Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2018 | Feb. 12, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | S&W Seed Co | |
Entity Central Index Key | 1,477,246 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 33,271,678 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Oct. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
CURRENT ASSETS | |||||
Cash and cash equivalents | $ 2,471,381 | $ 4,320,894 | $ 5,454,694 | $ 745,001 | |
Accounts receivable, net | 23,178,997 | 13,861,932 | |||
Unbilled accounts receivable, net | 11,206,984 | 0 | |||
Inventories, net | 88,455,980 | 60,419,276 | |||
Prepaid expenses and other current assets | 1,158,738 | 1,279,794 | |||
Assets held for sale | 1,930,400 | $ 1,930,400 | 0 | ||
TOTAL CURRENT ASSETS | 128,402,480 | 79,881,896 | |||
Property, plant and equipment, net | 22,731,765 | 13,180,132 | |||
Intangibles, net | 39,823,195 | 33,109,780 | |||
Goodwill | 11,865,811 | $ 1,573,546 | 10,292,265 | 10,292,265 | |
Other assets | 1,302,705 | 1,303,135 | |||
TOTAL ASSETS | 204,125,956 | 137,767,208 | |||
CURRENT LIABILITIES | |||||
Accounts payable | 31,594,475 | 5,935,454 | |||
Deferred revenue | 2,443,574 | 212,393 | |||
Accrued expenses and other current liabilities | 3,471,881 | 3,114,799 | |||
Lines of credit, net | 46,310,464 | 32,630,559 | |||
Current portion of long-term debt | 991,140 | 503,012 | |||
TOTAL CURRENT LIABILITIES | 84,811,534 | 42,396,217 | |||
Long-term debt, less current portion | 12,264,273 | 12,977,087 | |||
Other non-current liabilities | 656,994 | 651,780 | |||
TOTAL LIABILITIES | 97,732,801 | 56,025,084 | |||
STOCKHOLDERS' EQUITY | |||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding | 0 | 0 | |||
Common stock, $0.001 par value; 50,000,000 shares authorized; 33,246,141 issued and 33,221,141 outstanding at December 31, 2018; 24,367,906 issued and 24,342,906 outstanding at June 30, 2018 | 33,246 | 24,367 | |||
Treasury stock, at cost, 25,000 shares | (134,196) | (134,196) | |||
Additional paid-in capital | 136,495,216 | 108,803,991 | |||
Accumulated deficit | (23,906,501) | (21,161,376) | |||
Accumulated other comprehensive loss | (6,116,283) | (5,790,662) | |||
Noncontrolling interests | 21,673 | 0 | |||
TOTAL STOCKHOLDERS' EQUITY | 106,393,155 | 81,742,124 | $ 84,381,553 | $ 61,221,655 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 204,125,956 | $ 137,767,208 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Jun. 30, 2018 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 33,246,141 | 24,367,906 |
Common stock, shares outstanding | 33,221,141 | 24,342,906 |
Treasury stock, shares | 25,000 | 25,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 18,580,996 | $ 20,532,796 | $ 44,701,133 | $ 31,244,512 |
Type of Revenue [Extensible List] | Other product sales | Other product sales | Other product sales | Other product sales |
Cost of revenue | $ 13,897,455 | $ 15,860,629 | $ 34,554,463 | $ 24,236,757 |
Gross profit | 4,683,541 | 4,672,167 | 10,146,670 | 7,007,755 |
Operating expenses | ||||
Selling, general and administrative expenses | 4,342,696 | 2,446,955 | 7,230,074 | 5,361,035 |
Research and development expenses | 1,373,554 | 855,164 | 2,365,667 | 1,597,081 |
Depreciation and amortization | 1,035,606 | 870,981 | 1,890,714 | 1,759,233 |
Disposal of property, plant and equipment gain | 3,463 | (15,413) | 3,463 | (81,776) |
Total operating expenses | 6,755,319 | 4,157,687 | 11,489,918 | 8,635,573 |
Income (loss) from operations | (2,071,778) | 514,480 | (1,343,248) | (1,627,818) |
Other expense | ||||
Foreign currency (gain) loss | (32,987) | 7,472 | (58,430) | 22,030 |
Change in derivative warrant liabilities | 0 | 341,199 | 0 | (431,300) |
Interest expense - amortization of debt discount | 68,914 | 33,100 | 135,392 | 67,099 |
Interest expense | 641,479 | 383,894 | 1,298,709 | 731,623 |
Loss before income taxes | (2,749,184) | (251,185) | (2,718,919) | (2,017,270) |
Provision for income taxes | (4,801) | 148,702 | 4,533 | 200,123 |
Net loss including noncontrolling interests | (2,744,383) | (399,887) | (2,723,452) | (2,217,393) |
Net income attributed to noncontrolling interest | 21,673 | 0 | 21,673 | 0 |
Net loss attributed to S&W Seed Company | $ (2,766,056) | $ (399,887) | $ (2,745,125) | $ (2,217,393) |
Net income (loss) per common share: | ||||
Basic | $ (0.09) | $ (0.02) | $ (0.10) | $ (0.11) |
Diluted | $ (0.09) | $ (0.02) | $ (0.10) | $ (0.11) |
Weighted average number of common shares outstanding: | ||||
Basic | 29,153,852 | 21,130,960 | 26,996,483 | 20,643,973 |
Diluted | 29,153,852 | 21,130,960 | 26,996,483 | 20,643,973 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements Of Comprehensive Income | ||||
Net loss | $ (2,744,383) | $ (399,887) | $ (2,723,452) | $ (2,217,393) |
Foreign currency transaction adjustment, net of income taxes | (143,198) | (41,223) | (325,621) | 115,430 |
Comprehensive loss | (2,887,581) | (441,110) | (3,049,073) | (2,101,963) |
Comprehensive income attributed to noncontrolling interests | 21,673 | 0 | 21,673 | 0 |
Comprehensive loss attributable to S&W Seed Company | $ (2,909,254) | $ (441,110) | $ (3,070,746) | $ (2,101,963) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total |
Beginning balance, shares at Jun. 30, 2017 | 0 | 18,004,681 | (25,000) | |||||
Beginning balance, amount at Jun. 30, 2017 | $ 0 | $ 18,004 | $ (134,196) | $ 83,312,518 | $ (16,436,286) | $ (5,538,385) | $ 0 | $ 61,221,655 |
Stock-based compensation - options, restricted stock and RSU's | $ 0 | $ 0 | 0 | 451,033 | 0 | 0 | 0 | $ 451,033 |
Common stock issued for exercise of options, shares | 0 | |||||||
Net issuance to settle RSU's, shares | 0 | 88,619 | ||||||
Net issuance to settle RSU's, amount | $ 0 | $ 89 | 0 | (113,777) | 0 | 0 | 0 | $ (113,688) |
Proceeds from sale of common stock, net of fees and expenses, shares | 0 | 6,260,000 | ||||||
Proceeds from sale of common stock, net of fees and expenses, amount | $ 0 | $ 6,260 | 0 | 22,512,956 | 0 | 0 | 0 | 22,519,216 |
Reclassification of warrants upon expiration of repricing provisions | 0 | 0 | 0 | 2,405,000 | 0 | 0 | 0 | 2,405,300 |
Other comprehensive income (loss) | 0 | 0 | 0 | 0 | 0 | 115,430 | 0 | 115,430 |
Net income (loss) | $ 0 | $ 0 | $ 0 | 0 | (2,217,393) | 0 | 0 | (2,217,393) |
Ending balance, shares at Dec. 31, 2017 | 0 | 24,353,300 | (25,000) | |||||
Ending balance, amount at Dec. 31, 2017 | $ 0 | $ 24,353 | $ (134,196) | 108,568,030 | (18,653,679) | (5,422,955) | 0 | 84,381,553 |
Beginning balance, shares at Jun. 30, 2018 | 0 | 24,367,906 | (25,000) | |||||
Beginning balance, amount at Jun. 30, 2018 | $ 0 | $ 24,367 | $ (134,196) | 108,803,991 | (21,161,376) | (5,790,662) | 0 | 81,742,124 |
Stock-based compensation - options, restricted stock and RSU's | $ 0 | $ 0 | $ 0 | 377,458 | 0 | 0 | 0 | $ 377,458 |
Common stock issued for exercise of options, shares | 0 | |||||||
Net issuance to settle RSU's, shares | 0 | 35,518 | 0 | |||||
Net issuance to settle RSU's, amount | $ 0 | $ 36 | $ 0 | (25,534) | 0 | 0 | 0 | $ (25,498) |
Proceeds from sale of common stock, net of fees and expenses, shares | 0 | 1,607,717 | 0 | |||||
Proceeds from sale of common stock, net of fees and expenses, amount | $ 0 | $ 1,608 | $ 0 | 4,926,074 | 0 | 0 | 4,927,682 | |
Proceeds from sale of preferred stock, net of fees and expenses, shares | 7,235 | 0 | 0 | |||||
Proceeds from sale of preferred stock, net of fees and expenses, value | $ 7 | $ 0 | $ 0 | 22,420,455 | 0 | 0 | 0 | 22,420,462 |
Conversion of preferred stock to common stock, shares | (7,235) | 7,235,000 | 0 | |||||
Conversion of preferred stock to common stock, value | $ (7) | $ 7,235 | $ 0 | (7,228) | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) | 0 | 0 | 0 | 0 | (325,621) | (325,621) | ||
Net income (loss) | $ 0 | $ 0 | 0 | (2,745,125) | 0 | 21,673 | (2,723,452) | |
Ending balance, shares at Dec. 31, 2018 | 33,246,141 | (25,000) | ||||||
Ending balance, amount at Dec. 31, 2018 | $ 33,246 | $ (134,196) | $ 136,495,216 | $ (23,906,501) | $ (6,116,283) | $ 21,673 | $ 106,393,155 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (2,723,452) | $ (2,217,393) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Stock-based compensation | 377,458 | 451,033 |
Change in allowance for doubtful accounts | (154,364) | 20,547 |
Depreciation and amortization | 1,890,715 | 1,759,233 |
Gain on disposal of property, plant and equipment | 3,463 | (81,776) |
Change in foreign exchange contracts | 2,626 | 100,864 |
Change in derivative warrant liabilities | 0 | (431,300) |
Amortization of debt discount | 135,392 | 67,099 |
Changes in: | ||
Accounts receivable | (8,336,183) | (1,960,907) |
Unbilled accounts receivable | (11,206,984) | 0 |
Inventories | (21,513,547) | (38,850,545) |
Prepaid expenses and other current assets | 123,752 | (377,920) |
Other non-current assets | 0 | (4,963) |
Accounts payable | 23,698,244 | 25,606,471 |
Accounts payable - related parties | 0 | (216,112) |
Deferred revenue | 1,458,655 | (614,523) |
Accrued expenses and other current liabilities | 384,628 | (67,000) |
Other non-current liabilities | (40,855) | 148,147 |
Net cash used in operating activities | (15,900,452) | (16,669,045) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Additions to property, plant and equipment | (336,623) | (815,063) |
Additions to internal use software | (43,000) | 0 |
Proceeds from disposal of property, plant and equipment | 24,106 | 46,218 |
Acquisition of business, net of cash acquired | (26,354,951) | 0 |
Net cash used in investing activities | (26,710,468) | (768,845) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net proceeds from sale of common stock | 4,927,682 | 22,519,216 |
Net proceeds from sale of preferred stock | 22,420,462 | 0 |
Taxes paid related to net share settlements of stock-based compensation awards | (25,497) | (113,688) |
Borrowings and repayments on line of credit, net | 14,299,326 | 38,574 |
Repayment of contingent consideration obligation | 0 | (2,500,000) |
Borrowings of long-term debt | 2,369,071 | 12,500,000 |
Debt issuance costs | (354,589) | (257,964) |
Repayments of long-term debt | (2,682,056) | (10,113,415) |
Net cash provided by financing activities | 40,954,399 | 22,072,723 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (192,992) | 74,860 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,849,513) | 4,709,693 |
CASH AND CASH EQUIVALENTS, beginning of the period | 4,320,894 | 745,001 |
CASH AND CASH EQUIVALENTS, end of period | 2,471,381 | 5,454,694 |
Cash paid during the period for: | ||
Interest | 1,106,256 | 776,882 |
Income taxes | $ 13,304 | $ 42,244 |
NOTE 1 - BACKGROUND AND ORGANIZ
NOTE 1 - BACKGROUND AND ORGANIZATION | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 1 - BACKGROUND AND ORGANIZATION | NOTE 1 - BACKGROUND AND ORGANIZATION Organization S&W Seed Company, a Nevada corporation (the "Company"), began as S&W Seed Company, a general partnership, in 1980 and was originally in the business of breeding, growing, processing and selling alfalfa seed. We then incorporated a corporation with the same name in Delaware in October 2009, which 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. On April 1, 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 "S&W Holdings"), consummated an acquisition of all of the issued and outstanding shares of Seed Genetics International Pty Ltd, an Australia corporation ("SGI"), from SGI's shareholders. In April 2018, SGI changed its name to S&W Seed Company Australia Pty Ltd ("S&W Australia"). 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 seed cleaning and processing facilities, which are located in Five Points, California, Nampa, Idaho, Dumas, Texas, New Deal, Texas and Keith, 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 of stevia and developing marketing and distribution programs for its stevia products. The Company has also been actively engaged in expansion initiatives through a combination of organic growth and strategic acquisitions, including in December 31, 2014, when the Company purchased certain alfalfa research and production facilities and conventional (non-GMO) alfalfa germplasm assets and assumed certain related liabilities ("the Pioneer Acquisition") of Pioneer Hi-Bred International, Inc. ("DuPont Pioneer"). The Company has a long-term distribution agreement with DuPont Pioneer regarding conventional (non-GMO) varieties, the term of which extends into 2024. The Company's production agreement with DuPont Pioneer (relating to GMO-traited varieties) terminates on May 31, 2019. Although the production agreement will terminate on May 31, 2019, the Company expects that the DuPont Pioneer distribution agreement will continue to be a significant source of the Company's annual revenue through December 2024. In May 2016, 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 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. The Company's operations span the world's seed production regions with operations in the San Joaquin and Imperial Valleys of California, Texas, five other U.S. states, Australia, and three provinces in Canada, and the Company sells its seed products in more than 30 countries around the globe. |
NOTE 2 - SUMMARY OF SIGNIFICANT
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of S&W Seed Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements were prepared in accordance with U.S. GAAP and include the assets, liabilities, revenue and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company's exercises control. Outside stockholders' interests in subsidiaries are shown on the condensed consolidated financial statements as Noncontrolling interests. 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 ("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), 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, 2019. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America 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 Company's Annual Report on Form 10-K for the year ended June 30, 2018, 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, revenue recognition, asset impairments, provisions for income taxes, grower accruals (an estimate of amounts payable to farmers who grow seed for the Company), contingent consideration obligations, derivative liabilities, 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. Certain Risks and Concentrations The Company's revenue is principally derived from the sale of seed, the market for which is highly competitive. One customer accounted for 52% and 75% of its revenue for the three months ended December 31, 2018 and 2017, respectively. One customer accounted for 65% and 58% of its revenue for the six months ended December 31, 2018 and 2017, respectively. Three customers accounted for 28% of the Company's accounts receivable at December 31, 2018. One customer accounted for 35% of the Company's accounts receivable at June 30, 2018. In addition, the Company sells a substantial portion of its products to international customers. Sales to international markets represented 33% and 23% of revenue during the three months ended December 31, 2018 and 2017, respectively. Sales to international markets represented 23% and 38% of revenue during the six months ended December 31, 2018 and 2017, respectively. The net book value of fixed assets located outside the United States was 11% of total assets at December 31, 2018. The net book value of fixed assets located outside the United States was 20% at June 30, 2018. Cash balances located outside of the United States may not be insured and totaled $286,823 and $369,803 at December 31, 2018 and June 30, 2018, respectively. The following table shows revenue from external sources by destination country: Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 United States $ 12,464,626 67% $ 15,740,706 77% $ 34,204,005 77% $ 19,265,254 62% Australia 1,040,480 6% 438,468 2% 1,370,150 3% 557,998 2% Mexico 986,303 5% 1,664,618 8% 1,379,253 3% 4,380,626 14% Saudi Arabia 863,982 5% 513,000 2% 1,570,275 4% 844,908 3% Libya 800,375 4% 563,673 3% 1,798,750 4% 752,673 2% Argentina 556,227 3% 1,183,423 6% 562,164 1% 2,742,619 9% Pakistan 464,936 3% - 0% 730,583 2% - 0% Peru 299,245 2% 313,688 2% 709,495 2% 608,413 2% Other 1,104,822 5% 115,220 0% 2,376,458 4% 2,092,021 6% Total $ 18,580,996 100% $ 20,532,796 100% $ 44,701,133 100% $ 31,244,512 100% 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 consolidated statement of operations. Revenue Recognition The Company adopted the provisions of ASC Topic 606, Revenue from Contracts with Customers Cost of Revenue The Company records purchasing and receiving costs, inspection costs and warehousing costs in cost of revenue. When the Company is required to pay for outward freight and/or the costs incurred to deliver products to its customers, the costs are included in cost of revenue. Cash and Cash Equivalents For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At times, cash and cash equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation. 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 $430,964 and $584,202 at December 31, 2018 and June 30, 2018, respectively. Inventories Inventories consist of seed and packaging materials. Inventories are stated at the lower of cost or net realizable value, and an inventory reserve permanently reduces the cost basis of inventory. Inventories are valued as follows: Actual cost is used to value raw materials such as packaging materials, as well as goods in process. Costs for substantially all finished goods, which include the cost of carryover crops from the previous year, are valued at actual cost. Actual cost for finished goods includes plant conditioning and packaging costs, direct labor and raw materials and manufacturing overhead costs based on normal capacity. The Company records abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges and allocates fixed production overhead to the costs of finished goods based on the normal capacity of the production facilities. The Company's subsidiary, S&W Australia, does not fix the final price for seed payable to its growers until the completion of a given year's sales cycle pursuant to its standard contract production agreement. S&W Australia records an estimated unit price; accordingly, inventory, cost of revenue and gross profits are based upon management's best estimate of the final purchase price to growers. Inventory is periodically reviewed to determine if it is marketable, obsolete or impaired. Inventory that is determined to be obsolete or impaired is written off to expense at the time the impairment is identified. Inventory quality is a function of germination percentage. Alfalfa seed quality is very stable under proper storage conditions therefore, inventory obsolescence for alfalfa seed is not 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. The Company sells its inventory to distributors, dealers and directly to growers. Components of inventory are: December 31, June 30, 2018 2018 Raw materials and supplies $ 955,372 $ 344,620 Work in progress 22,820,169 2,775,398 Finished goods 64,680,439 57,299,258 $ 88,455,980 $ 60,419,276 Property, Plant and Equipment Property, plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset - periods of 5-35 years for buildings, 3-20 years for machinery 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 the straight-line method over the estimated useful life of the asset. Periods of 10-30 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 27 years for technology/IP/germplasm, 17 years for customer relationships and 18 years for trade names and 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 in the business climate, legal factors, a decline in operating performance, competition, sale or disposition 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 of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management then develops a detailed estimate of the reporting unit's fair value. The Company uses market capitalization and an estimate of a control premium, as well as a discounted cash flow analysis to estimate the fair value of its one reporting unit. Management then compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company performed a qualitative assessment of goodwill at December 31, 2018 and determined that goodwill was not impaired. Equity Method Investments Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company's board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are not reflected within the Company's consolidated balance sheets and statements of operations; however, the Company's share of the earnings or losses of the investee company is reflected in the caption "Loss on equity method investment" in the consolidated statements of operations. The Company's carrying value in an equity method investee company is included in the Company's consolidated balance sheets. When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Cost Method Investments Investee companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, the Company's share of the earnings or losses of such investee companies is not included in the consolidated balance sheet or statement of operations. However, impairment charges are recognized in the consolidated statement of operations. If circumstances suggest that the value of the investee company has subsequently recovered, such recovery is not recorded. Research and Development Costs The Company is engaged in ongoing research and development ("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 six months ended December 31, 2018 and 2017 has been affected by the valuation allowance on the Company's deferred tax assets. Net Income (Loss) Per Common Share Data Basic net income (loss) per common share ("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 convertible preferred stock, options, restricted stock awards, and common stock warrants. The treasury stock method is used for common stock warrants, 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 calculation of Basic and Diluted EPS is shown in the table below. Classes of securities identified in the table with no adjustments in the calculation of Diluted EPS were determined to be antidilutive for the applicable periods. Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 Numerator: Net loss attributed to S&W Seed Company $ (2,766,056) $ (399,887) $ (2,745,125) $ (2,217,393) Numerator for basis EPS (2,766,056) (399,887) (2,745,125) (2,217,393) Effect of dilutive securities: Warrants - - - - - - - - Numerator for diluted EPS $ (2,766,056) $ (399,887) $ (2,745,125) $ (2,217,393) Denominator: Denominator for basic EPS - weighted-average shares 29,153,852 21,130,960 26,996,483 20,643,973 Effect of dilutive securities: Employee stock options - - - - Employee restricted stock units - - - - Warrants - - - - Dilutive potential common shares - - - - Denominator for diluted EPS - adjusted weighted average shares and assumed conversions 29,153,852 21,130,960 26,996,483 20,643,973 Basic EPS $ (0.09) $ (0.02) $ (0.10) $ (0.11) Diluted EPS $ (0.09) $ (0.02) $ (0.10) $ (0.11) Impairment of Long-Lived Assets The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating 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. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of long-lived assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. 