)		(1,438,490	)		360,147
Other non-current liabilities		(117,524	)		(41,940	)		(27,198	)		(117,524	)
Net cash used in operating activities		(18,006,419	)		(9,849,361	)		(15,828,395	)		(18,006,419	)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(1,637,547	)		(772,531	)		(925,747	)		(1,637,547	)
Proceeds from disposal of property, plant and equipment		79,862			643,194			6,292			79,862
Net proceeds from sale of marketable securities		988,504			0
Proceeds from sale of assets held for sale		0			2,229,352
Acquisition of germplasm		0			(8,499	)
Net cash (used in) provided by investing activities		(569,181	)		2,091,516
Net proceeds from sale of equity investment								400,000			988,504
Proceeds from partnership transaction								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								8,360,648			(569,181	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of common stock		10,657,775			5,127,917			152,750			10,657,775
Net proceeds from sale of preferred stock		5,000,250			—
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		(178,727	)		(76,392	)		(25,663	)		(178,727	)
Borrowings and repayments on lines of credit, net		2,757,274			5,744,377			7,825,838			2,757,274
Borrowings of long-term debt		860,801			152,200			298,694			860,801
Debt issuance costs		(169,901	)		(93,670	)		(324,629	)		(169,901	)
Repayments of long-term debt		(1,027,959	)		(4,189,648	)		(1,361,496	)		(1,027,959	)
Net cash provided by financing activities		17,899,513			6,664,784			6,565,494			17,899,513
EFFECT OF EXCHANGE RATE CHANGES ON CASH		290,069			334,478			415,208			290,069
NET DECREASE IN CASH & CASH EQUIVALENTS		(386,018	)		(758,583	)		(487,045	)		(386,018	)
CASH AND CASH EQUIVALENTS, beginning of the period	$	3,527,937		$	4,123,094			2,056,508			3,527,937
CASH AND CASH EQUIVALENTS, end of period	$	3,141,919		$	3,364,511		$	1,569,463		$	3,141,919
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	1,916,894		$	2,160,742
Income taxes		278,095			244,062


Fiscal Year	Operating Leases			Finance Leases
Remainder of 2023	$	359,999		$	126,830
2024		1,387,727			367,055
2025		978,126			144,272
2026		641,966			51,829
2027		400,807			-
Thereafter		102,974			-
Total lease payments		3,871,599			689,986
Less: Interest		(280,074	)		(40,845	)
Present value of lease liabilities	$	3,591,525		$	649,141


PART I.	FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements (Unaudited):	4
	Condensed Consolidated Balance Sheets at March 31, ~~2022~~2023 and June 30, ~~2021~~2022	4
	Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended March 31, ~~2022~~2023 and ~~2021~~2022	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Nine Months Ended March 31, ~~2022~~2023 and ~~2021~~2022	6
	Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity for the Three Months and Nine Months Ended March 31, ~~2022~~2023 and ~~2021~~2022	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended 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	2928
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4442
Item 4.	Controls and Procedures	4442
PART II.	OTHER INFORMATION	4543
Item 1.	Legal Proceedings	4543
Item 1A.	Risk Factors	4543
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4543
Item 3.	Defaults Upon Senior Securities	4543
Item 4.	Mine Safety Disclosures	4543
Item 5.	Other Information	4543
Item 6.	Exhibits	4644

	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Noncontrolling			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Interests			Loss			Equity
Balance, December 31, 2020		—		—		34,189,660	$	34,190		(25,000	)	$	(134,196	)	$	140,028,674		$	(65,780,154	)		(62,365	)	$	(5,577,458	)	$	68,508,691
Stock-based compensation - options, restricted stock, and RSUs		—		—		—		—		—			—			421,814			—			—			—			421,814
Net issuance to settle RSUs		—		—		20,718		21		—			—			(28,727	)		—			—			—			(28,706	)
Proceeds from sale of common stock, net of fees and expenses		—		—		1,080,902		1,081		—			—			3,740,910			—			—			—			3,741,991
Other comprehensive income		—		—		—		—		—			—			—			—			—			36,875			36,875
Net loss		—		—		—		—		—			—			—			(1,847,292	)		(1,796	)		—			(1,849,088	)
Balance, March 31, 2021		—	$	—		35,291,280	$	35,291		(25,000	)	$	(134,196	)	$	144,162,671		$	(67,627,446	)	$	(64,161	)	$	(5,540,583	)	$	70,831,576

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 - options, restricted stock, and RSUs		—		—		—		—		—			—			413,293			—			—			—			413,293
Series B Detachable Warrant		—		—		—		—		—			—			361,729			(12,919	)		—			—			348,810
Accrued dividends on Series B Convertible Preferred Stock		—		—		—		—		—			—			—			(40,276	)		—			—			(40,276	)
Net issuance to settle RSUs		—		—		18,056		18		—			—			(20,458	)		—			—			—			(20,440	)
Proceeds from sale of common stock, net of fees and expenses		—		—		2,633,052		2,633		—			—			5,734,449			—			—			—			5,737,082
Other comprehensive income		—		—		—		—		—			—			—			—			—			480,280			480,280
Net loss		—		—		—		—		—			—			—			(7,304,923	)		42,668			—			(7,262,255	)
Balance, March 31, 2022		—	$	—		41,565,768	$	41,566		(25,000	)	$	(134,196	)	$	162,342,148		$	(92,865,104	)	$	10,933		$	(5,578,324	)	$	63,817,023

	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Noncontrolling			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Interests			Loss			Equity
Balance, June 30, 2020		—		—		33,457,861	$	33,458		(25,000	)	$	(134,196	)	$	137,809,540		$	(50,140,942	)		(120,459	)	$	(6,111,424	)	$	81,335,977
Stock-based compensation - options, restricted stock, and RSUs		—		—		—		—		—			—			1,303,439			—			—			—			1,303,439
Net issuance to settle RSUs		—		—		253,199		253		—			—			(76,645	)		—			—			—			(76,392	)
Proceeds from sale of common stock, net of fees and expenses		—		—		1,580,220		1,580		—			—			5,126,337			—			—			—			5,127,917
Other comprehensive income		—		—		—		—		—			—			—			—			—			570,841			570,841
Net income (loss)		—		—		—		—		—			—			—			(17,486,504	)		56,298			—			(17,430,206	)
Balance, March 31, 2021		—	$	—		35,291,280	$	35,291		(25,000	)	$	(134,196	)	$	144,162,671		$	(67,627,446	)	$	(64,161	)	$	(5,540,583	)	$	70,831,576

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
Stock-based compensation - options, restricted stock, and RSUs		—		—		—		—		—			—			1,821,808			—			—			—			1,821,808
Series B Detachable Warrant		—		—		—		—		—			—			361,729			(12,919	)		—			—			348,810
Accrued dividends on Series B Convertible Preferred Stock		—		—		—		—		—			—			—			(40,276	)		—			—			(40,276	)
Net issuance to settle RSUs		—		—		311,542		312		—			—			(179,039	)		—			—			—			(178,727	)
Proceeds from sale of common stock, net of fees and expenses		—		—		4,481,243		4,481		—			—			10,653,293			—			—			—			10,657,774
Other comprehensive income		—		—		—		—		—			—			—			—			—			272,502			272,502
Net loss		—		—		—		—		—			—			—			(23,500,000	)		41,939			—			(23,458,061	)
Balance, March 31, 2022		—	$	—		41,565,768	$	41,566		(25,000	)	$	(134,196	)	$	162,342,148		$	(92,865,104	)	$	10,933		$	(5,578,324	)	$	63,817,023


	Mezzanine Equity				Shareholders' Equity
	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Non- controlling			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Interests			Loss			Equity
Balance, December 31, 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		—		—		—		—		—			—			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		—		—		18,056		18		—			—			(20,458	)		—			—			—			(20,440	)
Proceeds from sale of common stock, net of expenses		—		—		2,633,052		2,633		—			—			5,734,449			—			—			—			5,737,082
Other comprehensive income (loss)		—		—		—		—		—			—			—			—			—			480,280			480,280
Net (loss) income		—		—		—		—		—			—			—			(7,304,923	)		42,668			—			(7,262,255	)
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, 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		—		—		—		—		—			—			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	)
Accrued dividends on Series B convertible preferred stock		—		95,299		—		—		—			—			—			(95,299	)		—			—			(95,299	)
Subordinated loan & security agreement warrants		—		—		—		—		—			—			1,092,000			—			—			—			1,092,000
Net issuance to settle RSUs		—		—		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)		—		—		—		—		—			—			—			—			—			(172,782	)		(172,782	)
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
	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Non- controlling			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Interests			Loss			Equity
Balance, June 30, 2021		—	$	—		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		—		—		—		—		—			—			1,821,808			—			—			—			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		—		—		311,542		312		—			—			(179,039	)		—			—			—			(178,727	)
Proceeds from sale of common stock, net of expenses		—		—		4,481,243		4,481		—			—			10,653,293			—			—			—			10,657,774
Other comprehensive income		—		—		—		—		—			—			—			—			—			272,502			272,502
Net loss		—		—		—		—		—			—			—			(23,500,000	)		41,939			—			(23,458,061	)
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
Stock-based compensation		—		—		—		—		—			—			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		—		77,514		—		—		—			—			—			(77,514	)		—			—			(77,514	)
Accrued dividends on Series B convertible preferred stock		—		271,746		—		—		—			—			—			(271,746	)		—			—			(271,746	)
Subordinated loan & security agreement warrants		—		—		—		—		—			—			1,894,901			—			—			—			1,894,901
Net issuance to settle RSUs		—		—		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		—		—		—		—		—			—			—			—			—			(347,557	)		(347,557	)
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