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. The Company has entered into certain derivative financial instruments (specifically foreign currency forward contracts), and accounts for these instruments in accordance with ASC Topic 815, "Derivatives and 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 are not designated as hedging instruments under ASC 815; accordingly, changes in the fair value are recorded in current period earnings. Derivative Liabilities The Company reviews the terms of the common stock, preferred stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options and redemption options, which are required to be bifurcated and accounted for separately as derivative financial instruments. Fair Value of Financial Instruments The Company discloses assets and liabilities that are recognized and measured at fair value, presented in a three-tier fair value hierarchy, as follows: Level 1. Observable inputs such as quoted prices in active markets; Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The assets acquired and liabilities assumed in the Chromatin acquisition were valued at fair value on a non-recurring basis as of October 25, 2018. No assets or liabilities were valued at fair value on a non-recurring basis as of December 31, 2018 or June 30, 2018. The carrying value of cash and cash equivalents, accounts payable, short-term and all long-term borrowings, as reflected in the consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments or interest rates commensurate with market rates. There have been no changes in operations and/or credit characteristics since the date of issuance that could impact the relationship between interest rate and market rates. Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows: Fair Value Measurements as of December 31, 2018 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 98,071 $ - Total $ - $ 98,071 $ - Fair Value Measurements as of June 30, 2018 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 100,138 $ - Total $ - $ 100,138 $ - Recently Adopted Accounting Pronouncements The Company adopted Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment ("ASU 2017-04") The Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers The Company adopted Topic 606 using the modified retrospective approach, in which the cumulative effect of applying the new standards to open contracts as of July 1, 2018 was to be recognized as a cumulative effect adjustment. The adoption did not result in a cumulative effect adjustment as of July 1, 2018. The adoption of Topic 606 had a significant effect on the Company's accounting for its distribution and production agreements with Pioneer for the three and six months ended December 31, 2018. There were no other changes in the Company's accounting as a result of the adoption of Topic 606. The change in the accounting for the distribution and production agreements with Pioneer arises from the provisions of Topic 606 regarding the determination of whether a performance obligation is satisfied at a point in time or over time. Under those provisions, a performance obligation is considered to be satisfied over time if the company's performance creates an asset that the customer controls as the asset is created or enhanced; or the work to satisfy the performance obligation does not create an asset with alternative future use to the vendor and the customer has an obligation to pay for work completed. Under the agreements, Pioneer submits a demand plan to the Company in advance of the growing season specifying the amount of seed that it intends to order for the upcoming sales year. Once the demand plan is submitted, Pioneer cannot cancel or reduce the amount of seed that it is obligated to purchase under the agreements. In addition, the Company is not permitted to sell products produced for Pioneer under the agreements to other customers. Therefore, under Topic 606, the performance obligation is satisfied, and revenue is recognized, over time, as the Company takes delivery of, processes, and packages the seed. The Company has concluded that cost is the best measure of progress under the Pioneer contracts because no other measure adequately reflects the value added to the product by each of the Company's major tasks - having the crop grown, processing, and packaging. As the Company contracts out the growing of seed to third parties, the vast majority of the Company's costs under these agreements are incurred, and therefore the vast majority of the revenue from such agreements is recognized, when the raw seed is purchased from the third-party contract growers. The rest of the costs are incurred, and therefore the rest of the revenue is recognized, as the Company processes and packages the product. Because revenue is recognized as costs are incurred, no inventory costs related to performance under the Pioneer contract are capitalized as inventory - instead, they are recognized as expenses as they are incurred. Prior to the adoption of Topic 606, revenue related to the Pioneer agreement was recognized when seed was delivered to Pioneer. Costs incurred to purchase and process seed were capitalized as inventory until the product was delivered. As the Company adopted Topic 606 using the modified retrospective approach, figures for fiscal 2018 have not been adjusted and continue to reflect the prior accounting policies. The change in accounting for the Pioneer contract did not result in a cumulative effect adjustment, because all seed produced for Pioneer in previous growing seasons had been delivered, and revenue recognized, prior to July 1, 2018, and no seed had been received prior to July 1, 2018 related to the current growing season. However, the change materially affected the amount of revenue and costs recognized during the three and six months ended December 31, 2018. The effects of the new accounting for the Pioneer contracts on the Company's financial statements are shown below: Three Months Ended Six Months Ended December 31, 2018 December 31, 2018 Balances Without Balances Without As Reported Adjustments Adoption of ASC 606 As Reported Adjustments Adoption of ASC 606 Revenue $ 18,580,996 $ 6,288,847 $ 24,869,843 $ 44,701,133 $ (11,050,488) $ 33,650,645 Cost of revenue 13,897,455 5,927,174 19,824,629 34,554,463 (7,158,038) 27,396,425 Gross profit 4,683,541 361,673 5,045,214 10,146,670 (3,892,450) 6,254,220 Operating expenses Selling, general and administrative expenses 4,342,696 - 4,342,696 7,230,074 - 7,230,074 Research and development expenses 1,373,554 - 1,373,554 2,365,667 - 2,365,667 Depreciation and amortization 1,035,606 - 1,035,606 1,890,714 - 1,890,714 Disposal of property, plant and equipment gain 3,463 - 3,463 3,463 - 3,463 Total operating expenses 6,755,319 - 6,755,319 11,489,918 - 11,489,918 Income (loss) from operations (2,071,778) 361,673 (1,710,105) (1,343,248) (3,892,450) (5,235,698) Other expense Foreign currency (gain) loss (32,987) - (32,987) (58,430) - (58,430) Change in derivative warrant liabilities - - - - - - Interest expense - amortization of debt discount 68,914 - 68,914 135,392 - 135,392 Interest expense 641,479 - 641,479 1,298,709 - 1,298,709 Income (loss) before income taxes (2,749,184) 361,673 (2,387,511) (2,718,919) (3,892,450) (6,611,369) Provision for income taxes (4,801) 15,944 11,143 4,533 (51,091) (46,558) Net income (loss) before noncontrolling interests $ (2,744,383) $ 345,729 $ (2,398,654) $ (2,723,452) $ (3,841,359) $ (6,564,811) Net income attributed to noncontrolling interest 21,673 - 21,673 21,673 - 21,673 Net loss attributed to S&W Seed Company $ (2,766,056) $ 345,729 $ (2,420,327) $ (2,745,125) $ (3,841,359) $ (6,586,484) Net income (loss) per common share: Basic $ (0.09) $ 0.01 $ (0.08) $ (0.10) $ (0.14) $ (0.24) Diluted $ (0.09) $ 0.01 $ (0.08) $ (0.10) $ (0.14) $ (0.24) Weighted average number of common shares outstanding: Basic 29,153,852 - 29,153,852 26,996,483 - 26,996,483 Diluted 29,153,852 - 29,153,852 26,996,483 - 26,996,483 December 31, 2018 Balances Without As Reported Adjustments Adoption of ASC 606 ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,471,381 $ - $ 2,471,381 Accounts receivable, net 23,178,997 - 23,178,997 Unbilled accounts receivable, net 11,206,984 (11,206,984) - Inventories, net 88,455,980 7,158,038 95,614,018 Prepaid expenses and other current assets 1,158,738 - 1,158,738 Assets held for sale 1,930,400 - 1,930,400 TOTAL CURRENT ASSETS 128,402,480 (4,048,946) 124,353,534 Property, plant and equipment, net 22,731,765 - 22,731,765 Intangibles, net 39,823,195 - 39,823,195 Goodwill 11,865,811 - 11,865,811 Other assets 1,302,705 - 1,302,705 TOTAL ASSETS $ 204,125,956 $ (4,048,946) $ 200,077,010 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 31,594,475 $ - $ 31,594,475 Deferred revenue 2,443,574 - 2,443,574 Accrued expenses and other current liabilities 3,471,881 (156,496) 3,315,385 Lines of credit, net 46,310,464 - 46,310,464 Current portion of long-term debt, net 991,140 - 991,140 TOTAL CURRENT LIABILITIES 84,811,534 (156,496) 84,655,038 Long-term debt, net, less current portion 12,264,273 - 12,264,273 Other non-current liabilities 656,994 (51,091) 605,903 TOTAL LIABILITIES 97,732,801 (207,587) 97,525,214 STOCKHOLDERS' EQUITY Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding - - - Common stock, $0.001 par value; 50,000,000 shares authorized; 33,246,141 issued and 33,221,141 outstanding at December 31, 2018; 24,367,906 issued and 24,342,906 outstanding at June 30, 2018; 33,246 - 33,246 Treasury stock, at cost, 25,000 shares (134,196) - (134,196) Additional paid-in capital 136,495,216 - 136,495,216 Accumulated deficit (23,906,501) (3,841,359) (27,747,860) Accumulated other comprehensive loss (6,116,283) - (6,116,283) Noncontrolling interest 21,673 - 21,673 TOTAL STOCKHOLDERS' EQUITY 106,393,155 (3,841,359) 102,551,796 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 204,125,956 $ (4,048,946) $ 200,077,010 Topic 606 also requires enhanced disclosures about the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. Those disclosures can also be found in Note 3. Recently Issued, but Not Yet Adopted, Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02: Leases |
NOTE 3 - REVENUE RECOGNITION
NOTE 3 - REVENUE RECOGNITION | 6 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
NOTE 3 - REVENUE RECOGNITION | NOTE 3 - REVENUE RECOGNITION The Company adopted the provisions of Topic 606 as of July 1, 2018. As the Company adopted Topic 606 using the modified retrospective approach, comparative figures have not been revised and are still reported under prior accounting standards. The Company derives its revenue from 1) the sale of seed, 2) milling services and 3) research and development services. The following table disaggregates the Company's revenue by type of contract 1 Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 ASC 606 ASC 605 ASC 605 ASC 606 ASC 605 ASC 605 Distribution and production agreements - Pioneer $ 9,677,988 $ 15,966,835 $ 15,313,310 $ 29,185,614 $ 18,135,126 $ 18,101,800 Other product sales 8,761,172 8,761,172 5,033,204 15,336,201 15,336,201 12,767,630 Services 141,836 141,836 186,282 179,318 179,318 375,082 $ 18,580,996 $ 24,869,843 $ 20,532,796 $ 44,701,133 $ 33,650,645 $ 31,244,512 1 Distribution and Production Agreements with Pioneer Under the production and distribution agreements with Pioneer, the Company grows, processes, and delivers alfalfa seed for and to Pioneer. The Company has concluded that none of the individual activities performed under these contracts are distinct, as the customer is contracting for processed and packaged product. Pioneer submits a demand plan to the Company in advance of the growing season specifying the amount of seed that it intends to order for the upcoming sales year. The Company is required to use commercially reasonable efforts to arrange for the requisite amount of seed to be grown and to process and package the product as provided for in the contract. Once the demand plan is submitted, Pioneer cannot cancel or reduce the amount of seed that it is obligated to purchase under the agreements. In addition, the Company is not permitted to sell products produced for Pioneer under the agreements to other customers. Therefore, as provided in Topic 606, the Company recognizes revenue from these agreements over time, as it incurs costs to fulfill its obligations. To the extent the Company produces more product than Pioneer has specified in its demand plan, the Company must first offer such product to Pioneer. If Pioneer does not purchase such excess product, the Company may sell such product to other customers subject to certain limitations. Revenue from such excess product is recognized as other product revenue, as discussed below. The agreements specify prices per finished unit which are adjusted each year, up or down, based on current market conditions, by a maximum of 4% per year. The prices for a given crop year are determined one year in advance of the beginning of the sales season. The Company believes that cost is the best measure of progress under these contracts because no other measure adequately reflects the value added to the product by each of the Company's major tasks - having the crop grown, processing, and packaging. As the Company typically contracts out the growing of seed to third parties, the vast majority of the Company's costs under these agreements are incurred, and therefore the vast majority of the revenue from such agreements is recognized, when the raw seed is purchased from the third-party contract growers. The rest of the costs are incurred, and therefore the rest of the revenue is recognized, as the Company processes and packages the product. Prior to the adoption of Topic 606, revenue from these agreements was recognized when risk and title to the product was transferred, which generally occurs upon shipment. Other Product Sales Revenue from other 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. The products must be in an unopened and undamaged state and must be resalable in the sole opinion of the Company to quality for refund. Returns are only accepted on product received by August 31 st Services Revenue from milling 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. R&D services are generally paid for in advance. In fiscal 2019, R&D revenue relates to a single contract in which the customer may decide annually whether to continue the arrangement. Revenue is recognized straight-line over time, as services are expected to be provided roughly evenly throughout the year. 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 120 days. As the period between the transfer of goods and/or services to the customer and receipt of payment is less than on year, the Company does not separately account for a financing component in its contracts with customers. Unbilled receivables represent contract assets that arise when 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 arise from the distribution and production agreements with Pioneer for which the Company recognizes revenue over time, as the Company bills for these arrangements upon product delivery, while revenue is recognized, as described above, as costs are 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 it becomes probable that amounts will not be paid. These losses are reversed in subsequent periods if these amounts are paid. During the six months ended December 31, 2018, the Company recognized a gain of $211,200 from collection of a previously impaired accounts receivable. Deferred revenue represents payments received from customers in advance of completion of the Company's performance obligation. Transaction Price Allocated to Remaining Performance Obligations Total estimated revenue remaining on uncompleted contracts is $86.8 million. This is comprised of $1.9 million remaining on the Pioneer distribution and production agreements which is expected to be recognized in fiscal 2019, an estimated $84.9 million related to fiscal years 2020 - 2023 based on the minimum purchase requirements in the Pioneer distribution agreement and $0.1 million remaining on a research and development services agreement expected to be recognized in fiscal 2019. |
NOTE 4 - BUSINESS COMBINATIONS
NOTE 4 - BUSINESS COMBINATIONS | 6 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
NOTE 4 - BUSINESS COMBINATIONS | NOTE 4 - BUSINESS COMBINATIONS On October 25, 2018, the Company completed the acquisition of substantially all of the assets of Chromatin, Inc. (together with certain of its subsidiaries and affiliates in receivership, "Chromatin"), as well as the assumption of certain contracts and limited specified liabilities of Chromatin, for an aggregate cash purchase price of approximately $26.5 million (the "Acquisition"), pursuant to the terms of its Asset Purchase Agreement, dated September 14, 2018, with Novo Advisors, solely in its capacity as the receiver for, and on behalf of, Chromatin ("Novo"). The acquisition expanded the Company's sorghum production capabilities, diversified its product offerings and provided access to new distribution channels. The Acquisition has been accounted for as a business combination, and the Company valued and recorded all assets acquired and liabilities assumed at their estimated fair values on the date of the Acquisition. Management has not yet finalized the fair value of assets held for sale and certain other intangible assets. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date of October 25, 2018: October 25, 2018 Cash $ 95,049 Accounts receivable 947,015 Inventory 6,959,936 Prepaid expenses 16,501 Property, plant and equipment 10,193,620 Assets held for sale 1,930,400 In-process research and development 380,000 Technology/IP - germplasm 7,200,000 Trade names 150,000 Goodwill 1,573,546 Current liabilities (2,881,198) Noncurrent liabilities (114,869) Total acquisition cost allocated $ (26,450,000) Management determined that one of the facilities acquired as part of the Chromatin acquisition would not be operated and is being held for sale. The components of that facility are: Land and improvements $ 320,000 Buildings and improvements 1,380,000 Machinery and equipment 332,000 Less: Costs to sell (101,600) Assets held for sale $ 1,930,400 Management expects the sale to be completed within 12 months and plans to settle short-term debt with the proceeds, accordingly, these held for sale assets are presented as current assets. The estimated fair value of accounts receivable acquired is $947,015, with the gross contractual amount totaling $2,164,476, less $1,217,461 expected to be uncollectible. The current liabilities assumed relate to inventory acquired in the acquisition as well as customer deposits. The excess of the purchase price over the fair value of the net assets acquired, amounting to $1,573,546, was recorded as goodwill on the consolidated balance sheet. The primary item that generated goodwill was the premium paid by the Company for the ability to control the acquired business, technology, and the distribution channels. Goodwill is not amortized for financial reporting purposes, but is amortized for tax purposes. Management assigned fair values to the identifiable intangible assets through a combination of the relief from royalty method, the multi-period excess earnings method, and the replacement cost method. The values and useful lives of the acquired intangibles are as follows: Estimated Useful Life (Years) Estimated Fair Value In-process research and development 3 $ 380,000 Technology/IP - germplasm 30 7,200,000 Trade names 5 150,000 Total identifiable intangible assets $ 7,730,000 The Company incurred acquisitions costs of $586,800 and $995,316 during the three and six months ended December 31, 2018 that have been recorded in selling, general and administrative expenses on the consolidated statement of operations. The following unaudited pro forma financial information presents results as if the Acquisition occurred on July 1, 2017. Six Months Ended December 31, (unaudited) 2018 2017 Revenue $ 46,374,310 $ 39,910,879 Net loss $ (4,889,152) $ (7,784,946) For purposes of the pro forma disclosures above, the primary adjustments for the six months ended December 31, 2018 include: (i) the elimination of acquisition charges of $995,316; (ii) amortization of acquired intangibles of $132,222; and iii) depreciation of acquired property, plant and equipment of $358,273. For purposes of the pro forma disclosures above, the primary adjustments for the six months ended December 31, 2017 include: (i) amortization of acquired intangibles of $198,333; and ii) depreciation of acquired property, plant and equipment of $537,410. |
NOTE 5 - GOODWILL AND INTANGIBL
NOTE 5 - GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 5 - GOODWILL AND INTANGIBLE ASSETS | NOTE 5 - GOODWILL AND INTANGIBLE ASSETS The following table summarizes the activity of goodwill for the six months ended December 31, 2018 and the year ended June 30, 2018, respectively. Balance at Balance at July 1, 2018 Additions December 31, 2018 Goodwill $ 10,292,265 $ 1,573,546 $ 11,865,811 Balance at Balance at July 1, 2017 Additions June 30, 2018 Goodwill $ 10,292,265 $ - $ 10,292,265 Intangible assets consist of the following: Balance at Balance at July 1, 2018 Additions Amortization December 31, 2018 Trade name $ 1,159,826 $ 150,000 $ (47,240) $ 1,262,586 Customer relationships 1,156,955 - (50,604) 1,106,351 Non-compete 62,720 - (18,871) 43,849 GI customer list 71,639 - (3,582) 68,057 Supply agreement 1,077,783 - (37,816) 1,039,967 Distribution agreement 6,344,253 - (192,251) 6,152,002 Grower relationships 1,753,208 - (52,704) 1,700,504 Intellectual property 20,873,393 7,200,000 (601,518) 27,471,875 In process research and development - 380,000 (21,111) 358,889 Internal use software 610,003 43,000 (33,888) 619,115 $ 33,109,780 $ 7,773,000 $ (1,059,585) $ 39,823,195 Balance at Balance at July 1, 2017 Additions Amortization June 30, 2018 Trade name $ 1,244,306 $ - $ (84,480) $ 1,159,826 Customer relationships 1,258,163 - (101,208) 1,156,955 Non-compete 102,035 - (39,315) 62,720 GI customer list 78,803 - (7,164) 71,639 Supply agreement 1,153,415 - (75,632) 1,077,783 Distribution agreement 6,728,753 - (384,500) 6,344,253 Production agreement 111,670 - (111,670) - Grower relationships 1,858,616 - (105,408) 1,753,208 Intellectual property 21,725,539 295,034 (1,147,180) 20,873,393 Internal use software 677,779 - (67,776) 610,003 $ 34,939,079 $ 295,034 $ (2,124,333) $ 33,109,780 Amortization expense totaled $552,967 and $555,471 for the three months ended December 31, 2018 and 2017, respectively. Amortization expense totaled $1,059,585 and $1,128,392 for the six months ended December 31, 2018 and 2017, respectively. Estimated aggregate remaining amortization is as follows: 2019 2020 2021 2022 2023 Thereafter Amortization expense $ 1,178,739 $ 2,355,136 $ 2,336,313 $ 2,252,980 $ 2,204,355 $ 28,795,672 |
NOTE 6 - PROPERTY, PLANT AND EQ
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT | NOTE 6 - PROPERTY, PLANT AND EQUIPMENT Components of property, plant and equipment were as follows: December 31, June 30, 2018 2018 Land and improvements $ 2,532,053 $ 2,068,742 Buildings and improvements 11,291,516 8,888,196 Machinery and equipment 12,656,650 5,731,293 Vehicles 1,580,518 1,130,276 Construction in progress 313,852 220,089 Total property, plant and equipment 28,374,589 18,038,596 Less: accumulated depreciation (5,642,824) (4,858,464) Property, plant and equipment, net $ 22,731,765 $ 13,180,132 Depreciation expense totaled $482,639 and $315,510 for the three months ended December 31, 2018 and 2017, respectively. Depreciation expense totaled $831,130 and $630,842 for the six months ended December 31, 2018 and 2017, respectively. |
NOTE 7 - DEBT
NOTE 7 - DEBT | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 7 - DEBT | NOTE 7 - DEBT Total debt outstanding is presented on the consolidated balance sheet as follows: December 31, June 30, 2018 2018 Working capital lines of credit KeyBank $ 38,836,070 $ 25,050,464 National Australia Bank Limited 7,870,247 7,697,040 Debt issuance costs (395,853) (116,945) Total working capital lines of credit, net $ 46,310,464 $ 32,630,559 Current portion of long-term debt Capital leases $ 451,089 $ 27,241 Keith facility (building loan) - National Australia Bank Limited 77,649 3,701 Keith facility (machinery & equipment loans) - National Australia Bank Limited 212,852 198,251 Unsecured subordinate promissory note 100,000 100,000 Secured real estate note - Conterra 238,693 229,789 Secured equipment note - Conterra - 37,824 Debt issuance costs (89,143) (93,794) Total current portion, net 991,140 503,012 Long-term debt, less current portion Capital leases 1,623,504 - Keith facility (building loan) - National Australia Bank Limited 254,124 421,857 Keith facility (machinery & equipment loans) - National Australia Bank Limited 420,550 431,754 Secured real estate note - Conterra 10,048,597 10,170,211 Secured equipment note - Conterra - 2,062,176 Debt issuance costs (82,502) (108,911) Total long-term portion, net 12,264,273 12,977,087 Total debt, net $ 13,255,413 $ 13,480,099 On September 22, 2015, the Company entered into a credit and security agreement (the "KeyBank Credit Facility") with KeyBank. Key provisions of the KeyBank Credit Facility, as amended, include: An aggregate principal amount that the Company may borrow, repay and reborrow, of up to $45.0 million in the aggregate, subject to a requirement that the Company maintain a reduced loan balance of (i) not more than $20.0 million for at least 30 consecutive days over the prior twelve months (measured each quarter on a trailing 12 month basis) and (ii) not more than $25.0 million for at least 60 consecutive days over the prior twelve months (measured each quarter on a trailing 12 month basis). All amounts due and owing, including, but not limited to, accrued and unpaid principal and interest, will be payable in full on December 31, 2020. A borrowing base of up to 85% of eligible domestic accounts receivable and 90% of eligible foreign accounts receivable, plus up to the lesser of (i) 75% of the cost eligible inventory (provided that eligible inventory acquired by the Company in its recent Chromatin acquisition is initially subject to a rate of 25%, potentially increasing to 75% if the Company delivers an appraisal of the acquired inventory that is satisfactory to KeyBank) or (ii) 90% of the net orderly liquidation value of the inventory, subject to lender reserves. Loans may be based on a Base Rate or Eurodollar Rate (which is increased by an applicable margin of 2.9% per annum for Eurodollar Loans and 1.0% for Base Rate Loans) (both as defined in the KeyBank Credit Facility), generally at the Company's option. In the event of a default, at the option of KeyBank, the interest rate on all obligations owing will increase by 3% per annum over the rate otherwise applicable. Subject to certain exceptions, the KeyBank Credit Facility is secured by a first priority perfected security interest in all of the Company's now owned and after acquired tangible and intangible assets and its domestic subsidiaries, which have guaranteed the Company's obligations under the KeyBank Credit Facility. The KeyBank Credit Facility is further secured by a lien on, and a pledge of, 65% of the stock of its wholly-owned subsidiary, S&W Holdings Australia Pty Ltd. At December 31, 2018, the Company was in compliance with all KeyBank debt covenants. On December 31, 2014, the Company issued a three-year secured promissory note to DuPont Pioneer in the initial principal amount of $10,000,000 (the "Pioneer Note"), with a maturity date of December 31, 2017. The Pioneer Note accrued interest at 3% per annum. Interest was payable in three annual installments, in arrears, commencing on December 31, 2015. On December 31, 2014, the Company also issued contingent consideration to DuPont Pioneer which required the Company to increase the principal amount of the Pioneer Note by up to an additional $5,000,000 if the Company met certain performance metrics during the three-year period following December 31, 2014. The earn out payment to DuPont Pioneer was finalized in October 2017 and this amount of $2,500,000 was added to the Pioneer Note in October 2017. On December 1, 2017, the Company repaid the Pioneer Note. The repayment amount included the $2.5 million earn-out payment related to the Pioneer Acquisition that was added to the principal amount of the Pioneer Note in October 2017. On November 30, 2017, the Company entered into a secured note financing transaction (the "Loan Transaction") with Conterra Agricultural Capital, LLC ("Conterra") for $12.5 million in gross proceeds. Pursuant to the Loan Transaction, the Company issued two secured promissory notes (the "Notes") to Conterra as follows: Secured Real Estate Note Secured Equipment Note On August 15, 2018, the Company completed a sale and leaseback transaction with American AgCredit involving certain equipment located at the Company's Five Points, California and Nampa, Idaho production facilities. Due to its terms, the sale and leaseback transaction is required to be accounted for as a financing arrangement. Accordingly, the proceeds received from American AgCredit were accounted for as proceeds from a debt financing. Under the terms of the transaction: 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. S&W Australia finances the purchase of most of its seed inventory from growers pursuant to seasonal credit facilities with National Australia Bank Ltd ("NAB"). The current facilities (the "2016 NAB Facilities") were amended as of April 13, 2018 and expire on March 30, 2020. As of December 31, 2018, AUD $11,149,237 (USD $7,870,247) was outstanding under the 2016 NAB Facilities. The 2016 NAB Facilities, as currently in effect, comprise two distinct facility lines: (i) an overdraft facility (the "Overdraft Facility"), having a credit limit of AUD $1,000,000 (USD $705,900 at December 31, 2018) and a borrowing base facility (the "Borrowing Base Facility"), having a credit limit of AUD $12,000,000 (USD $8,470,800 at December 31, 2018). The Borrowing Base Facility permits S&W Australia to borrow funds for periods of up to 180 days, at S&W Australia's discretion, provided that the term is consistent with its trading terms. Interest for each drawdown is set at the time of the drawdown as follows: (i) for Australian dollar drawings, based on the Australian Trade Refinance Rate plus 1.5% per annum and (ii) for foreign currency drawings, based on the British Bankers' Association Interest Settlement Rate for the relevant foreign currency for the relevant period, or if such rate is not available, the rate reasonably determined by NAB to be the appropriate equivalent rate, plus 1.5% per annum. As of December 31, 2018, the Borrowing Base Facility accrued interest on Australian dollar drawings at approximately 5.53% per annum calculated daily. The Borrowing Base Facility is secured by a lien on all the present and future rights, property and undertakings of S&W Australia, the mortgage on S&W Australia's Keith, South Australia property and the Company's corporate guarantee (up to a maximum of AUD $15,000,000). 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 December 31, 2018, the Overdraft Facility accrued interest at approximately 6.77% per annum calculated daily. For both the Overdraft Facility and the Borrowing Base Facility, interest is payable each month in arrears. In the event of a default, as defined in the NAB Facility agreements, the principal balance due under the facilities will thereafter bear interest at an increased rate per annum above the interest rate that would otherwise have been in effect from time to time under the terms of each facility ( i.e. Both facilities constituting the 2016 NAB Facilities are secured by a fixed and floating lien over all the present and future rights, property and undertakings of S&W Australia and are guaranteed by the Company as noted above. The 2016 NAB Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate S&W Australia's outstanding obligations, all as set forth in the NAB facility agreements. S&W Australia was in compliance with all NAB debt covenants at December 31, 2018. In January 2015, NAB and S&W Australia entered into a new business markets - flexible rate loan (the "Keith Building Loan") and a separate machinery and equipment facility (the "Keith Machinery and Equipment Facility"). In February 2016, NAB and S&W Australia also entered into a master asset finance facility (the "Master Assets Facility"). The Master Asset Facility has various maturity dates through 2021 and have interest rates ranging from 4.86% to 5.31%. The Keith Building Loan and Keith Machinery and Equipment Facility are used for the construction of a building on S&W Australia's Keith, South Australia property, purchase of adjoining land and for the machinery and equipment for use in the operations of the building. The Keith Building Loan matures on November 30, 2024. The interest rate on the Keith Building Loan varies from pricing period to pricing period (each such period approximately 30 days), based on the weighted average of a specified basket of interest rates (6.45% as of December 31, 2018). Interest is payable each month in arrears. The Keith Machinery and Equipment Facility bears interest, payable in arrears, based on the Australian Trade Refinance Rate quoted by NAB at the time of the drawdown, plus 2.9%. The Keith Credit Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate S&W Australia's outstanding obligations, all as set forth in the facility agreement. They are secured by a lien on all the present and future rights, property and undertakings of S&W Australia, the Company's corporate guarantee and a mortgage on S&W Australia's Keith, South Australia property. The annual maturities of short-term and long-term debt are as follows: Fiscal Year Amount 2019 $ 576,583 2020 1,011,523 2021 10,628,888 2022 607,263 2023 466,531 Thereafter 136,270 Total $ 13,427,058 |
NOTE 8 - WARRANTS
NOTE 8 - WARRANTS | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 8 - WARRANTS | NOTE 8 - WARRANTS The following table summarizes the total warrants outstanding at December 31, 2018: Exercise Price Expiration Outstanding as Outstanding as Issue Date Per Share Date of June 30, 2018 New Issuances Expired of December 31, 2018 Warrants Dec 2014 $ 4.32 June 2020 2,699,999 - - 2,699,999 2,699,999 - - 2,699,999 The following table summarizes the total warrants outstanding at June 30, 2018: Exercise Price Expiration Outstanding as Outstanding as Issue Date Per Share Date of June 30, 2017 New Issuances Expired of June 30, 2018 Warrants Dec 2014 $ 4.32 June 2020 2,699,999 - - 2,699,999 2,699,999 - - 2,699,999 |
NOTE 9 - EQUITY
NOTE 9 - EQUITY | 6 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
NOTE 9 - EQUITY | NOTE 9 - EQUITY On September 5, 2018, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with MFP Partners, L.P. ("MFP"), pursuant to which the Company sold to MFP 1,607,717 shares of common stock of the Company (the "Common Shares") at a purchase price of $3.11 per share at an initial closing, and agreed to sell, subject to the satisfaction of certain conditions, 7,235 shares of newly designated Series A Convertible Preferred Stock of the Company ("Preferred Shares") to MFP at a purchase price of $3,110 per share at a second closing (the "Second Closing"). The Second Closing was completed on October 23, 2018, for aggregate gross proceeds of approximately $22.5 million, which was used primarily to fund the Chromatin Acquisition. The Preferred Shares carried no voting rights and were automatically convertible into shares of common stock at the rate of 1,000 shares of common stock per Preferred Share upon the approval of the Company's stockholders for the issuance of the requisite shares of common stock. Pursuant to the Securities Purchase Agreement, the Company agreed to use its reasonable best efforts to solicit the approval of its shareholders for the issuance of stock upon the conversion of the Preferred Shares at a special meeting of shareholders, and at each annual meeting of shareholders thereafter, if necessary. Approval was obtained at a Special Meeting of Stockholders held on November 20, 2018, and the Preferred Shares automatically converted into 7,235,000 shares of common stock on that same day. |
NOTE 10 - FOREIGN CURRENCY CONT
NOTE 10 - FOREIGN CURRENCY CONTRACTS | 6 Months Ended |
Dec. 31, 2018 | |
Note 10 - Foreign Currency Contracts | |
NOTE 10 - FOREIGN CURRENCY CONTRACTS | NOTE 10 - FOREIGN CURRENCY 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 manages through the use of foreign currency forward contracts. These foreign currency contracts are not designated as hedging instruments; accordingly, changes in the fair value are recorded in current period earnings. These foreign currency contracts had a notional value of $3,218,800 at December 31, 2018 and their maturities range from January 2019 to June 2019. The Company records an asset or liability on the consolidated balance sheet for the fair value of the foreign currency forward contracts. The foreign currency contract liabilities totaled $98,071 at December 31, 2018 and $100,138 at June 30, 2018. The Company recorded a gain on foreign exchange contracts of $35,836 and a loss of $61,560, which is reflected in cost of revenue for the three months ended December 31, 2018 and 2017, respectively. The Company recorded a loss on foreign exchange contracts of $2,626 and $100,864, which is reflected in cost of revenue for the six months ended December 31, 2018 and 2017, respectively. |
NOTE 11 - COMMITMENTS AND CONTI
NOTE 11 - COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 11 - COMMITMENTS AND CONTINGENCIES | NOTE 11 - COMMITMENTS AND CONTINGENCIES Contingencies Based on information currently available, management is not aware of any other matters that would have a material adverse effect on the Company's financial condition, results of operations or cash flows. Legal Matters The Company may be subject to various legal proceedings from time to time. The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. Any current litigation is considered immaterial and counter claims have been assessed as remote. |
NOTE 12 - RELATED PARTY TRANSAC
NOTE 12 - RELATED PARTY TRANSACTIONS | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 12 - RELATED PARTY TRANSACTIONS | NOTE 12 - RELATED PARTY TRANSACTIONS On July 19, 2017, the Company entered into a Securities Purchase Agreement with certain purchasers, including MFP Partners, L.P. ("MFP"), a stockholder of the Company, and certain entities related to Wynnefield Capital Management LLC (collectively, "Wynnefield"), pursuant to which MFP purchased approximately $3.7 million of shares of its common stock and Wynnefield purchased approximately $3.0 million of shares of its common stock. Each of MFP and Wynnefield is a beneficial owner of more than 5% of the Company's common stock. Alexander C. Matina, a member of the Company's Board, is Vice President, Investments of MFP. Robert D. Straus, a member of the Company's Board since January 9, 2018, is a Portfolio Manager at Wynnefield. On October 11, 2017, the Company entered into a Securities Purchase Agreement with Mark W. Wong, the Company's President and Chief Executive Officer, pursuant to which the Company sold and issued an aggregate of 75,000 shares of its Common Stock at a purchase price of $3.50 per share, for aggregate gross proceeds of $262,500. On December 22, 2017, the Company completed the closing of its previously announced rights offering. At the closing, the Company sold and issued an aggregate of 2,594,923 shares of its Common Stock at a subscription price of $3.50 per share pursuant to the exercise of subscriptions and oversubscriptions in the rights offering from its existing stockholders. Pursuant to an Investment Agreement, dated October 3, 2017, between the Company and MFP, MFP agreed to purchase, at the subscription price, all of the shares not purchased in the Rights Offering (the "Backstop Commitment"). Accordingly, on December 22, 2017, the Company and MFP completed the closing of the Backstop Commitment, in which the Company sold and issued 905,077 shares of its Common Stock to MFP. Combined, the Company sold and issued an aggregate of 3,500,000 shares of its common stock for aggregate gross proceeds of $12.25 million. On September 5, 2018, the Company entered into the Securities Purchase Agreement with MFP, pursuant to which the Company sold the Common Shares at the Initial Closing and the Preferred Shares at the Second Closing. The Initial Closing was completed on September 5, 2018 and the Second Closing was completed on October 23, 2018. See Note 9 for further discussion on the Second Closing. On December 18, 2018, the Company entered into a Loan and Security Agreement (the "MFP Loan Agreement") with MFP, pursuant to which the Company may borrow up to $5,000,000, in minimum increments of $1,000,000, from MFP during the period beginning on December 18, 2018 and ending on the earlier to occur of (i) March 18, 2019 and (ii) certain specified events of default. Pursuant to the MFP Loan Agreement, interest will accrue on outstanding principal at a fixed per annum rate of 6.0%. In addition, the Company is obligated to pay to MFP a fee equal to 2.0% of each advance under the MFP Loan Agreement. Concurrently with the execution of the MFP Loan Agreement, the Company drew down $1,000,000 under the MFP Loan Agreement, which was disbursed to the Company on December 21, 2018. On December 31, 2018 the Company repaid in full the $1,000,000 disbursed to the Company. As of December 31, 2018, no amounts remain outstanding under the MFP Loan Agreement. |
NOTE 13 - EQUITY-BASED COMPENSA
NOTE 13 - EQUITY-BASED COMPENSATION | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 13 - EQUITY-BASED COMPENSATION | NOTE 13 - EQUITY-BASED COMPENSATION In October 2009 and January 2010, the Company's Board of Directors and stockholders, respectively, approved the 2009 Equity Incentive Plan (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 an amendment of the 2009 Plan to increase 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 an amendment of the 2009 Plan to increase the number of shares available for issuance as grants and awards under the Plan to 2,450,000 shares. The term of incentive stock options granted under the 2009 Plan 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 2009 Plan 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 for awards granted during the period are set forth below: December 31, 2018 2017 Risk free rate 2.72% - 2.99% 1.72% - 1.91% Dividend yield 0% 0% Volatility 40.36% - 45.47% 45.3% - 45.5% Average forfeiture assumptions 1.4% 1.4% During the six months ended December 31, 2018, the Company granted options to purchase 353,822 shares of its common stock to certain of its Directors, members of the executive management team and other employees at exercise prices ranging from $2.79 - $3.30. 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 six months ended December 31, 2018 and the year ended June 30, 2018 is presented below: Weighted- Weighted - Average Average Remaining Aggregate Number Exercise Price Contractual Intrinsic Outstanding Per Share Life (Years) Value Outstanding at June 30, 2017 990,528 $ 5.12 4.3 $ 100,344 Granted 103,283 3.45 - - Exercised (49,000) 3.95 - - Canceled/forfeited/expired (252,737) 6.46 - - Outstanding at June 30, 2018 792,074 4.55 6.3 10,413 Granted 353,822 2.98 - - Exercised - - - - Canceled/forfeited/expired (96,500) 6.12 - - Outstanding at December 31, 2018 1,049,396 3.87 7.7 - Options vested and exercisable at December 31, 2018 544,288 4.46 6.1 - Options vested and expected to vest as of December 31, 2018 1,048,087 $ 3.87 7.7 $ - The weighted average grant date fair value of options granted and outstanding at December 31, 2018 was $1.08. At December 31, 2018, the Company had $528,553 of unrecognized stock compensation expense, net of estimated forfeitures, related to the options under the 2009 Plan, which will be recognized over the weighted average remaining service period of 2.2 years. The Company settles employee stock option exercises with newly issued shares of common stock. During the six months ended December 31, 2018, the Company issued 99,902 restricted stock units to certain members of the executive management team and other employees. The restricted stock units vest immediately, in annual installments over one-year or quarterly periods over three-years. The fair value of the awards totaled $306,047 and was based on the closing stock price on the date of grants. The Company recorded $222,431 and $311,067 of stock-based compensation expense associated with grants of restricted stock units during the six months ended December 31, 2018 and 2017, respectively. A summary of activity related to non-vested restricted stock units is presented below: Six Months Ended December 31, 2018 Weighted - Number of Weighted- Average Nonvested Average Remaining Restricted Grant Date Contractual Stock Units Fair Value Life (Years) Beginning nonvested restricted units outstanding 89,193 $ 3.98 1.1 Granted 99,902 3.06 2.8 Vested (44,507) 3.72 - Forfeited - - - Ending nonvested restricted units outstanding 144,588 $ 3.43 2.1 At December 31, 2018, the Company had $288,327 of unrecognized stock compensation expense related to the restricted stock units, which will be recognized over the weighted average remaining service period of 2.11 years. At December 31, 2018, there were 350,343 shares available under the 2009 Plan for future grants and awards. Stock-based compensation expense recorded for stock options, restricted stock grants and restricted stock units for the three months ended December 31, 2018 and 2017, totaled $222,153 and $193,571, respectively. Stock-based compensation expense recorded for stock options, restricted stock grants and restricted stock units for the six months ended December 31, 2018 and 2017, totaled $377,458 and $451,033, respectively. |
NOTE 14 - NON-CASH INVESTING AN
NOTE 14 - NON-CASH INVESTING AND FINANCING ACTIVITIES FOR STATEMENTS OF CASH FLOWS | 6 Months Ended |
Dec. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
NOTE 14 - NON-CASH INVESTING AND FINANCING ACTIVITIES FOR STATEMENTS OF CASH FLOWS | NOTE 14 - NON-CASH INVESTING AND FINANCING ACTIVITIES FOR STATEMENTS OF CASH FLOWS The below table represents supplemental information to the Company's consolidated statements of cash flows for non-cash activities during the six months ended December 31, 2018 and 2017, respectively. Six Months Ended December 31, 2018 2017 Fair value of assets acquired $ 29,446,067 $ - Cash paid for the acquisition (26,450,000) - Liabilities assumed (2,996,067) - |