Leases	Income Statement Classification	Three Months Ended March 31, 2022		Nine Months Ended March 31, 2022
Operating lease cost	Cost of revenue	$	172,582	$	527,354
Operating lease cost	Selling, general and administrative expenses		82,043		235,868
Operating lease cost	Research and development expenses		122,280		312,341
Finance lease cost	Depreciation and amortization		183,261		533,877
Total lease costs		$	560,166	$	1,609,440

	Operating Leases			Finance Leases
Remainder of 2022	$	429,195		$	271,001
2023		1,254,993			956,902
2024		1,153,370			375,811
2025		811,971			109,016
2026		726,553			23,816
After 2026		505,569			—
Total lease payments		4,881,651			1,736,546
Less: Interest		(378,436	)		(118,038	)
Present value of lease liabilities	$	4,503,215		$	1,618,508

Operating lease remaining lease term	4.3 years
Operating lease discount rate		4.09	%
Finance lease remaining lease term	1.8 years
Finance lease discount rate		5.09	%
Cash paid for operating leases	$	859,713
Cash paid for finance leases	$	1,244,746

	Balance at July 1, 2021		Additions		Impairment		Amortization			Currency Translation Adjustment			Balance at March 31, 2022
Trade name	$	1,310,489	$	0	$	0	$	(152,569	)	$	(2,289	)	$	1,155,631
Customer relationships		6,302,591		0		0		(281,047	)		(13,754	)		6,007,790
Non-compete		5,058		0		0		(5,058	)		0			0
GI customer list		50,146		0		0		(5,373	)		0			44,773
Supply agreement		850,874		0		0		(56,725	)		0			794,149
Grower relationships		1,436,988		0		0		(79,055	)		0			1,357,933
Intellectual property		24,427,857		0		0		(1,044,266	)		0			23,383,591
License agreement		2,340,269		0		0		(129,612	)		(6,930	)		2,203,727
Internal use software		406,670		0		0		(50,833	)		0			355,837
	$	37,130,942	$	0	$	0	$	(1,804,538	)	$	(22,973	)	$	35,303,431

	Balance at July 1, 2020		Additions			Impairment		Amortization			Currency Translation Adjustment		Balance at June 30, 2021
Trade name	$	1,479,278	$	0		$	0	$	(206,311	)	$	37,522	$	1,310,489
Customer relationships		6,187,086		0			0		(376,431	)		491,936		6,302,591
Non-compete		21,312		0			0		(16,254	)		0		5,058
GI customer list		57,310		0			0		(7,164	)		0		50,146
Supply agreement		926,507		0					(75,633	)		0		850,874
Grower relationships		1,542,393		0			0		(105,405	)		0		1,436,988
Intellectual property		25,415,665		388,499			0		(1,376,307	)		0		24,427,857
In process research and development		380,000		(380,000	)		0		—			0		0
License agreement		2,300,059		0			0		(176,646	)		216,856		2,340,269
Internal use software		474,448		0			0		(67,778	)		0		406,670
	$	38,784,058	$	8,499		$	0	$	(2,407,929	)	$	746,314	$	37,130,942

Fiscal Year	Amount
Remaining in 2022	$	685,513
2023		8,502,505
2024		1,076,166
2025		2,596,971
2026		300,969
Thereafter		287,171
Total	$	13,449,295

	March 31,
	2022			2021
Risk free rate	0.8% - 1.1%			0.2% - 0.3%
Dividend yield		0	%		0	%
Volatility	61.8% - 62.4%			55.2% - 58.1%
Average forfeiture assumptions	2.8%			2.3%

	Nine Months Ended March 31,
	2022			2021
Purchases of equipment classified as finance lease	$	(271,524	)	$	(381,464	)
Dividends accrued for participating securities and accretion	$	(53,195	)	$	0