NOTE 15 - SUBSEQUENT EVENTS
NOTE 15 - SUBSEQUENT EVENTS | 6 Months Ended |
Dec. 31, 2018 | |
Note 15 - Subsequent Events | |
Note 15 - SUBSEQUENT EVENTS | NOTE 15 - SUBSEQUENT EVENTS At the Annual Meeting of Stockholders of the Company, held on January 16, 2019 (the "Annual Meeting"), the Company's stockholders approved the S&W Seed Company 2019 Equity Incentive Plan (the "2019 Plan") as a successor to and continuation of the Company's Amended and Restated 2009 Equity Incentive Plan (the "2009 Plan"). 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 will not exceed 4,246,878 shares, which is the sum of (i) 2,750,000 new shares, plus (ii) 353,431 shares that remained available for grant under the 2009 Plan as of January 16, 2019, plus (iii) 1,143,447 shares subject to outstanding stock awards granted under the 2009 Plan. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of S&W Seed Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements were prepared in accordance with U.S. GAAP and include the assets, liabilities, revenue and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company's exercises control. Outside stockholders' interests in subsidiaries are shown on the condensed consolidated financial statements as Noncontrolling interests. |
Unaudited Interim Financial Information | 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 ("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), 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, 2019. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America 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 Company's Annual Report on Form 10-K for the year ended June 30, 2018, as filed with the SEC. |
Use of Estimates | 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, revenue recognition, asset impairments, provisions for income taxes, grower accruals (an estimate of amounts payable to farmers who grow seed for the Company), contingent consideration obligations, derivative liabilities, 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. |
Certain Risks and Concentrations | Certain Risks and Concentrations The Company's revenue is principally derived from the sale of seed, the market for which is highly competitive. One customer accounted for 52% and 75% of its revenue for the three months ended December 31, 2018 and 2017, respectively. One customer accounted for 65% and 58% of its revenue for the six months ended December 31, 2018 and 2017, respectively. Three customers accounted for 28% of the Company's accounts receivable at December 31, 2018. One customer accounted for 35% of the Company's accounts receivable at June 30, 2018. In addition, the Company sells a substantial portion of its products to international customers. Sales to international markets represented 33% and 23% of revenue during the three months ended December 31, 2018 and 2017, respectively. Sales to international markets represented 23% and 38% of revenue during the six months ended December 31, 2018 and 2017, respectively. The net book value of fixed assets located outside the United States was 11% of total assets at December 31, 2018. The net book value of fixed assets located outside the United States was 20% at June 30, 2018. Cash balances located outside of the United States may not be insured and totaled $286,823 and $369,803 at December 31, 2018 and June 30, 2018, respectively. The following table shows revenue from external sources by destination country: Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 United States $ 12,464,626 67% $ 15,740,706 77% $ 34,204,005 77% $ 19,265,254 62% Australia 1,040,480 6% 438,468 2% 1,370,150 3% 557,998 2% Mexico 986,303 5% 1,664,618 8% 1,379,253 3% 4,380,626 14% Saudi Arabia 863,982 5% 513,000 2% 1,570,275 4% 844,908 3% Libya 800,375 4% 563,673 3% 1,798,750 4% 752,673 2% Argentina 556,227 3% 1,183,423 6% 562,164 1% 2,742,619 9% Pakistan 464,936 3% - 0% 730,583 2% - 0% Peru 299,245 2% 313,688 2% 709,495 2% 608,413 2% Other 1,104,822 5% 115,220 0% 2,376,458 4% 2,092,021 6% Total $ 18,580,996 100% $ 20,532,796 100% $ 44,701,133 100% $ 31,244,512 100% |
International Operations | 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 consolidated statement of operations. |
Revenue Recognition | Revenue Recognition The Company adopted the provisions of ASC Topic 606, Revenue from Contracts with Customers |
Cost of Revenue | Cost of Revenue The Company records purchasing and receiving costs, inspection costs and warehousing costs in cost of revenue. When the Company is required to pay for outward freight and/or the costs incurred to deliver products to its customers, the costs are included in cost of revenue. |
Cash and Equivalents | Cash and Cash Equivalents For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At times, cash and cash equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation. |
Accounts Receivable | 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 $430,964 and $584,202 at December 31, 2018 and June 30, 2018, respectively. |
Inventories | Inventories Inventories consist of seed and packaging materials. Inventories are stated at the lower of cost or net realizable value, and an inventory reserve permanently reduces the cost basis of inventory. Inventories are valued as follows: Actual cost is used to value raw materials such as packaging materials, as well as goods in process. Costs for substantially all finished goods, which include the cost of carryover crops from the previous year, are valued at actual cost. Actual cost for finished goods includes plant conditioning and packaging costs, direct labor and raw materials and manufacturing overhead costs based on normal capacity. The Company records abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges and allocates fixed production overhead to the costs of finished goods based on the normal capacity of the production facilities. The Company's subsidiary, S&W Australia, does not fix the final price for seed payable to its growers until the completion of a given year's sales cycle pursuant to its standard contract production agreement. S&W Australia records an estimated unit price; accordingly, inventory, cost of revenue and gross profits are based upon management's best estimate of the final purchase price to growers. Inventory is periodically reviewed to determine if it is marketable, obsolete or impaired. Inventory that is determined to be obsolete or impaired is written off to expense at the time the impairment is identified. Inventory quality is a function of germination percentage. Alfalfa seed quality is very stable under proper storage conditions therefore, inventory obsolescence for alfalfa seed is not 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. The Company sells its inventory to distributors, dealers and directly to growers. Components of inventory are: December 31, June 30, 2018 2018 Raw materials and supplies $ 955,372 $ 344,620 Work in progress 22,820,169 2,775,398 Finished goods 64,680,439 57,299,258 $ 88,455,980 $ 60,419,276 |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset - periods of 5-35 years for buildings, 3-20 years for machinery and equipment, and 2-5 years for vehicles. |
Intangible Assets | Intangible Assets Intangible assets acquired in business acquisitions are reported at their initial fair value less accumulated amortization. Intangible assets are amortized using the straight-line method over the estimated useful life of the asset. Periods of 10-30 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 27 years for technology/IP/germplasm, 17 years for customer relationships and 18 years for trade names and other intangible assets. |
Goodwill | 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 in the business climate, legal factors, a decline in operating performance, competition, sale or disposition 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 of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management then develops a detailed estimate of the reporting unit's fair value. The Company uses market capitalization and an estimate of a control premium, as well as a discounted cash flow analysis to estimate the fair value of its one reporting unit. Management then compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company performed a qualitative assessment of goodwill at December 31, 2018 and determined that goodwill was not impaired. |
Equity Method Investments | Equity Method Investments Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company's board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are not reflected within the Company's consolidated balance sheets and statements of operations; however, the Company's share of the earnings or losses of the investee company is reflected in the caption "Loss on equity method investment" in the consolidated statements of operations. The Company's carrying value in an equity method investee company is included in the Company's consolidated balance sheets. When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. |
Cost Method Investments | Cost Method Investments Investee companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, the Company's share of the earnings or losses of such investee companies is not included in the consolidated balance sheet or statement of operations. However, impairment charges are recognized in the consolidated statement of operations. If circumstances suggest that the value of the investee company has subsequently recovered, such recovery is not recorded. |
Research and Development Costs | Research and Development Costs The Company is engaged in ongoing research and development ("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 | 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 six months ended December 31, 2018 and 2017 has been affected by the valuation allowance on the Company's deferred tax assets. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Data Basic net income (loss) per common share ("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 convertible preferred stock, options, restricted stock awards, and common stock warrants. The treasury stock method is used for common stock warrants, 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 calculation of Basic and Diluted EPS is shown in the table below. Classes of securities identified in the table with no adjustments in the calculation of Diluted EPS were determined to be antidilutive for the applicable periods. Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 Numerator: Net loss attributed to S&W Seed Company $ (2,766,056) $ (399,887) $ (2,745,125) $ (2,217,393) Numerator for basis EPS (2,766,056) (399,887) (2,745,125) (2,217,393) Effect of dilutive securities: Warrants - - - - - - - - Numerator for diluted EPS $ (2,766,056) $ (399,887) $ (2,745,125) $ (2,217,393) Denominator: Denominator for basic EPS - weighted-average shares 29,153,852 21,130,960 26,996,483 20,643,973 Effect of dilutive securities: Employee stock options - - - - Employee restricted stock units - - - - Warrants - - - - Dilutive potential common shares - - - - Denominator for diluted EPS - adjusted weighted average shares and assumed conversions 29,153,852 21,130,960 26,996,483 20,643,973 Basic EPS $ (0.09) $ (0.02) $ (0.10) $ (0.11) Diluted EPS $ (0.09) $ (0.02) $ (0.10) $ (0.11) |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating 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. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of long-lived assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. |
Foreign Exchange Contracts | 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. The Company has entered into certain derivative financial instruments (specifically foreign currency forward contracts), and accounts for these instruments in accordance with ASC Topic 815, "Derivatives and 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 are not designated as hedging instruments under ASC 815; accordingly, changes in the fair value are recorded in current period earnings. |
Derivative Liabilities | Derivative Financial Instruments Derivative Liabilities The Company reviews the terms of the common stock, preferred stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options and redemption options, which are required to be bifurcated and accounted for separately as derivative financial instruments. |
Fair Values of Financial Instruments | Fair Value of Financial Instruments The Company discloses assets and liabilities that are recognized and measured at fair value, presented in a three-tier fair value hierarchy, as follows: Level 1. Observable inputs such as quoted prices in active markets; Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The assets acquired and liabilities assumed in the Chromatin acquisition were valued at fair value on a non-recurring basis as of October 25, 2018. No assets or liabilities were valued at fair value on a non-recurring basis as of December 31, 2018 or June 30, 2018. The carrying value of cash and cash equivalents, accounts payable, short-term and all long-term borrowings, as reflected in the consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments or interest rates commensurate with market rates. There have been no changes in operations and/or credit characteristics since the date of issuance that could impact the relationship between interest rate and market rates. Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows: Fair Value Measurements as of December 31, 2018 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 98,071 $ - Total $ - $ 98,071 $ - Fair Value Measurements as of June 30, 2018 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 100,138 $ - Total $ - $ 100,138 $ - |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements The Company adopted Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment ("ASU 2017-04") The Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers The Company adopted Topic 606 using the modified retrospective approach, in which the cumulative effect of applying the new standards to open contracts as of July 1, 2018 was to be recognized as a cumulative effect adjustment. The adoption did not result in a cumulative effect adjustment as of July 1, 2018. The adoption of Topic 606 had a significant effect on the Company's accounting for its distribution and production agreements with Pioneer for the three and six months ended December 31, 2018. There were no other changes in the Company's accounting as a result of the adoption of Topic 606. The change in the accounting for the distribution and production agreements with Pioneer arises from the provisions of Topic 606 regarding the determination of whether a performance obligation is satisfied at a point in time or over time. Under those provisions, a performance obligation is considered to be satisfied over time if the company's performance creates an asset that the customer controls as the asset is created or enhanced; or the work to satisfy the performance obligation does not create an asset with alternative future use to the vendor and the customer has an obligation to pay for work completed. Under the agreements, Pioneer submits a demand plan to the Company in advance of the growing season specifying the amount of seed that it intends to order for the upcoming sales year. Once the demand plan is submitted, Pioneer cannot cancel or reduce the amount of seed that it is obligated to purchase under the agreements. In addition, the Company is not permitted to sell products produced for Pioneer under the agreements to other customers. Therefore, under Topic 606, the performance obligation is satisfied, and revenue is recognized, over time, as the Company takes delivery of, processes, and packages the seed. The Company has concluded that cost is the best measure of progress under the Pioneer contracts because no other measure adequately reflects the value added to the product by each of the Company's major tasks - having the crop grown, processing, and packaging. As the Company contracts out the growing of seed to third parties, the vast majority of the Company's costs under these agreements are incurred, and therefore the vast majority of the revenue from such agreements is recognized, when the raw seed is purchased from the third-party contract growers. The rest of the costs are incurred, and therefore the rest of the revenue is recognized, as the Company processes and packages the product. Because revenue is recognized as costs are incurred, no inventory costs related to performance under the Pioneer contract are capitalized as inventory - instead, they are recognized as expenses as they are incurred. Prior to the adoption of Topic 606, revenue related to the Pioneer agreement was recognized when seed was delivered to Pioneer. Costs incurred to purchase and process seed were capitalized as inventory until the product was delivered. As the Company adopted Topic 606 using the modified retrospective approach, figures for fiscal 2018 have not been adjusted and continue to reflect the prior accounting policies. The change in accounting for the Pioneer contract did not result in a cumulative effect adjustment, because all seed produced for Pioneer in previous growing seasons had been delivered, and revenue recognized, prior to July 1, 2018, and no seed had been received prior to July 1, 2018 related to the current growing season. However, the change materially affected the amount of revenue and costs recognized during the three and six months ended December 31, 2018. The effects of the new accounting for the Pioneer contracts on the Company's financial statements are shown below: Three Months Ended Six Months Ended December 31, 2018 December 31, 2018 Balances Without Balances Without As Reported Adjustments Adoption of ASC 606 As Reported Adjustments Adoption of ASC 606 Revenue $ 18,580,996 $ 6,288,847 $ 24,869,843 $ 44,701,133 $ (11,050,488) $ 33,650,645 Cost of revenue 13,897,455 5,927,174 19,824,629 34,554,463 (7,158,038) 27,396,425 Gross profit 4,683,541 361,673 5,045,214 10,146,670 (3,892,450) 6,254,220 Operating expenses Selling, general and administrative expenses 4,342,696 - 4,342,696 7,230,074 - 7,230,074 Research and development expenses 1,373,554 - 1,373,554 2,365,667 - 2,365,667 Depreciation and amortization 1,035,606 - 1,035,606 1,890,714 - 1,890,714 Disposal of property, plant and equipment gain 3,463 - 3,463 3,463 - 3,463 Total operating expenses 6,755,319 - 6,755,319 11,489,918 - 11,489,918 Income (loss) from operations (2,071,778) 361,673 (1,710,105) (1,343,248) (3,892,450) (5,235,698) Other expense Foreign currency (gain) loss (32,987) - (32,987) (58,430) - (58,430) Change in derivative warrant liabilities - - - - - - Interest expense - amortization of debt discount 68,914 - 68,914 135,392 - 135,392 Interest expense 641,479 - 641,479 1,298,709 - 1,298,709 Income (loss) before income taxes (2,749,184) 361,673 (2,387,511) (2,718,919) (3,892,450) (6,611,369) Provision for income taxes (4,801) 15,944 11,143 4,533 (51,091) (46,558) Net income (loss) before noncontrolling interests $ (2,744,383) $ 345,729 $ (2,398,654) $ (2,723,452) $ (3,841,359) $ (6,564,811) Net income attributed to noncontrolling interest 21,673 - 21,673 21,673 - 21,673 Net loss attributed to S&W Seed Company $ (2,766,056) $ 345,729 $ (2,420,327) $ (2,745,125) $ (3,841,359) $ (6,586,484) Net income (loss) per common share: Basic $ (0.09) $ 0.01 $ (0.08) $ (0.10) $ (0.14) $ (0.24) Diluted $ (0.09) $ 0.01 $ (0.08) $ (0.10) $ (0.14) $ (0.24) Weighted average number of common shares outstanding: Basic 29,153,852 - 29,153,852 26,996,483 - 26,996,483 Diluted 29,153,852 - 29,153,852 26,996,483 - 26,996,483 December 31, 2018 Balances Without As Reported Adjustments Adoption of ASC 606 ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,471,381 $ - $ 2,471,381 Accounts receivable, net 23,178,997 - 23,178,997 Unbilled accounts receivable, net 11,206,984 (11,206,984) - Inventories, net 88,455,980 7,158,038 95,614,018 Prepaid expenses and other current assets 1,158,738 - 1,158,738 Assets held for sale 1,930,400 - 1,930,400 TOTAL CURRENT ASSETS 128,402,480 (4,048,946) 124,353,534 Property, plant and equipment, net 22,731,765 - 22,731,765 Intangibles, net 39,823,195 - 39,823,195 Goodwill 11,865,811 - 11,865,811 Other assets 1,302,705 - 1,302,705 TOTAL ASSETS $ 204,125,956 $ (4,048,946) $ 200,077,010 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 31,594,475 $ - $ 31,594,475 Deferred revenue 2,443,574 - 2,443,574 Accrued expenses and other current liabilities 3,471,881 (156,496) 3,315,385 Lines of credit, net 46,310,464 - 46,310,464 Current portion of long-term debt, net 991,140 - 991,140 TOTAL CURRENT LIABILITIES 84,811,534 (156,496) 84,655,038 Long-term debt, net, less current portion 12,264,273 - 12,264,273 Other non-current liabilities 656,994 (51,091) 605,903 TOTAL LIABILITIES 97,732,801 (207,587) 97,525,214 STOCKHOLDERS' EQUITY Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding - - - Common stock, $0.001 par value; 50,000,000 shares authorized; 33,246,141 issued and 33,221,141 outstanding at December 31, 2018; 24,367,906 issued and 24,342,906 outstanding at June 30, 2018; 33,246 - 33,246 Treasury stock, at cost, 25,000 shares (134,196) - (134,196) Additional paid-in capital 136,495,216 - 136,495,216 Accumulated deficit (23,906,501) (3,841,359) (27,747,860) Accumulated other comprehensive loss (6,116,283) - (6,116,283) Noncontrolling interest 21,673 - 21,673 TOTAL STOCKHOLDERS' EQUITY 106,393,155 (3,841,359) 102,551,796 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 204,125,956 $ (4,048,946) $ 200,077,010 Topic 606 also requires enhanced disclosures about the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. Those disclosures can also be found in Note 3. |
Recently Issued, but Not Yet Adopted, Accounting Pronouncements | Recently Issued, but Not Yet Adopted, Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02: Leases |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Certain Risks and Concentrations) (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Policies Certain Risks And Concentrations | |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The following table shows revenue from external sources by destination country: Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 United States $ 12,464,626 67% $ 15,740,706 77% $ 34,204,005 77% $ 19,265,254 62% Australia 1,040,480 6% 438,468 2% 1,370,150 3% 557,998 2% Mexico 986,303 5% 1,664,618 8% 1,379,253 3% 4,380,626 14% Saudi Arabia 863,982 5% 513,000 2% 1,570,275 4% 844,908 3% Libya 800,375 4% 563,673 3% 1,798,750 4% 752,673 2% Argentina 556,227 3% 1,183,423 6% 562,164 1% 2,742,619 9% Pakistan 464,936 3% - 0% 730,583 2% - 0% Peru 299,245 2% 313,688 2% 709,495 2% 608,413 2% Other 1,104,822 5% 115,220 0% 2,376,458 4% 2,092,021 6% Total $ 18,580,996 100% $ 20,532,796 100% $ 44,701,133 100% $ 31,244,512 100% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Inventories) (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Policies Inventories | |
Inventories (Tables) | Components of inventory are: December 31, June 30, 2018 2018 Raw materials and supplies $ 955,372 $ 344,620 Work in progress 22,820,169 2,775,398 Finished goods 64,680,439 57,299,258 $ 88,455,980 $ 60,419,276 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Net Income (Loss) Per Common Share Data) (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Policies Net Income Loss Per Common Share Data | |
Net Income (Loss) Per Common Share Data (Tables) | The calculation of Basic and Diluted EPS is shown in the table below. Classes of securities identified in the table with no adjustments in the calculation of Diluted EPS were determined to be antidilutive for the applicable periods. Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 Numerator: Net loss attributed to S&W Seed Company $ (2,766,056) $ (399,887) $ (2,745,125) $ (2,217,393) Numerator for basis EPS (2,766,056) (399,887) (2,745,125) (2,217,393) Effect of dilutive securities: Warrants - - - - - - - - Numerator for diluted EPS $ (2,766,056) $ (399,887) $ (2,745,125) $ (2,217,393) Denominator: Denominator for basic EPS - weighted-average shares 29,153,852 21,130,960 26,996,483 20,643,973 Effect of dilutive securities: Employee stock options - - - - Employee restricted stock units - - - - Warrants - - - - Dilutive potential common shares - - - - Denominator for diluted EPS - adjusted weighted average shares and assumed conversions 29,153,852 21,130,960 26,996,483 20,643,973 Basic EPS $ (0.09) $ (0.02) $ (0.10) $ (0.11) Diluted EPS $ (0.09) $ (0.02) $ (0.10) $ (0.11) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Fair Value Measurement) (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Policies Fair Value Measurement | |
Fair Value of Financial Instrumements (Tables) | Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows: Fair Value Measurements as of December 31, 2018 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 98,071 $ - Total $ - $ 98,071 $ - Fair Value Measurements as of June 30, 2018 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 100,138 $ - Total $ - $ 100,138 $ - |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies and Revenue Recognition (Adoption of Topic 606)) (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Policies And Revenue Recognition Adoption Of Topic 606 | |
Schedule of impacts of adopting ASC 606 | December 31, 2018 Balances Without As Reported Adjustments Adoption of ASC 606 ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,471,381 $ - $ 2,471,381 Accounts receivable, net 23,178,997 - 23,178,997 Unbilled accounts receivable, net 11,206,984 (11,206,984) - Inventories, net 88,455,980 7,158,038 95,614,018 Prepaid expenses and other current assets 1,158,738 - 1,158,738 Assets held for sale 1,930,400 - 1,930,400 TOTAL CURRENT ASSETS 128,402,480 (4,048,946) 124,353,534 Property, plant and equipment, net 22,731,765 - 22,731,765 Intangibles, net 39,823,195 - 39,823,195 Goodwill 11,865,811 - 11,865,811 Other assets 1,302,705 - 1,302,705 TOTAL ASSETS $ 204,125,956 $ (4,048,946) $ 200,077,010 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 31,594,475 $ - $ 31,594,475 Deferred revenue 2,443,574 - 2,443,574 Accrued expenses and other current liabilities 3,471,881 (156,496) 3,315,385 Lines of credit, net 46,310,464 - 46,310,464 Current portion of long-term debt, net 991,140 - 991,140 TOTAL CURRENT LIABILITIES 84,811,534 (156,496) 84,655,038 Long-term debt, net, less current portion 12,264,273 - 12,264,273 Other non-current liabilities 656,994 (51,091) 605,903 TOTAL LIABILITIES 97,732,801 (207,587) 97,525,214 STOCKHOLDERS' EQUITY Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding - - - Common stock, $0.001 par value; 50,000,000 shares authorized; 33,246,141 issued and 33,221,141 outstanding at December 31, 2018; 24,367,906 issued and 24,342,906 outstanding at June 30, 2018; 33,246 - 33,246 Treasury stock, at cost, 25,000 shares (134,196) - (134,196) Additional paid-in capital 136,495,216 - 136,495,216 Accumulated deficit (23,906,501) (3,841,359) (27,747,860) Accumulated other comprehensive loss (6,116,283) - (6,116,283) Noncontrolling interest 21,673 - 21,673 TOTAL STOCKHOLDERS' EQUITY 106,393,155 (3,841,359) 102,551,796 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 204,125,956 $ (4,048,946) $ 200,077,010 Three Months Ended Six Months Ended December 31, 2018 December 31, 2018 Balances Without Balances Without As Reported Adjustments Adoption of ASC 606 As Reported Adjustments Adoption of ASC 606 Revenue $ 18,580,996 $ 6,288,847 $ 24,869,843 $ 44,701,133 $ (11,050,488) $ 33,650,645 Cost of revenue 13,897,455 5,927,174 19,824,629 34,554,463 (7,158,038) 27,396,425 Gross profit 4,683,541 361,673 5,045,214 10,146,670 (3,892,450) 6,254,220 Operating expenses Selling, general and administrative expenses 4,342,696 - 4,342,696 7,230,074 - 7,230,074 Research and development expenses 1,373,554 - 1,373,554 2,365,667 - 2,365,667 Depreciation and amortization 1,035,606 - 1,035,606 1,890,714 - 1,890,714 Disposal of property, plant and equipment gain 3,463 - 3,463 3,463 - 3,463 Total operating expenses 6,755,319 - 6,755,319 11,489,918 - 11,489,918 Income (loss) from operations (2,071,778) 361,673 (1,710,105) (1,343,248) (3,892,450) (5,235,698) Other expense Foreign currency (gain) loss (32,987) - (32,987) (58,430) - (58,430) Change in derivative warrant liabilities - - - - - - Interest expense - amortization of debt discount 68,914 - 68,914 135,392 - 135,392 Interest expense 641,479 - 641,479 1,298,709 - 1,298,709 Income (loss) before income taxes (2,749,184) 361,673 (2,387,511) (2,718,919) (3,892,450) (6,611,369) Provision for income taxes (4,801) 15,944 11,143 4,533 (51,091) (46,558) Net income (loss) before noncontrolling interests $ (2,744,383) $ 345,729 $ (2,398,654) $ (2,723,452) $ (3,841,359) $ (6,564,811) Net income attributed to noncontrolling interest 21,673 - 21,673 21,673 - 21,673 Net loss attributed to S&W Seed Company $ (2,766,056) $ 345,729 $ (2,420,327) $ (2,745,125) $ (3,841,359) $ (6,586,484) Net income (loss) per common share: Basic $ (0.09) $ 0.01 $ (0.08) $ (0.10) $ (0.14) $ (0.24) Diluted $ (0.09) $ 0.01 $ (0.08) $ (0.10) $ (0.14) $ (0.24) Weighted average number of common shares outstanding: Basic 29,153,852 - 29,153,852 26,996,483 - 26,996,483 Diluted 29,153,852 - 29,153,852 26,996,483 - 26,996,483 The following table disaggregates the Company's revenue by type of contract 1 Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 ASC 606 ASC 605 ASC 605 ASC 606 ASC 605 ASC 605 Distribution and production agreements - Pioneer $ 9,677,988 $ 15,966,835 $ 15,313,310 $ 29,185,614 $ 18,135,126 $ 18,101,800 Other product sales 8,761,172 8,761,172 5,033,204 15,336,201 15,336,201 12,767,630 Services 141,836 141,836 186,282 179,318 179,318 375,082 $ 18,580,996 $ 24,869,843 $ 20,532,796 $ 44,701,133 $ 33,650,645 $ 31,244,512 |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Business Acquisition, Pro Forma Information | The following unaudited pro forma financial information presents results as if the Acquisition occurred on July 1, 2017. Six Months Ended December 31, (unaudited) 2018 2017 Revenue $ 46,374,310 $ 39,910,879 Net loss $ (4,889,152) $ (7,784,946) |
Chromatin Acquisition | |
Schedule of Purchase Price Allocation | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date of October 25, 2018: October 25, 2018 Cash $ 95,049 Accounts receivable 947,015 Inventory 6,959,936 Prepaid expenses 16,501 Property, plant and equipment 10,193,620 Assets held for sale 1,930,400 In-process research and development 380,000 Technology/IP - germplasm 7,200,000 Trade names 150,000 Goodwill 1,573,546 Current liabilities (2,881,198) Noncurrent liabilities (114,869) Total acquisition cost allocated $ (26,450,000) |
Assets held for sale | Assets held for sale Land and improvements $ 320,000 Buildings and improvements 1,380,000 Machinery and equipment 332,000 Less: Costs to sell (101,600) Assets held for sale $ 1,930,400 |
Useful lives of acquired intangibles in business combination | The values and useful lives of the acquired intangibles are as follows: Estimated Useful Life (Years) Estimated Fair Value In-process research and development 3 $ 380,000 Technology/IP - germplasm 30 7,200,000 Trade names 5 150,000 Total identifiable intangible assets $ 7,730,000 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Intangible Assets Tables Abstract | |
Goodwill | The following table summarizes the activity of goodwill for the six months ended December 31, 2018 and the year ended June 30, 2018, respectively. Balance at Balance at July 1, 2018 Additions December 31, 2018 Goodwill $ 10,292,265 $ 1,573,546 $ 11,865,811 Balance at Balance at July 1, 2017 Additions June 30, 2018 Goodwill $ 10,292,265 $ - $ 10,292,265 |
Carrying values of intangible assets (Tables) | Intangible assets consist of the following: Balance at Balance at July 1, 2018 Additions Amortization December 31, 2018 Trade name $ 1,159,826 $ 150,000 $ (47,240) $ 1,262,586 Customer relationships 1,156,955 - (50,604) 1,106,351 Non-compete 62,720 - (18,871) 43,849 GI customer list 71,639 - (3,582) 68,057 Supply agreement 1,077,783 - (37,816) 1,039,967 Distribution agreement 6,344,253 - (192,251) 6,152,002 Grower relationships 1,753,208 - (52,704) 1,700,504 Intellectual property 20,873,393 7,200,000 (601,518) 27,471,875 In process research and development - 380,000 (21,111) 358,889 Internal use software 610,003 43,000 (33,888) 619,115 $ 33,109,780 $ 7,773,000 $ (1,059,585) $ 39,823,195 Balance at Balance at July 1, 2017 Additions Amortization June 30, 2018 Trade name $ 1,244,306 $ - $ (84,480) $ 1,159,826 Customer relationships 1,258,163 - (101,208) 1,156,955 Non-compete 102,035 - (39,315) 62,720 GI customer list 78,803 - (7,164) 71,639 Supply agreement 1,153,415 - (75,632) 1,077,783 Distribution agreement 6,728,753 - (384,500) 6,344,253 Production agreement 111,670 - (111,670) - Grower relationships 1,858,616 - (105,408) 1,753,208 Intellectual property 21,725,539 295,034 (1,147,180) 20,873,393 Internal use software 677,779 - (67,776) 610,003 $ 34,939,079 $ 295,034 $ (2,124,333) $ 33,109,780 |
Finite-lived intangible assets - future amortization expense | Estimated aggregate remaining amortization is as follows: 2019 2020 2021 2022 2023 Thereafter Amortization expense $ 1,178,739 $ 2,355,136 $ 2,336,313 $ 2,252,980 $ 2,204,355 $ 28,795,672 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Property Plant And Equipment | |
Components of Property, Plant and Equipment | Components of property, plant and equipment were as follows: December 31, June 30, 2018 2018 Land and improvements $ 2,532,053 $ 2,068,742 Buildings and improvements 11,291,516 8,888,196 Machinery and equipment 12,656,650 5,731,293 Vehicles 1,580,518 1,130,276 Construction in progress 313,852 220,089 Total property, plant and equipment 28,374,589 18,038,596 Less: accumulated depreciation (5,642,824) (4,858,464) Property, plant and equipment, net $ 22,731,765 $ 13,180,132 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Debt | |
Debt Components | Total debt outstanding is presented on the consolidated balance sheet as follows: December 31, June 30, 2018 2018 Working capital lines of credit KeyBank $ 38,836,070 $ 25,050,464 National Australia Bank Limited 7,870,247 7,697,040 Debt issuance costs (395,853) (116,945) Total working capital lines of credit, net $ 46,310,464 $ 32,630,559 Current portion of long-term debt Capital leases $ 451,089 $ 27,241 Keith facility (building loan) - National Australia Bank Limited 77,649 3,701 Keith facility (machinery & equipment loans) - National Australia Bank Limited 212,852 198,251 Unsecured subordinate promissory note 100,000 100,000 Secured real estate note - Conterra 238,693 229,789 Secured equipment note - Conterra - 37,824 Debt issuance costs (89,143) (93,794) Total current portion, net 991,140 503,012 Long-term debt, less current portion Capital leases 1,623,504 - Keith facility (building loan) - National Australia Bank Limited 254,124 421,857 Keith facility (machinery & equipment loans) - National Australia Bank Limited 420,550 431,754 Secured real estate note - Conterra 10,048,597 10,170,211 Secured equipment note - Conterra - 2,062,176 Debt issuance costs (82,502) (108,911) Total long-term portion, net 12,264,273 12,977,087 Total debt, net $ 13,255,413 $ 13,480,099 |
Schedule of Annual Maturities | The annual maturities of short-term and long-term debt are as follows: Fiscal Year Amount 2019 $ 576,583 2020 1,011,523 2021 10,628,888 2022 607,263 2023 466,531 Thereafter 136,270 Total $ 13,427,058 |
Stockholders' Equity (Warrants
Stockholders' Equity (Warrants Outstanding) (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Stockholders Equity Warrants Outstanding | |
Warrants Outstanding (Tables) | The following table summarizes the total warrants outstanding at December 31, 2018: Exercise Price Expiration Outstanding as Outstanding as Issue Date Per Share Date of June 30, 2018 New Issuances Expired of December 31, 2018 Warrants Dec 2014 $ 4.32 June 2020 2,699,999 - - 2,699,999 2,699,999 - - 2,699,999 The following table summarizes the total warrants outstanding at June 30, 2018: Exercise Price Expiration Outstanding as Outstanding as Issue Date Per Share Date of June 30, 2017 New Issuances Expired of June 30, 2018 Warrants Dec 2014 $ 4.32 June 2020 2,699,999 - - 2,699,999 2,699,999 - - 2,699,999 |
Equity-Based Compensation (Plan
Equity-Based Compensation (Plan Activity) (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Stock Options | |
Summary of Share-Based Compensation Arrangements By Share-Based Payment Award | A summary of stock option activity for the six months ended December 31, 2018 and the year ended June 30, 2018 is presented below: Weighted- Weighted - Average Average Remaining Aggregate Number Exercise Price Contractual Intrinsic Outstanding Per Share Life (Years) Value Outstanding at June 30, 2017 990,528 $ 5.12 4.3 $ 100,344 Granted 103,283 3.45 - - Exercised (49,000) 3.95 - - Canceled/forfeited/expired (252,737) 6.46 - - Outstanding at June 30, 2018 792,074 4.55 6.3 10,413 Granted 353,822 2.98 - - Exercised - - - - Canceled/forfeited/expired (96,500) 6.12 - - Outstanding at December 31, 2018 1,049,396 3.87 7.7 - Options vested and exercisable at December 31, 2018 544,288 4.46 6.1 - Options vested and expected to vest as of December 31, 2018 1,048,087 $ 3.87 7.7 $ - |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Weighted average assumptions used in the Black-Scholes-Merton model for awards granted during the period are set forth below: December 31, 2018 2017 Risk free rate 2.72% - 2.99% 1.72% - 1.91% Dividend yield 0% 0% Volatility 40.36% - 45.47% 45.3% - 45.5% Average forfeiture assumptions 1.4% 1.4% |
Nonvested restricted stock | |
Summary of Share-Based Compensation Arrangements By Share-Based Payment Award | A summary of activity related to non-vested restricted stock units is presented below: Six Months Ended December 31, 2018 Weighted - Number of Weighted- Average Nonvested Average Remaining Restricted Grant Date Contractual Stock Units Fair Value Life (Years) Beginning nonvested restricted units outstanding 89,193 $ 3.98 1.1 Granted 99,902 3.06 2.8 Vested (44,507) 3.72 - Forfeited - - - Ending nonvested restricted units outstanding 144,588 $ 3.43 2.1 |
Non-Cash Investing and Financin
Non-Cash Investing and Financing Activities for Statements of Cash Flows (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Non-cash Investing And Financing Activities For Statements Of Cash Flows | |
Schedule of Cash Flow, Supplemental Disclosures | The below table represents supplemental information to the Company's consolidated statements of cash flows for non-cash activities during the six months ended December 31, 2018 and 2017, respectively. Six Months Ended December 31, 2018 2017 Fair value of assets acquired $ 29,446,067 $ - Cash paid for the acquisition (26,450,000) - Liabilities assumed (2,996,067) |
Background and Organization (Na
Background and Organization (Narrative) (Details) | Dec. 31, 2018 |
Background And Organization Narrative | |
Number of Countries in which S&W Operates | 30 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Concentrations Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Summary Of Significant Accounting Policies Concentrations Narrative | |||||
Sales revenue, major customer, percentage | 52.00% | 75.00% | 65.00% | 58.00% | |
Accounts receivable from major customers, percentage of total | 28.00% | 28.00% | 35.00% | ||
International sales revenue, percentage | 33% | 23% | 23% | 38% | |
Cash balances located outside of the United States | $ 286,823 | $ 286,823 | $ 369,803 | ||
Net book value of fixed assets located outside the United States, percent of total | 11.00% | 11.00% | 20.00% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Revenues from External Customers By Country Of Domicile) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues from external customers | $ 18,580,996 | $ 20,532,796 | $ 44,701,133 | $ 31,244,512 |
Revenue from external customers by country, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Disclosure on Geographic Areas, Fixed Assets | The net book value of fixed assets located outside the United States was 19% and 19% of total assets at December 31, 2017 and June 30, 2017, respectively.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-D5"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The net book value of fixed assets located outside the United States was 19% and 19% of total assets at December 31, 2017 and June 30, 2017, respectively.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> | |||
United States | ||||
Revenues from external customers | $ 12,464,626 | $ 15,740,706 | $ 34,204,005 | $ 19,265,254 |
Revenue from external customers by country, percentage | 67.00% | 77.00% | 77.00% | 62.00% |
Australia | ||||
Revenues from external customers | $ 1,040,480 | $ 438,468 | $ 1,370,150 | $ 557,998 |
Revenue from external customers by country, percentage | 6.00% | 2.00% | 3.00% | 2.00% |
Mexico | ||||
Revenues from external customers | $ 986,303 | $ 1,664,618 | $ 1,379,253 | $ 4,380,626 |
Revenue from external customers by country, percentage | 5.00% | 8.00% | 3.00% | 14.00% |
Saudi Arabia | ||||
Revenues from external customers | $ 863,982 | $ 513,000 | $ 1,570,275 | $ 844,908 |
Revenue from external customers by country, percentage | 5.00% | 2.00% | 4.00% | 3.00% |
Libya | ||||
Revenues from external customers | $ 800,375 | $ 563,673 | $ 1,798,750 | $ 752,673 |
Revenue from external customers by country, percentage | 4.00% | 3.00% | 4.00% | 2.00% |
Agrentina | ||||
Revenues from external customers | $ 556,227 | $ 1,183,423 | $ 562,164 | $ 2,742,619 |
Revenue from external customers by country, percentage | 3.00% | 6.00% | 1.00% | 9.00% |
Pakistan | ||||
Revenues from external customers | $ 464,936 | $ 0 | $ 730,583 | $ 0 |
Revenue from external customers by country, percentage | 3.00% | 0.00% | 2.00% | 0.00% |
Peru | ||||
Revenues from external customers | $ 299,245 | $ 313,688 | $ 709,495 | $ 608,413 |
Revenue from external customers by country, percentage | 2.00% | 2.00% | 2.00% | 2.00% |
Other | ||||
Revenues from external customers | $ 1,104,822 | $ 115,220 | $ 2,376,458 | $ 2,092,021 |
Revenue from external customers by country, percentage | 5.00% | 0.00% | 4.00% | 6.00% |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Accounts Receivable Narrative) (Details) - USD ($) | Dec. 31, 2018 | Jun. 30, 2018 |
Summary Of Significant Accounting Policies Accounts Receivable Narrative | ||
Allowance for doubtful trade receivables | $ 430,964 | $ 584,202 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies (Inventories by Component) (Details) - USD ($) | Dec. 31, 2018 | Jun. 30, 2018 |
Summary Of Significant Accounting Policies Inventories By Component | ||
Raw materials and supplies | $ 955,372 | $ 344,620 |
Work in progress | 22,820,169 | 2,775,398 |
Finished goods | 64,680,439 | 57,299,258 |
Inventories | $ 88,455,980 | $ 60,419,276 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies (Property, Plant and Equipment Useful Life Narrative) (Details) | 6 Months Ended |
Dec. 31, 2018 | |
Building | Minimum | |
Estimated Useful Lives | 5 years |
Building | Maximum | |
Estimated Useful Lives | 35 years |
Equipment | Minimum | |
Estimated Useful Lives | 3 years |
Equipment | Maximum | |
Estimated Useful Lives | 20 years |
Vehicles | Minimum | |
Estimated Useful Lives | 2 years |
Vehicles | Maximum | |
Estimated Useful Lives | 5 years |
Summary of Significant Accou_12
Summary of Significant Accounting Policies (Net Income (Loss) Per Common Share) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | ||||||
Net income (loss) | $ (2,766,056) | $ (2,766,056) | $ (399,887) | $ (399,887) | $ (2,745,125) | $ (2,217,393) |
Numerator for basic EPS | (2,766,056) | (399,887) | (2,745,125) | (2,217,393) | ||
Effect of dilutive securities: | ||||||
Warrants | 0 | 0 | 0 | 0 | ||
Total effect of dilutive securities: | 0 | 0 | 0 | 0 | ||
Numerator for diluted EPS | $ (2,766,056) | $ (399,887) | $ (2,745,125) | $ (2,217,393) | ||
Denominator: | ||||||
Denominator for basic EPS - weighted-average shares | 29,153,852 | 29,153,852 | 21,130,960 | 21,130,960 | 26,996,483 | 20,643,973 |
Effect of dilutive securities, shares: | ||||||
Employee stock options | 0 | 0 | 0 | 0 | ||
Employee restricted stock units | 0 | 0 | 0 | 0 | ||
Warrants | 0 | 0 | 0 | 0 | ||
Dilutive potential common shares | 0 | 0 | 0 | 0 | ||
Denominator for diluted EPS - adjusted weighted average shares and assumed conversions | 29,153,852 | 29,153,852 | 21,130,960 | 21,130,960 | 26,996,483 | 20,643,973 |
Net income (loss) per share: | ||||||
Basic EPS | $ (0.09) | $ (0.09) | $ (0.02) | $ (0.02) | $ (0.10) | $ (0.11) |
Diluted EPS | $ (0.09) | $ (0.09) | $ (0.02) | $ (0.02) | $ (0.10) | $ (0.11) |
Summary of Significant Accou_13
Summary of Significant Accounting Policies (Intangible Assets Useful Life Narrative) (Details) | 6 Months Ended |
Dec. 31, 2018 | |
Technology/IP | Minimum | |
Useful life | 10 years |
Technology/IP | Maximum | |
Useful life | 30 years |
Technology/IP | Weighted Average | |
Useful life | 27 years |
Customer Relationships | Minimum | |
Useful life | 5 years |
Customer Relationships | Maximum | |
Useful life | 20 years |
Customer Relationships | Weighted Average | |
Useful life | 17 years |
Trade Name | Minimum | |
Useful life | 3 years |
Trade Name | Maximum | |
Useful life | 20 years |
Trade Name | Weighted Average | |
Useful life | 18 years |
Other Intangibles | Minimum | |
Useful life | 3 years |
Other Intangibles | Maximum | |
Useful life | 20 years |
Other Intangibles | Weighted Average | |
Useful life | 18 years |
Summary of Significant Accou_14
Summary of Significant Accounting Policies (Fair Value of Financial Instruments) (Details) - USD ($) | Dec. 31, 2018 | Jun. 30, 2018 |
(Level 1) | ||
Foreign exchange contract liability | $ 0 | $ 0 |
Total | 0 | 0 |
(Level 2) | ||
Foreign exchange contract liability | 98,071 | 100,138 |
Total | 98,071 | 100,138 |
(Level 3) | ||
Foreign exchange contract liability | 0 | 0 |
Total | $ 0 | $ 0 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Summary of Impact of ASC 606 (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||||
Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | |
CURRENT ASSETS | |||||||||
Cash and cash equivalents | $ 2,471,381 | $ 5,454,694 | $ 2,471,381 | $ 5,454,694 | $ 4,320,894 | $ 745,001 | |||
Accounts receivable, net | 23,178,997 | 23,178,997 | 13,861,932 | ||||||
Unbilled accounts receivable, net | 11,206,984 | 11,206,984 | 0 | ||||||
Inventories, net | 88,455,980 | 88,455,980 | 60,419,276 | ||||||
Prepaid expenses and other current assets | 1,158,738 | 1,158,738 | 1,279,794 | ||||||
Assets held for sale | 1,930,400 | 1,930,400 | $ 1,930,400 | 0 | |||||
TOTAL CURRENT ASSETS | 128,402,480 | 128,402,480 | 79,881,896 | ||||||
Property, plant and equipment, net | 22,731,765 | 22,731,765 | 13,180,132 | ||||||
Intangibles, net | 39,823,195 | 39,823,195 | 33,109,780 | ||||||
Goodwill | 11,865,811 | 11,865,811 | $ 1,573,546 | 10,292,265 | 10,292,265 | ||||
Other assets | 1,302,705 | 1,302,705 | 1,303,135 | ||||||
TOTAL ASSETS | 204,125,956 | 204,125,956 | 137,767,208 | ||||||
CURRENT LIABILITIES | |||||||||
Accounts payable | 31,594,475 | 31,594,475 | 5,935,454 | ||||||
Deferred revenue | 2,443,574 | 2,443,574 | 212,393 | ||||||
Accrued expenses and other current liabilities | 3,471,881 | 3,471,881 | 3,114,799 | ||||||
Lines of credit, net | 46,310,464 | 46,310,464 | 32,630,559 | ||||||
Current portion of long-term debt | 991,140 | 991,140 | 503,012 | ||||||
TOTAL CURRENT LIABILITIES | 84,811,534 | 84,811,534 | 42,396,217 | ||||||
Long-term debt, less current portion | 12,264,273 | 12,264,273 | 12,977,087 | ||||||
Other non-current liabilities | 656,994 | 656,994 | 651,780 | ||||||
TOTAL LIABILITIES | 97,732,801 | 97,732,801 | 56,025,084 | ||||||
STOCKHOLDERS' EQUITY | |||||||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding | 0 | 0 | 0 | ||||||
Common stock, $0.001 par value; 50,000,000 shares authorized; 33,246,141 issued and 33,221,141 outstanding at December 31, 2018; 24,367,906 issued and 24,342,906 outstanding at June 30, 2018 | 33,246 | 33,246 | 24,367 | ||||||
Treasury stock, at cost, 25,000 shares | (134,196) | (134,196) | (134,196) | ||||||
Additional paid-in capital | 136,495,216 | 136,495,216 | 108,803,991 | ||||||
Accumulated deficit | (23,906,501) | (23,906,501) | (21,161,376) | ||||||
Accumulated other comprehensive loss | (6,116,283) | (6,116,283) | (5,790,662) | ||||||
Noncontrolling interests | 21,673 | 21,673 | 0 | ||||||
TOTAL STOCKHOLDERS' EQUITY | 106,393,155 | 84,381,553 | 106,393,155 | 84,381,553 | 81,742,124 | $ 61,221,655 | |||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 204,125,956 | 204,125,956 | $ 137,767,208 | ||||||
Revenue | 18,580,996 | 20,532,796 | 44,701,133 | 31,244,512 | |||||
Cost of revenue | 13,897,455 | 15,860,629 | 34,554,463 | 24,236,757 | |||||
Gross profit | 4,683,541 | 4,672,167 | 10,146,670 | 7,007,755 | |||||
Operating expenses | |||||||||
Selling, general and administrative expenses | 4,342,696 | 2,446,955 | 7,230,074 | 5,361,035 | |||||
Research and development expenses | 1,373,554 | 855,164 | 2,365,667 | 1,597,081 | |||||
Depreciation and amortization | 1,035,606 | 870,981 | 1,890,714 | 1,759,233 | |||||
Disposal of property, plant and equipment gain | 3,463 | (15,413) | 3,463 | (81,776) | |||||
Total operating expenses | 6,755,319 | 4,157,687 | 11,489,918 | 8,635,573 | |||||
Income (loss) from operations | (2,071,778) | 514,480 | (1,343,248) | (1,627,818) | |||||
Other expense | |||||||||
Foreign currency (gain) loss | (32,987) | 7,472 | (58,430) | 22,030 | |||||
Change in derivative warrant liabilities | 0 | 341,199 | 0 | (431,300) | |||||
Interest expense - amortization of debt discount | 68,914 | 33,100 | 135,392 | 67,099 | |||||
Interest expense | 641,479 | 383,894 | 1,298,709 | 731,623 | |||||
Income (loss) before income taxes | (2,749,184) | (251,185) | (2,718,919) | (2,017,270) | |||||
Provision for income taxes | (4,801) | 148,702 | 4,533 | 200,123 | |||||
Net loss including noncontrolling interests | (2,744,383) | (399,887) | (2,723,452) | (2,217,393) | |||||
Net income attributed to noncontrolling interest | 21,673 | 0 | 21,673 | 0 | |||||
Net loss attributed to S&W Seed Company | $ (2,766,056) | $ (2,766,056) | $ (399,887) | $ (399,887) | $ (2,745,125) | $ (2,217,393) | |||
Net income (loss) per common share: | |||||||||
Basic | $ (0.09) | $ (0.09) | $ (0.02) | $ (0.02) | $ (0.10) | $ (0.11) | |||
Diluted | $ (0.09) | $ (0.09) | $ (0.02) | $ (0.02) | $ (0.10) | $ (0.11) | |||
Weighted average number of common shares outstanding: | |||||||||
Basic | 29,153,852 | 29,153,852 | 21,130,960 | 21,130,960 | 26,996,483 | 20,643,973 | |||
Diluted | 29,153,852 | 29,153,852 | 21,130,960 | 21,130,960 | 26,996,483 | 20,643,973 | |||
ASC 606 | |||||||||
STOCKHOLDERS' EQUITY | |||||||||
Revenue | $ 18,580,996 | $ 44,701,133 | |||||||
ASC 606 | Adjustment | |||||||||
CURRENT ASSETS | |||||||||
Cash and cash equivalents | 0 | 0 | |||||||
Accounts receivable, net | 0 | 0 | |||||||
Unbilled accounts receivable, net | (11,206,984) | (11,206,984) | |||||||
Inventories, net | 7,158,038 | 7,158,038 | |||||||
Prepaid expenses and other current assets | 0 | 0 | |||||||
Assets held for sale | 0 | 0 | |||||||
TOTAL CURRENT ASSETS | (4,048,946) | (4,048,946) | |||||||
Property, plant and equipment, net | 0 | 0 | |||||||
Intangibles, net | 0 | 0 | |||||||
Goodwill | 0 | 0 | |||||||
Other assets | 0 | 0 | |||||||
TOTAL ASSETS | (4,048,946) | (4,048,946) | |||||||
CURRENT LIABILITIES | |||||||||
Accounts payable | 0 | 0 | |||||||
Deferred revenue | 0 | 0 | |||||||
Accrued expenses and other current liabilities | (156,496) | (156,496) | |||||||
Lines of credit, net | 0 | 0 | |||||||
Current portion of long-term debt | 0 | 0 | |||||||
TOTAL CURRENT LIABILITIES | (156,496) | (156,496) | |||||||
Long-term debt, less current portion | 0 | 0 | |||||||
Other non-current liabilities | (51,091) | (51,091) | |||||||
TOTAL LIABILITIES | (207,587) | (207,587) | |||||||
STOCKHOLDERS' EQUITY | |||||||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding | 0 | 0 | |||||||
Common stock, $0.001 par value; 50,000,000 shares authorized; 33,246,141 issued and 33,221,141 outstanding at December 31, 2018; 24,367,906 issued and 24,342,906 outstanding at June 30, 2018 | 0 | 0 | |||||||
Treasury stock, at cost, 25,000 shares | 0 | 0 | |||||||
Additional paid-in capital | 0 | 0 | |||||||
Accumulated deficit | (3,841,359) | (3,841,359) | |||||||
Accumulated other comprehensive loss | 0 | 0 | |||||||
Noncontrolling interests | 0 | 0 | |||||||
TOTAL STOCKHOLDERS' EQUITY | (3,841,359) | (3,841,359) | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | (4,048,946) | (4,048,946) | |||||||
Revenue | 6,288,847 | (11,050,488) | |||||||
Cost of revenue | 5,927,174 | (7,158,038) | |||||||
Gross profit | 361,673 | (3,892,450) | |||||||
Operating expenses | |||||||||
Selling, general and administrative expenses | 0 | 0 | |||||||
Research and development expenses | 0 | 0 | |||||||
Depreciation and amortization | 0 | 0 | |||||||
Disposal of property, plant and equipment gain | 0 | 0 | |||||||
Total operating expenses | 0 | 0 | |||||||
Income (loss) from operations | 361,673 | (3,892,450) | |||||||
Other expense | |||||||||
Foreign currency (gain) loss | 0 | 0 | |||||||
Change in derivative warrant liabilities | 0 | 0 | |||||||
Interest expense - amortization of debt discount | 0 | 0 | |||||||
Interest expense | 0 | 0 | |||||||
Income (loss) before income taxes | 361,673 | (3,892,450) | |||||||
Provision for income taxes | 15,944 | (51,091) | |||||||
Net loss including noncontrolling interests | 345,729 | (3,841,359) | |||||||
Net income attributed to noncontrolling interest | 0 | 0 | |||||||
Net loss attributed to S&W Seed Company | $ 345,729 | $ (3,841,359) | |||||||
Net income (loss) per common share: | |||||||||
Basic | $ 0.01 | $ (0.14) | |||||||
Diluted | $ 0.01 | $ (0.14) | |||||||
Weighted average number of common shares outstanding: | |||||||||
Basic | 0 | 0 | |||||||
Diluted | 0 | 0 | |||||||
Balances Without | Adoption of ASC 606 | |||||||||
STOCKHOLDERS' EQUITY | |||||||||
Revenue | $ 24,869,843 | $ 33,650,645 | |||||||
Cost of revenue | 19,824,629 | 27,396,425 | |||||||
Gross profit | 5,045,214 | 6,254,220 | |||||||
Operating expenses | |||||||||
Selling, general and administrative expenses | 4,342,696 | 7,230,074 | |||||||
Research and development expenses | 1,373,554 | 2,365,667 | |||||||
Depreciation and amortization | 1,035,606 | 1,890,714 | |||||||
Disposal of property, plant and equipment gain | 3,463 | 3,463 | |||||||
Total operating expenses | 6,755,319 | 11,489,918 | |||||||
Income (loss) from operations | (1,710,105) | (5,235,698) | |||||||
Other expense | |||||||||
Foreign currency (gain) loss | (32,987) | (58,430) | |||||||
Change in derivative warrant liabilities | 0 | 0 | |||||||
Interest expense - amortization of debt discount | 68,914 | 135,392 | |||||||
Interest expense | 641,479 | 1,298,709 | |||||||
Income (loss) before income taxes | (2,387,511) | (6,611,369) | |||||||
Provision for income taxes | 11,143 | (46,558) | |||||||
Net loss including noncontrolling interests | (2,398,654) | (6,564,811) | |||||||
Net income attributed to noncontrolling interest | 21,673 | 21,673 | |||||||
Net loss attributed to S&W Seed Company | $ (2,420,327) | $ (6,586,484) | |||||||
Net income (loss) per common share: | |||||||||
Basic | $ (0.08) | $ (0.24) | |||||||
Diluted | $ (0.08) | $ (0.24) | |||||||
Weighted average number of common shares outstanding: | |||||||||
Basic | 29,153,852 | 26,996,483 | |||||||
Diluted | 29,153,852 | 26,996,483 | |||||||
Balances Without | Adoption of ASC 606 | |||||||||
CURRENT ASSETS | |||||||||
Cash and cash equivalents | $ 2,471,381 | $ 2,471,381 | |||||||
Accounts receivable, net | 23,178,997 | 23,178,997 | |||||||
Unbilled accounts receivable, net | 0 | 0 | |||||||
Inventories, net | 95,614,018 | 95,614,018 | |||||||
Prepaid expenses and other current assets | 1,158,738 | 1,158,738 | |||||||
Assets held for sale | 1,930,400 | 1,930,400 | |||||||
TOTAL CURRENT ASSETS | 124,353,534 | 124,353,534 | |||||||
Property, plant and equipment, net | 22,731,765 | 22,731,765 | |||||||
Intangibles, net | 39,823,195 | 39,823,195 | |||||||
Goodwill | 11,865,811 | 11,865,811 | |||||||
Other assets | 1,302,705 | 1,302,705 | |||||||
TOTAL ASSETS | 200,077,010 | 200,077,010 | |||||||
CURRENT LIABILITIES | |||||||||
Accounts payable | 31,594,475 | 31,594,475 | |||||||
Deferred revenue | 2,443,574 | 2,443,574 | |||||||
Accrued expenses and other current liabilities | 3,315,385 | 3,315,385 | |||||||
Lines of credit, net | 46,310,464 | 46,310,464 | |||||||
Current portion of long-term debt | 991,140 | 991,140 | |||||||
TOTAL CURRENT LIABILITIES | 84,655,038 | 84,655,038 | |||||||
Long-term debt, less current portion | 12,264,273 | 12,264,273 | |||||||
Other non-current liabilities | 605,903 | 605,903 | |||||||
TOTAL LIABILITIES | 97,525,214 | 97,525,214 | |||||||
STOCKHOLDERS' EQUITY | |||||||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding | 0 | 0 | |||||||
Common stock, $0.001 par value; 50,000,000 shares authorized; 33,246,141 issued and 33,221,141 outstanding at December 31, 2018; 24,367,906 issued and 24,342,906 outstanding at June 30, 2018 | 33,246 | 33,246 | |||||||
Treasury stock, at cost, 25,000 shares | (134,196) | (134,196) | |||||||
Additional paid-in capital | 136,495,216 | 136,495,216 | |||||||
Accumulated deficit | (27,747,860) | (27,747,860) | |||||||
Accumulated other comprehensive loss | (6,116,283) | (6,116,283) | |||||||
Noncontrolling interests | 21,673 | 21,673 | |||||||
TOTAL STOCKHOLDERS' EQUITY | 102,551,796 | 102,551,796 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 200,077,010 | $ 200,077,010 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 18,580,996 | $ 20,532,796 | $ 44,701,133 | $ 31,244,512 |
ASC 606 | ||||
Revenues | 18,580,996 | 44,701,133 | ||
ASC 606 | Dstribution and production agreements - Pioneer | ||||
Revenues | 9,677,988 | 29,185,614 | ||
ASC 606 | Other product sales | ||||
Revenues | 8,761,172 | 15,336,201 | ||
ASC 606 | Services | ||||
Revenues | 141,836 | 179,318 | ||
Topic 605 | ||||
Revenues | 24,869,843 | 20,532,796 | 33,650,645 | 31,244,512 |
Topic 605 | Dstribution and production agreements - Pioneer | ||||
Revenues | 15,966,835 | 15,313,310 | 18,135,126 | 18,101,800 |
Topic 605 | Other product sales | ||||
Revenues | 8,761,172 | 5,033,204 | 15,336,201 | 12,767,630 |
Topic 605 | Services | ||||
Revenues | $ 141,836 | $ 186,282 | $ 179,318 | $ 375,082 |
Revenue Recognition - Estimated
Revenue Recognition - Estimated Revenue Expected to be Recognized in Future for Performance Obligations (Narrative) (Details) $ in Millions | Dec. 31, 2018USD ($) |
Revenue Recognition - Estimated Revenue Expected To Be Recognized In Future For Performance Obligations Narrative | |
Revenue, Remaining Performance Obligation | $ 86.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 4 years |
Business Combinations (Purchase
Business Combinations (Purchase Price Allocation and Assets Held for Sale) (Details) - USD ($) | 1 Months Ended | |||
Oct. 31, 2018 | Dec. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | |
Business Combinations Purchase Price Allocation And Assets Held For Sale | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | $ 95,049 | |||
Accounts receivable | 947,015 | |||
Inventory | 6,959,936 | |||
Prepaid expenses | 16,501 | |||
Property, plant and equipment | 10,193,620 | |||
Assets held for sale | 1,930,400 | $ 1,930,400 | $ 0 | |
In-process research and development | 380,000 | |||
Technology/IP - germplasm | 7,200,000 | |||
Trade names | 150,000 | |||
Goodwill | 1,573,546 | 11,865,811 | 10,292,265 | $ 10,292,265 |
Current liabilities | (2,881,198) | |||
Noncurrent liabilities | (114,869) | |||
Total acquisition cost allocated | (26,450,000) | |||
Assets held for sale | ||||
Land and improvements | 320,000 | 2,532,053 | 2,068,742 | |
Buildings and improvements | 1,380,000 | 11,291,516 | 8,888,196 | |
Machinery and equipment | 332,000 | $ 12,656,650 | $ 5,731,293 | |
Less: Costs to sell | $ (101,600) |
Business Combinations (Acquired
Business Combinations (Acquired Intangibles (Value and Useful Lives) (Details) - Chromatin | 6 Months Ended |
Dec. 31, 2018USD ($) | |
Total identifiable intangible assets | |
Fair value of asset | $ 7,730,000 |
In-process research and development | |
Estimated Useful Life (years) | 3 years |
Fair value of asset | $ 380,000 |
Technology/IP - germplasm | |
Estimated Useful Life (years) | 30 years |
Fair value of asset | $ 7,200,000 |
Trade names | |
Estimated Useful Life (years) | 5 years |
Fair value of asset | $ 150,000 |
Business Combinations (Pro Form
Business Combinations (Pro Forma Financial Information with Narrative) (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Combinations Pro Forma Financial Information With Narrative | ||
Revenue | $ 46,374,310 | $ 39,910,879 |
Net loss | $ (4,889,152) | $ (7,784,946) |
Business Acquisition, Pro Forma Information, Description | For purposes of the pro forma disclosures above, the primary adjustments for the six months ended December 31, 2018 include: (i) the elimination of acquisition charges of $995,316; (ii) amortization of acquired intangibles of $132,222; and iii) depreciation of acquired property, plant and equipment of $358,273.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">For purposes of the pro forma disclosures above, the primary adjustments for the six months ended December 31, 2017 include: (i) amortization of acquired intangibles of $198,333; and ii) depreciation of acquired property, plant and equipment of $537,410.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-B6"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">For purposes of the pro forma disclosures above, the primary adjustments for the six months ended December 31, 2018 include: (i) the elimination of acquisition charges of $995,316; (ii) amortization of acquired intangibles of $132,222; and iii) depreciation of acquired property, plant and equipment of $358,273.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">For purposes of the pro forma disclosures above, the primary adjustments for the six months ended December 31, 2017 include: (i) amortization of acquired intangibles of $198,333; and ii) depreciation of acquired property, plant and equipment of $537,410.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> |
Business Combinations (Purcha_2
Business Combinations (Purchase Price Components Narrative) (Details) - USD ($) | 6 Months Ended | ||
Dec. 31, 2018 | Oct. 31, 2018 | Sep. 30, 2018 | |
Business Combinations Purchase Price Components Narrative | |||
Business Combination, Acquired Receivables, Gross Contractual Amount | $ 2,164,476 | ||
Business Combination, Acquired Receivables, Estimated Uncollectible | $ 1,217,461 | ||
Acquisition costs | $ 995,316 | $ 586,800 | |
Business Acquisition, Description of Acquired Entity | On October 25, 2018, the Company completed the acquisition of substantially all of the assets of Chromatin, Inc. (together with certain of its subsidiaries and affiliates in receivership, "Chromatin"), as well as the assumption of certain contracts and limited specified liabilities of Chromatin, for an aggregate cash purchase price of approximately $26.5 million (the "Acquisition"), pursuant to the terms of its Asset Purchase Agreement, dated September 14, 2018, with Novo Advisors, solely in its capacity as the receiver for, and on behalf of, Chromatin ("Novo").</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The acquisition expanded the Company's sorghum production capabilities, diversified its product offerings and provided access to new distribution channels.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Acquisition has been accounted for as a business combination, and the Company valued and recorded all assets acquired and liabilities assumed at their estimated fair values on the date of the Acquisition.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-B7"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On October 25, 2018, the Company completed the acquisition of substantially all of the assets of Chromatin, Inc. (together with certain of its subsidiaries and affiliates in receivership, "Chromatin"), as well as the assumption of certain contracts and limited specified liabilities of Chromatin, for an aggregate cash purchase price of approximately $26.5 million (the "Acquisition"), pursuant to the terms of its Asset Purchase Agreement, dated September 14, 2018, with Novo Advisors, solely in its capacity as the receiver for, and on behalf of, Chromatin ("Novo").</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The acquisition expanded the Company's sorghum production capabilities, diversified its product offerings and provided access to new distribution channels.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Acquisition has been accounted for as a business combination, and the Company valued and recorded all assets acquired and liabilities assumed at their estimated fair values on the date of the Acquisition.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> | ||
Business Combination, Goodwill Recognized, Description | The excess of the purchase price over the fair value of the net assets acquired, amounting to $1,573,546, was recorded as goodwill on the consolidated balance sheet. The primary item that generated goodwill was the premium paid by the Company for the ability to control the acquired business, technology, and the distribution channels. Goodwill is not amortized for financial reporting purposes, but is amortized for tax purposes.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-B8"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The excess of the purchase price over the fair value of the net assets acquired, amounting to $1,573,546, was recorded as goodwill on the consolidated balance sheet. The primary item that generated goodwill was the premium paid by the Company for the ability to control the acquired business, technology, and the distribution channels. Goodwill is not amortized for financial reporting purposes, but is amortized for tax purposes.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> |
Changes in Carrying Amount of G
Changes in Carrying Amount of Goodwill (Detail) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Jun. 30, 2018 | |
Goodwill, Beginning Balance | $ 10,292,265 | $ 10,292,265 |
Goodwill additions | 1,573,546 | 0 |
Goodwill, Ending Balance | $ 11,865,811 | $ 10,292,265 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Intangible asset | $ 39,823,195 | $ 39,823,195 | $ 33,109,780 | $ 34,939,079 | ||
Intangible addition | 7,773,000 | 295,034 | ||||
Intangible amortization expense | (552,967) | $ (555,471) | (1,059,585) | $ (1,128,392) | (2,124,333) | |
Trade name | ||||||
Intangible asset | 1,262,586 | 1,262,586 | 1,159,826 | 1,244,306 | ||
Intangible addition | 150,000 | 0 | ||||
Intangible amortization expense | (47,240) | (84,480) | ||||
Customer Relationships | ||||||
Intangible asset | 1,106,351 | 1,106,351 | 1,156,955 | 1,258,163 | ||
Intangible addition | 0 | 0 | ||||
Intangible amortization expense | (50,604) | (101,208) | ||||
Non-compete | ||||||
Intangible asset | 43,849 | 43,849 | 62,720 | 102,035 | ||
Intangible addition | 0 | 0 | ||||
Intangible amortization expense | (18,871) | (39,315) | ||||
GI Customer list | ||||||
Intangible asset | 68,057 | 68,057 | 71,639 | 78,803 | ||
Intangible addition | 0 | 0 | ||||
Intangible amortization expense | (3,582) | (7,164) | ||||
Supply Agreement | ||||||
Intangible asset | 1,039,967 | 1,039,967 | 1,077,783 | 1,153,415 | ||
Intangible addition | 0 | 0 | ||||
Intangible amortization expense | (37,816) | (75,632) | ||||
Distribution Agreement | ||||||
Intangible asset | 6,152,002 | 6,152,002 | ||||
Intangible addition | 0 | |||||
Intangible amortization expense | (192,251) | |||||
Distribution agreement | ||||||
Intangible asset | 6,344,253 | 6,728,753 | ||||
Intangible addition | 0 | |||||
Intangible amortization expense | (384,500) | |||||
Production agreement | ||||||
Intangible asset | 0 | 111,670 | ||||
Intangible addition | 0 | |||||
Intangible amortization expense | (111,670) | |||||
Grower Relationships | ||||||
Intangible asset | 1,700,504 | 1,700,504 | 1,753,208 | 1,858,616 | ||
Intangible addition | 0 | 0 | ||||
Intangible amortization expense | (52,704) | (105,408) | ||||
Intellectual Property | ||||||
Intangible asset | 27,471,875 | 27,471,875 | 20,873,393 | 21,725,539 | ||
Intangible addition | 7,200,000 | 295,034 | ||||
Intangible amortization expense | (601,518) | (1,147,180) | ||||
In Process Research and Development | ||||||
Intangible asset | 358,889 | 358,889 | 0 | |||
Intangible addition | 380,000 | |||||
Intangible amortization expense | (21,111) | |||||
Internal use software | ||||||
Intangible asset | $ 619,115 | 619,115 | 610,003 | $ 677,779 | ||
Intangible addition | 43,000 | |||||
Intangible amortization expense | $ (33,888) | $ (67,776) |
Intangible Assets (Future Amort
Intangible Assets (Future Amortization) (Details) | Dec. 31, 2018USD ($) |
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract] | |
2,019 | $ 1,178,739 |
2,020 | 2,355,136 |
2,021 | 2,336,313 |
2,022 | 2,252,980 |
2,023 | 2,204,355 |
Thereafter | $ 28,795,672 |
Intangible Assets (Amortization
Intangible Assets (Amortization Expense Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Intangible Assets Amortization Expense Narrative | |||||
Amortization expense | $ 552,967 | $ 555,471 | $ 1,059,585 | $ 1,128,392 | $ 2,124,333 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2018 | Oct. 31, 2018 | Jun. 30, 2018 |
Balance Sheet Related Disclosures [Abstract] | |||
Land and improvements | $ 2,532,053 | $ 320,000 | $ 2,068,742 |
Buildings and improvements | 11,291,516 | 1,380,000 | 8,888,196 |
Machinery and equipment | 12,656,650 | $ 332,000 | 5,731,293 |
Vehicles | 1,580,518 | 1,130,276 | |
Construction in progress | 313,852 | 220,089 | |
Property and equipment, gross | 28,374,589 | 18,038,596 | |
Less: accumulated depreciation | (5,642,824) | (4,858,464) | |
Property, plant and equipment, net | $ 22,731,765 | $ 13,180,132 |
Property, Plant and Equipment_3
Property, Plant and Equipment (Depreciation Expense Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property Plant And Equipment Depreciation Expense Narrative | ||||
Depreciation expense | $ 482,639 | $ 315,510 | $ 831,130 | $ 630,842 |
Debt Lines of Credit (Details)
Debt Lines of Credit (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Jun. 30, 2018 | |
Working capital lines of credit | ||
Line of Credit Facility, Fair Value of Amount Outstanding | $ 46,310,464 | $ 32,630,559 |
Debt issuance costs | (395,853) | (116,945) |
KeyBank | ||
Working capital lines of credit | ||
Line of Credit Facility, Fair Value of Amount Outstanding | 38,836,070 | 25,050,464 |
National Australia Bank | ||
Working capital lines of credit | ||
Line of Credit Facility, Fair Value of Amount Outstanding | $ 7,870,247 | $ 7,697,040 |
Debt Current and Long Term (Det
Debt Current and Long Term (Details) - USD ($) | Dec. 31, 2018 | Jun. 30, 2018 |
Current portion of long-term debt | ||
Debt issuance costs - short-term | $ (89,143) | $ (93,794) |
Total current portion | 991,140 | 503,012 |
Long-term debt, less current portion | ||
Debt issuance costs - long-term | (82,502) | (108,911) |
Total long-term portion | 12,264,273 | 12,977,087 |
Total debt | 13,255,413 | 13,480,099 |
Capital Lease Current | ||
Current portion of long-term debt | ||
Secured Debt, Current | 451,089 | 27,241 |
Keith Building Current | ||
Current portion of long-term debt | ||
Secured Debt, Current | 77,649 | 3,701 |
Keith Equipment Current | ||
Current portion of long-term debt | ||
Secured Debt, Current | 212,852 | 198,251 |
Promissory Note Current | ||
Current portion of long-term debt | ||
Unsecured Debt, Current | 100,000 | 100,000 |
Contera RE Short | ||
Current portion of long-term debt | ||
Secured Debt, Current | 238,693 | 229,789 |
Contera Equip Short | ||
Current portion of long-term debt | ||
Secured Debt, Current | 0 | 37,824 |
Capital Lease Long Term | ||
Long-term debt, less current portion | ||
Secured Long-term Debt, Noncurrent | 1,623,504 | 0 |
Keith Building Long | ||
Long-term debt, less current portion | ||
Secured Long-term Debt, Noncurrent | 254,124 | 421,857 |
Keith Equipment Long | ||
Long-term debt, less current portion | ||
Secured Long-term Debt, Noncurrent | 420,550 | 431,754 |
Contera RE Long | ||
Long-term debt, less current portion | ||
Secured Long-term Debt, Noncurrent | 10,048,597 | 10,170,211 |
Contera Equip Long | ||
Long-term debt, less current portion | ||
Secured Long-term Debt, Noncurrent | $ 0 | $ 2,062,176 |
Debt Maturities (Details)
Debt Maturities (Details) | Dec. 31, 2018USD ($) |
Fiscal Year | |
2,019 | $ 576,583 |
2,020 | 1,011,523 |
2,021 | 10,628,888 |
2,022 | 607,263 |
2,023 | 466,531 |
Thereafter | 136,270 |
Total | $ 13,427,058 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | 1 Months Ended | 6 Months Ended |
Dec. 31, 2014 | Dec. 31, 2018 | |
KeyBank | ||
Line of Credit Facility, Description | On September 22, 2015, the Company entered into a credit and security agreement (the "KeyBank Credit Facility") with KeyBank. Key provisions of the KeyBank Credit Facility, as amended, include:</p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">An aggregate principal amount that the Company may borrow, repay and reborrow, of up to $45.0 million in the aggregate, subject to a requirement that the Company maintain a reduced loan balance of (i) not more than $20.0 million for at least 30 consecutive days over the prior twelve months (measured each quarter on a trailing 12 month basis) and (ii) not more than $25.0 million for at least 60 consecutive days over the prior twelve months (measured each quarter on a trailing 12 month basis).</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">All amounts due and owing, including, but not limited to, accrued and unpaid principal and interest, will be payable in full on December 31, 2020.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">A borrowing base of up to 85% of eligible domestic accounts receivable and 90% of eligible foreign accounts receivable, plus up to the lesser of (i) 75% of the cost eligible inventory (provided that eligible inventory acquired by the Company in its recent Chromatin acquisition is initially subject to a rate of 25%, potentially increasing to 75% if the Company delivers an appraisal of the acquired inventory that is satisfactory to KeyBank) or (ii) 90% of the net orderly liquidation value of the inventory, subject to lender reserves.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">Loans may be based on a Base Rate or Eurodollar Rate (which is increased by an applicable margin of 2.9% per annum for Eurodollar Loans and 1.0% for Base Rate Loans) (both as defined in the KeyBank Credit Facility), generally at the Company's option. In the event of a default, at the option of KeyBank, the interest rate on all obligations owing will increase by 3% per annum over the rate otherwise applicable.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">Subject to certain exceptions, the KeyBank Credit Facility is secured by a first priority perfected security interest in all of the Company's now owned and after acquired tangible and intangible assets and its domestic subsidiaries, which have guaranteed the Company's obligations under the KeyBank Credit Facility. The KeyBank Credit Facility is further secured by a lien on, and a pledge of, 65% of the stock of its wholly-owned subsidiary, S&W Holdings Australia Pty Ltd.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">At December 31, 2018, the Company was in compliance with all KeyBank debt covenants.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>" id="sjs-C4"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On September 22, 2015, the Company entered into a credit and security agreement (the "KeyBank Credit Facility") with KeyBank. Key provisions of the KeyBank Credit Facility, as amended, include:</p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">An aggregate principal amount that the Company may borrow, repay and reborrow, of up to $45.0 million in the aggregate, subject to a requirement that the Company maintain a reduced loan balance of (i) not more than $20.0 million for at least 30 consecutive days over the prior twelve months (measured each quarter on a trailing 12 month basis) and (ii) not more than $25.0 million for at least 60 consecutive days over the prior twelve months (measured each quarter on a trailing 12 month basis).</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">All amounts due and owing, including, but not limited to, accrued and unpaid principal and interest, will be payable in full on December 31, 2020.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">A borrowing base of up to 85% of eligible domestic accounts receivable and 90% of eligible foreign accounts receivable, plus up to the lesser of (i) 75% of the cost eligible inventory (provided that eligible inventory acquired by the Company in its recent Chromatin acquisition is initially subject to a rate of 25%, potentially increasing to 75% if the Company delivers an appraisal of the acquired inventory that is satisfactory to KeyBank) or (ii) 90% of the net orderly liquidation value of the inventory, subject to lender reserves.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">Loans may be based on a Base Rate or Eurodollar Rate (which is increased by an applicable margin of 2.9% per annum for Eurodollar Loans and 1.0% for Base Rate Loans) (both as defined in the KeyBank Credit Facility), generally at the Company's option. In the event of a default, at the option of KeyBank, the interest rate on all obligations owing will increase by 3% per annum over the rate otherwise applicable.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">Subject to certain exceptions, the KeyBank Credit Facility is secured by a first priority perfected security interest in all of the Company's now owned and after acquired tangible and intangible assets and its domestic subsidiaries, which have guaranteed the Company's obligations under the KeyBank Credit Facility. The KeyBank Credit Facility is further secured by a lien on, and a pledge of, 65% of the stock of its wholly-owned subsidiary, S&W Holdings Australia Pty Ltd.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">At December 31, 2018, the Company was in compliance with all KeyBank debt covenants.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> | |
Pioneer Note | ||
Long-term Debt, Description | On December 31, 2014, the Company issued a three-year secured promissory note to DuPont Pioneer in the initial principal amount of $10,000,000 (the "Pioneer Note"), with a maturity date of December 31, 2017. The Pioneer Note accrued interest at 3% per annum. Interest was payable in three annual installments, in arrears, commencing on December 31, 2015. On December 31, 2014, the Company also issued contingent consideration to DuPont Pioneer which required the Company to increase the principal amount of the Pioneer Note by up to an additional $5,000,000 if the Company met certain performance metrics during the three-year period following December 31, 2014. The earn out payment to DuPont Pioneer was finalized in October 2017 and this amount of $2,500,000 was added to the Pioneer Note in October 2017. On December 1, 2017, the Company repaid the Pioneer Note. The repayment amount included the $2.5 million earn-out payment related to the Pioneer Acquisition that was added to the principal amount of the Pioneer Note in October 2017.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-B6"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On December 31, 2014, the Company issued a three-year secured promissory note to DuPont Pioneer in the initial principal amount of $10,000,000 (the "Pioneer Note"), with a maturity date of December 31, 2017. The Pioneer Note accrued interest at 3% per annum. Interest was payable in three annual installments, in arrears, commencing on December 31, 2015. On December 31, 2014, the Company also issued contingent consideration to DuPont Pioneer which required the Company to increase the principal amount of the Pioneer Note by up to an additional $5,000,000 if the Company met certain performance metrics during the three-year period following December 31, 2014. The earn out payment to DuPont Pioneer was finalized in October 2017 and this amount of $2,500,000 was added to the Pioneer Note in October 2017. On December 1, 2017, the Company repaid the Pioneer Note. The repayment amount included the $2.5 million earn-out payment related to the Pioneer Acquisition that was added to the principal amount of the Pioneer Note in October 2017.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> | |
Conterra | ||
Long-term Debt, Description | On November 30, 2017, the Company entered into a secured note financing transaction (the "Loan Transaction") with Conterra Agricultural Capital, LLC ("Conterra") for $12.5 million in gross proceeds. Pursuant to the Loan Transaction, the Company issued two secured promissory notes (the "Notes") to Conterra as follows:</p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><u>Secured Real Estate Note</u>. The Company issued one Note in the principal amount of $10.4 million (the "Secured Real Estate Note") that is secured by a first priority security interest in the property, plant and fixtures (the "Real Estate Collateral") located at the Company's Five Points, California and Nampa, Idaho production facilities and its Nampa, Idaho and Arlington, Wisconsin research facilities (the "Facilities"). The Secured Real Estate Note matures on November 30, 2020, which, subject to Conterra's approval, may be extended to November 30, 2022. The Secured Real Estate Note bears interest of 7.75% per annum. The Company has agreed to make semi-annual payments of interest and amortized principal on a 20-year amortization schedule, for a combined payment of $515,711, starting July 1, 2018, in addition to a one-time interest only payment on January 1, 2018. The Company may prepay the Secured Real Estate Note, in whole or in part, at any time after it has paid a minimum of twelve months of interest on the Secured Real Estate Note.</li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><u>Secured Equipment Note</u>. The Company issued a second Note in the principal amount of $2.1 million (the "Secured Equipment Note") that was secured by a first priority security interest in certain equipment not attached to real estate located at the Facilities. The Secured Equipment Note was also secured by the Real Estate Collateral. The Secured Equipment Note was scheduled to mature on November 30, 2019. The Secured Equipment Note bore an interest rate of 9.5% per annum. The Company agreed to make semi-annual payments of interest and amortized principal on a 20-year amortization schedule, for a combined payment of $118,223, starting July 1, 2018, in addition to a one-time interest only payment on January 1, 2018. The Company may prepay the Secured Equipment Note, in whole or in part, at any time.</li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On August 15, 2018, the Company completed a sale and leaseback transaction with American AgCredit involving certain equipment located at the Company's Five Points, California and Nampa, Idaho production facilities. Due to its terms, the sale and leaseback transaction is required to be accounted for as a financing arrangement. Accordingly, the proceeds received from American AgCredit were accounted for as proceeds from a debt financing. Under the terms of the transaction:</p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt">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.</li> </ul> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt">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.</li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>" id="sjs-C8"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On November 30, 2017, the Company entered into a secured note financing transaction (the "Loan Transaction") with Conterra Agricultural Capital, LLC ("Conterra") for $12.5 million in gross proceeds. Pursuant to the Loan Transaction, the Company issued two secured promissory notes (the "Notes") to Conterra as follows:</p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><u>Secured Real Estate Note</u>. The Company issued one Note in the principal amount of $10.4 million (the "Secured Real Estate Note") that is secured by a first priority security interest in the property, plant and fixtures (the "Real Estate Collateral") located at the Company's Five Points, California and Nampa, Idaho production facilities and its Nampa, Idaho and Arlington, Wisconsin research facilities (the "Facilities"). The Secured Real Estate Note matures on November 30, 2020, which, subject to Conterra's approval, may be extended to November 30, 2022. The Secured Real Estate Note bears interest of 7.75% per annum. The Company has agreed to make semi-annual payments of interest and amortized principal on a 20-year amortization schedule, for a combined payment of $515,711, starting July 1, 2018, in addition to a one-time interest only payment on January 1, 2018. The Company may prepay the Secured Real Estate Note, in whole or in part, at any time after it has paid a minimum of twelve months of interest on the Secured Real Estate Note.</li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><u>Secured Equipment Note</u>. The Company issued a second Note in the principal amount of $2.1 million (the "Secured Equipment Note") that was secured by a first priority security interest in certain equipment not attached to real estate located at the Facilities. The Secured Equipment Note was also secured by the Real Estate Collateral. The Secured Equipment Note was scheduled to mature on November 30, 2019. The Secured Equipment Note bore an interest rate of 9.5% per annum. The Company agreed to make semi-annual payments of interest and amortized principal on a 20-year amortization schedule, for a combined payment of $118,223, starting July 1, 2018, in addition to a one-time interest only payment on January 1, 2018. The Company may prepay the Secured Equipment Note, in whole or in part, at any time.</li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On August 15, 2018, the Company completed a sale and leaseback transaction with American AgCredit involving certain equipment located at the Company's Five Points, California and Nampa, Idaho production facilities. Due to its terms, the sale and leaseback transaction is required to be accounted for as a financing arrangement. Accordingly, the proceeds received from American AgCredit were accounted for as proceeds from a debt financing. Under the terms of the transaction:</p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt">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.</li> </ul> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt">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.</li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> | |
NAB Facility | ||
Long-term Debt, Description | S&W Australia finances the purchase of most of its seed inventory from growers pursuant to seasonal credit facilities with National Australia Bank Ltd ("NAB"). The current facilities (the "2016 NAB Facilities") were amended as of April 13, 2018 and expire on March 30, 2020. As of December 31, 2018, AUD $11,149,237 (USD $7,870,247) was outstanding under the 2016 NAB Facilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The 2016 NAB Facilities, as currently in effect, comprise two distinct facility lines: (i) an overdraft facility (the "Overdraft Facility"), having a credit limit of AUD $1,000,000 (USD $705,900 at December 31, 2018) and a borrowing base facility (the "Borrowing Base Facility"), having a credit limit of AUD $12,000,000 (USD $8,470,800 at December 31, 2018).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Borrowing Base Facility permits S&W Australia to borrow funds for periods of up to 180 days, at S&W Australia's discretion, provided that the term is consistent with its trading terms. Interest for each drawdown is set at the time of the drawdown as follows: (i) for Australian dollar drawings, based on the Australian Trade Refinance Rate plus 1.5% per annum and (ii) for foreign currency drawings, based on the British Bankers' Association Interest Settlement Rate for the relevant foreign currency for the relevant period, or if such rate is not available, the rate reasonably determined by NAB to be the appropriate equivalent rate, plus 1.5% per annum. As of December 31, 2018, the Borrowing Base Facility accrued interest on Australian dollar drawings at approximately 5.53% per annum calculated daily. The Borrowing Base Facility is secured by a lien on all the present and future rights, property and undertakings of S&W Australia, the mortgage on S&W Australia's Keith, South Australia property and the Company's corporate guarantee (up to a maximum of AUD $15,000,000).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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 December 31, 2018, the Overdraft Facility accrued interest at approximately 6.77% per annum calculated daily.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">For both the Overdraft Facility and the Borrowing Base Facility, interest is payable each month in arrears. In the event of a default, as defined in the NAB Facility agreements, the principal balance due under the facilities will thereafter bear interest at an increased rate per annum above the interest rate that would otherwise have been in effect from time to time under the terms of each facility (<i>i.e.</i>, the interest rate increases by 4.5% per annum under the Borrowing Base Facility and the Overdraft Facility rate increases to 13.92% per annum upon the occurrence of an event of default).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">Both facilities constituting the 2016 NAB Facilities are secured by a fixed and floating lien over all the present and future rights, property and undertakings of S&W Australia and are guaranteed by the Company as noted above. The 2016 NAB Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate S&W Australia's outstanding obligations, all as set forth in the NAB facility agreements. S&W Australia was in compliance with all NAB debt covenants at December 31, 2018.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">In January 2015, NAB and S&W Australia entered into a new business markets - flexible rate loan (the "Keith Building Loan") and a separate machinery and equipment facility (the "Keith Machinery and Equipment Facility"). In February 2016, NAB and S&W Australia also entered into a master asset finance facility (the "Master Assets Facility"). The Master Asset Facility has various maturity dates through 2021 and have interest rates ranging from 4.86% to 5.31%.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Keith Building Loan and Keith Machinery and Equipment Facility are used for the construction of a building on S&W Australia's Keith, South Australia property, purchase of adjoining land and for the machinery and equipment for use in the operations of the building. The Keith Building Loan matures on November 30, 2024. The interest rate on the Keith Building Loan varies from pricing period to pricing period (each such period approximately 30 days), based on the weighted average of a specified basket of interest rates (6.45% as of December 31, 2018). Interest is payable each month in arrears. The Keith Machinery and Equipment Facility bears interest, payable in arrears, based on the Australian Trade Refinance Rate quoted by NAB at the time of the drawdown, plus 2.9%. The Keith Credit Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate S&W Australia's outstanding obligations, all as set forth in the facility agreement. They are secured by a lien on all the present and future rights, property and undertakings of S&W Australia, the Company's corporate guarantee and a mortgage on S&W Australia's Keith, South Australia property.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-C10"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">S&W Australia finances the purchase of most of its seed inventory from growers pursuant to seasonal credit facilities with National Australia Bank Ltd ("NAB"). The current facilities (the "2016 NAB Facilities") were amended as of April 13, 2018 and expire on March 30, 2020. As of December 31, 2018, AUD $11,149,237 (USD $7,870,247) was outstanding under the 2016 NAB Facilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The 2016 NAB Facilities, as currently in effect, comprise two distinct facility lines: (i) an overdraft facility (the "Overdraft Facility"), having a credit limit of AUD $1,000,000 (USD $705,900 at December 31, 2018) and a borrowing base facility (the "Borrowing Base Facility"), having a credit limit of AUD $12,000,000 (USD $8,470,800 at December 31, 2018).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Borrowing Base Facility permits S&W Australia to borrow funds for periods of up to 180 days, at S&W Australia's discretion, provided that the term is consistent with its trading terms. Interest for each drawdown is set at the time of the drawdown as follows: (i) for Australian dollar drawings, based on the Australian Trade Refinance Rate plus 1.5% per annum and (ii) for foreign currency drawings, based on the British Bankers' Association Interest Settlement Rate for the relevant foreign currency for the relevant period, or if such rate is not available, the rate reasonably determined by NAB to be the appropriate equivalent rate, plus 1.5% per annum. As of December 31, 2018, the Borrowing Base Facility accrued interest on Australian dollar drawings at approximately 5.53% per annum calculated daily. The Borrowing Base Facility is secured by a lien on all the present and future rights, property and undertakings of S&W Australia, the mortgage on S&W Australia's Keith, South Australia property and the Company's corporate guarantee (up to a maximum of AUD $15,000,000).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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 December 31, 2018, the Overdraft Facility accrued interest at approximately 6.77% per annum calculated daily.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">For both the Overdraft Facility and the Borrowing Base Facility, interest is payable each month in arrears. In the event of a default, as defined in the NAB Facility agreements, the principal balance due under the facilities will thereafter bear interest at an increased rate per annum above the interest rate that would otherwise have been in effect from time to time under the terms of each facility (<i>i.e.</i>, the interest rate increases by 4.5% per annum under the Borrowing Base Facility and the Overdraft Facility rate increases to 13.92% per annum upon the occurrence of an event of default).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">Both facilities constituting the 2016 NAB Facilities are secured by a fixed and floating lien over all the present and future rights, property and undertakings of S&W Australia and are guaranteed by the Company as noted above. The 2016 NAB Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate S&W Australia's outstanding obligations, all as set forth in the NAB facility agreements. S&W Australia was in compliance with all NAB debt covenants at December 31, 2018.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">In January 2015, NAB and S&W Australia entered into a new business markets - flexible rate loan (the "Keith Building Loan") and a separate machinery and equipment facility (the "Keith Machinery and Equipment Facility"). In February 2016, NAB and S&W Australia also entered into a master asset finance facility (the "Master Assets Facility"). The Master Asset Facility has various maturity dates through 2021 and have interest rates ranging from 4.86% to 5.31%.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Keith Building Loan and Keith Machinery and Equipment Facility are used for the construction of a building on S&W Australia's Keith, South Australia property, purchase of adjoining land and for the machinery and equipment for use in the operations of the building. The Keith Building Loan matures on November 30, 2024. The interest rate on the Keith Building Loan varies from pricing period to pricing period (each such period approximately 30 days), based on the weighted average of a specified basket of interest rates (6.45% as of December 31, 2018). Interest is payable each month in arrears. The Keith Machinery and Equipment Facility bears interest, payable in arrears, based on the Australian Trade Refinance Rate quoted by NAB at the time of the drawdown, plus 2.9%. The Keith Credit Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate S&W Australia's outstanding obligations, all as set forth in the facility agreement. They are secured by a lien on all the present and future rights, property and undertakings of S&W Australia, the Company's corporate guarantee and a mortgage on S&W Australia's Keith, South Australia property.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> | |
AgCredit | ||
Long-term Debt, Description | On August 15, 2018, the Company completed a sale and leaseback transaction with American AgCredit involving certain equipment located at the Company's Five Points, California and Nampa, Idaho production facilities. Due to its terms, the sale and leaseback transaction is required to be accounted for as a financing arrangement. Accordingly, the proceeds received from American AgCredit were accounted for as proceeds from a debt financing. Under the terms of the transaction:</p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">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.</font></li> </ul> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">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.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-C12"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On August 15, 2018, the Company completed a sale and leaseback transaction with American AgCredit involving certain equipment located at the Company's Five Points, California and Nampa, Idaho production facilities. Due to its terms, the sale and leaseback transaction is required to be accounted for as a financing arrangement. Accordingly, the proceeds received from American AgCredit were accounted for as proceeds from a debt financing. Under the terms of the transaction:</p> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">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.</font></li> </ul> <ul> <li style="margin: 0pt 0 12pt; font-size: 10pt"><font style="font-family: Times New Roman, Times, Serif">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.</font></li> </ul> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> |
Warrants Outstanding (Details)
Warrants Outstanding (Details) - $ / shares | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | |
Warrants outstanding, beginning | 2,699,999 | 2,699,999 | |
Warrant issuances | 0 | 0 | |
Warrants expired | 0 | 0 | |
Warrants outstanding. ending | 2,699,999 | 2,699,999 | |
Warrants | |||
Warrant issue date | 2014-12 | 2014-12 | |
Warrants outstanding, beginning | 2,699,999 | 2,699,999 | |
Exercise price per share | $ 4.32 | $ 4.32 | |
Warrant expiration date | 2020-06 | 2020-06 | |
Warrant issuances | 0 | 0 | |
Warrants expired | 0 | 0 | |
Warrants outstanding. ending | 2,699,999 | 2,699,999 |
Foreign Currency Contract (Narr
Foreign Currency Contract (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Foreign Currency Contract Narrative | |||||
Foreign Currency Transactions, Description | 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 manages through the use of foreign currency forward contracts. These foreign currency contracts are not designated as hedging instruments; accordingly, changes in the fair value are recorded in current period earnings. These foreign currency contracts had a notional value of $3,218,800 at December 31, 2018 and their maturities range from January 2019 to June 2019.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Company records an asset or liability on the consolidated balance sheet for the fair value of the foreign currency forward contracts. The foreign currency contract liabilities totaled $98,071 at December 31, 2018 and $100,138 at June 30, 2018. The Company recorded a gain on foreign exchange contracts of $35,836 and a loss of $61,560, which is reflected in cost of revenue for the three months ended December 31, 2018 and 2017, respectively. The Company recorded a loss on foreign exchange contracts of $2,626 and $100,864, which is reflected in cost of revenue for the six months ended December 31, 2018 and 2017, respectively.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>" id="sjs-D4"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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 manages through the use of foreign currency forward contracts. These foreign currency contracts are not designated as hedging instruments; accordingly, changes in the fair value are recorded in current period earnings. These foreign currency contracts had a notional value of $3,218,800 at December 31, 2018 and their maturities range from January 2019 to June 2019.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The Company records an asset or liability on the consolidated balance sheet for the fair value of the foreign currency forward contracts. The foreign currency contract liabilities totaled $98,071 at December 31, 2018 and $100,138 at June 30, 2018. The Company recorded a gain on foreign exchange contracts of $35,836 and a loss of $61,560, which is reflected in cost of revenue for the three months ended December 31, 2018 and 2017, respectively. The Company recorded a loss on foreign exchange contracts of $2,626 and $100,864, which is reflected in cost of revenue for the six months ended December 31, 2018 and 2017, respectively.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> | ||||
Foreign exchange contract liability | $ 98,071 | $ 98,071 | $ 100,138 | ||
Gain on foreign exchange contracts | $ 35,836 | ||||
Loss on foreign exchange contracts | $ 61,560 | $ 2,626 | $ 100,864 |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) | 6 Months Ended |
Dec. 31, 2018 | |
MFP | |
Related Party Transaction, Description of Transaction | On July 19, 2017, the Company entered into a Securities Purchase Agreement with certain purchasers, including MFP Partners, L.P. ("MFP"), a stockholder of the Company, and certain entities related to Wynnefield Capital Management LLC (collectively, "Wynnefield"), pursuant to which MFP purchased approximately $3.7 million of shares of its common stock and Wynnefield purchased approximately $3.0 million of shares of its common stock. Each of MFP and Wynnefield is a beneficial owner of more than 5% of the Company's common stock. Alexander C. Matina, a member of the Company's Board, is Vice President, Investments of MFP. Robert D. Straus, a member of the Company's Board since January 9, 2018, is a Portfolio Manager at Wynnefield.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On December 22, 2017, the Company completed the closing of its previously announced rights offering. At the closing, the Company sold and issued an aggregate of 2,594,923 shares of its Common Stock at a subscription price of $3.50 per share pursuant to the exercise of subscriptions and oversubscriptions in the rights offering from its existing stockholders. Pursuant to an Investment Agreement, dated October 3, 2017, between the Company and MFP, MFP agreed to purchase, at the subscription price, all of the shares not purchased in the Rights Offering (the "Backstop Commitment"). Accordingly, on December 22, 2017, the Company and MFP completed the closing of the Backstop Commitment, in which the Company sold and issued 905,077 shares of its Common Stock to MFP. Combined, the Company sold and issued an aggregate of 3,500,000 shares of its common stock for aggregate gross proceeds of $12.25 million.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On September 5, 2018, the Company entered into the Securities Purchase Agreement with MFP, pursuant to which the Company sold the Common Shares at the Initial Closing and the Preferred Shares at the Second Closing. The Initial Closing was completed on September 5, 2018 and the Second Closing was completed on October 23, 2018. See Note 9 for further discussion on the Second Closing.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On December 18, 2018, the Company entered into a Loan and Security Agreement (the "MFP Loan Agreement") with MFP, pursuant to which the Company may borrow up to $5,000,000, in minimum increments of $1,000,000, from MFP during the period beginning on December 18, 2018 and ending on the earlier to occur of (i) March 18, 2019 and (ii) certain specified events of default. Pursuant to the MFP Loan Agreement, interest will accrue on outstanding principal at a fixed per annum rate of 6.0%. In addition, the Company is obligated to pay to MFP a fee equal to 2.0% of each advance under the MFP Loan Agreement. Concurrently with the execution of the MFP Loan Agreement, the Company drew down $1,000,000 under the MFP Loan Agreement, which was disbursed to the Company on December 21, 2018. On December 31, 2018 the Company repaid in full the $1,000,000 disbursed to the Company. As of December 31, 2018, no amounts remain outstanding under the MFP Loan Agreement.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>" id="sjs-B4"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On July 19, 2017, the Company entered into a Securities Purchase Agreement with certain purchasers, including MFP Partners, L.P. ("MFP"), a stockholder of the Company, and certain entities related to Wynnefield Capital Management LLC (collectively, "Wynnefield"), pursuant to which MFP purchased approximately $3.7 million of shares of its common stock and Wynnefield purchased approximately $3.0 million of shares of its common stock. Each of MFP and Wynnefield is a beneficial owner of more than 5% of the Company's common stock. Alexander C. Matina, a member of the Company's Board, is Vice President, Investments of MFP. Robert D. Straus, a member of the Company's Board since January 9, 2018, is a Portfolio Manager at Wynnefield.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On December 22, 2017, the Company completed the closing of its previously announced rights offering. At the closing, the Company sold and issued an aggregate of 2,594,923 shares of its Common Stock at a subscription price of $3.50 per share pursuant to the exercise of subscriptions and oversubscriptions in the rights offering from its existing stockholders. Pursuant to an Investment Agreement, dated October 3, 2017, between the Company and MFP, MFP agreed to purchase, at the subscription price, all of the shares not purchased in the Rights Offering (the "Backstop Commitment"). Accordingly, on December 22, 2017, the Company and MFP completed the closing of the Backstop Commitment, in which the Company sold and issued 905,077 shares of its Common Stock to MFP. Combined, the Company sold and issued an aggregate of 3,500,000 shares of its common stock for aggregate gross proceeds of $12.25 million.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On September 5, 2018, the Company entered into the Securities Purchase Agreement with MFP, pursuant to which the Company sold the Common Shares at the Initial Closing and the Preferred Shares at the Second Closing. The Initial Closing was completed on September 5, 2018 and the Second Closing was completed on October 23, 2018. See Note 9 for further discussion on the Second Closing.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On December 18, 2018, the Company entered into a Loan and Security Agreement (the "MFP Loan Agreement") with MFP, pursuant to which the Company may borrow up to $5,000,000, in minimum increments of $1,000,000, from MFP during the period beginning on December 18, 2018 and ending on the earlier to occur of (i) March 18, 2019 and (ii) certain specified events of default. Pursuant to the MFP Loan Agreement, interest will accrue on outstanding principal at a fixed per annum rate of 6.0%. In addition, the Company is obligated to pay to MFP a fee equal to 2.0% of each advance under the MFP Loan Agreement. Concurrently with the execution of the MFP Loan Agreement, the Company drew down $1,000,000 under the MFP Loan Agreement, which was disbursed to the Company on December 21, 2018. On December 31, 2018 the Company repaid in full the $1,000,000 disbursed to the Company. As of December 31, 2018, no amounts remain outstanding under the MFP Loan Agreement.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> |
Wynnefield | |
Related Party Transaction, Description of Transaction | On July 19, 2017, the Company entered into a Securities Purchase Agreement with certain purchasers, including MFP Partners, L.P. ("MFP"), a stockholder of the Company, and certain entities related to Wynnefield Capital Management LLC (collectively, "Wynnefield"), pursuant to which MFP purchased approximately $3.7 million of shares of its common stock and Wynnefield purchased approximately $3.0 million of shares of its common stock. Each of MFP and Wynnefield is a beneficial owner of more than 5% of the Company's common stock. Alexander C. Matina, a member of the Company's Board, is Vice President, Investments of MFP. Robert D. Straus, a member of the Company's Board since January 9, 2018, is a Portfolio Manager at Wynnefield.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-B6"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On July 19, 2017, the Company entered into a Securities Purchase Agreement with certain purchasers, including MFP Partners, L.P. ("MFP"), a stockholder of the Company, and certain entities related to Wynnefield Capital Management LLC (collectively, "Wynnefield"), pursuant to which MFP purchased approximately $3.7 million of shares of its common stock and Wynnefield purchased approximately $3.0 million of shares of its common stock. Each of MFP and Wynnefield is a beneficial owner of more than 5% of the Company's common stock. Alexander C. Matina, a member of the Company's Board, is Vice President, Investments of MFP. Robert D. Straus, a member of the Company's Board since January 9, 2018, is a Portfolio Manager at Wynnefield.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> |
Mark Wong | |
Related Party Transaction, Description of Transaction | On October 11, 2017, the Company entered into a Securities Purchase Agreement with Mark W. Wong, the Company's President and Chief Executive Officer, pursuant to which the Company sold and issued an aggregate of 75,000 shares of its Common Stock at a purchase price of $3.50 per share, for aggregate gross proceeds of $262,500.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>" id="sjs-B8"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">On October 11, 2017, the Company entered into a Securities Purchase Agreement with Mark W. Wong, the Company's President and Chief Executive Officer, pursuant to which the Company sold and issued an aggregate of 75,000 shares of its Common Stock at a purchase price of $3.50 per share, for aggregate gross proceeds of $262,500.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> |
Equity-Based Compensation (Pl_2
Equity-Based Compensation (Plan Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | |
Stock option exercise price | $ 3.45 | ||||
Share-based compensation | $ 222,153 | $ 193,571 | $ 377,458 | $ 451,033 | |
2009 Plan | |||||
Description of the 2009 Equity Incentive Plan | <b></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">In October 2009 and January 2010, the Company's Board of Directors and stockholders, respectively, approved the 2009 Equity Incentive Plan (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 an amendment of the 2009 Plan to increase 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 an amendment of the 2009 Plan to increase the number of shares available for issuance as grants and awards under the Plan to 2,450,000 shares.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>" id="sjs-D6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">In October 2009 and January 2010, the Company's Board of Directors and stockholders, respectively, approved the 2009 Equity Incentive Plan (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 an amendment of the 2009 Plan to increase 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 an amendment of the 2009 Plan to increase the number of shares available for issuance as grants and awards under the Plan to 2,450,000 shares.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p> | ||||
Plan Modification, Description and Terms | </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p>" id="sjs-D7"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> | ||||
Shares available for future grants and awards | 350,343 | 350,343 | |||
Terms of awards and other restrictions | </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The term of incentive stock options granted under the 2009 Plan 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 2009 Plan 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>" id="sjs-D9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">The term of incentive stock options granted under the 2009 Plan 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 2009 Plan 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> |
Equity-Based Compensation (Weig
Equity-Based Compensation (Weighted Average Assumptions) (Details) - Stock Options - $ / shares | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Risk Free Interest Rate, minimum | 2.72% | 1.72% |
Risk Free Interest Rate, maximum | 2.99% | 1.91% |
Dividend yield | 0.00% | 0.00% |
Volatility of common stock, minimum | 40.36% | 45.30% |
Volatility of common stock, maximum | 45.47% | 45.50% |
Average forfeiture assumptions | 1.40% | 1.40% |
Weighted average grant date fair value of options granted and outstanding | $ 1.08 | |
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 2 years 72 days |
Equity-Based Compensation (Sche
Equity-Based Compensation (Schedule Of Stock Option Activity) (Details) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017shares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | |
Equity-based Compensation Schedule Of Stock Option Activity | ||||
Options, Outstanding as of beginning of period | shares | 792,074 | 990,528 | ||
Options, Granted | shares | 353,822 | 103,283 | ||
Options, Exercised | shares | 0 | 0 | (49,000) | |
Options, Forfeited, cancelled or expired | shares | (96,500) | (252,737) | ||
Options, Outstanding as of end of period | shares | 1,049,396 | 990,528 | ||
Options, vested and exercisable at end of period | shares | 544,288 | |||
Options, vested and expected to vest | shares | 1,048,087 | |||
Weighted-Average Exercise Prices, Outstanding as of beginnig of period | $ / shares | $ 4.55 | |||
Weighted-Average Exercise Prices, Granted | $ / shares | $ 3.45 | |||
Weighted-Average Exercise Prices, Exercised | $ / shares | 0 | 3.95 | ||
Weighted-Average Exercise Prices, Forfeited, cancelled or expired | $ / shares | 0 | $ 6.46 | ||
Weighted-Average Exercise Prices, Outstanding as of end of period | $ / shares | 3.87 | |||
Weighted-Average Exercise Prices, Vested and Exercisable | $ / shares | 4.46 | |||
Weighted-Average Exercise Price, Vested and expected to vest | $ / shares | $ 3.87 | |||
Options Outstanding, Weighted-Average Remaining Contractual Term (in years) | 7 years 252 days | 6 years 108 days | ||
Weighted-Average Remaining Contractual Term (in years), Vested and Exercisable | 6 years 36 days | |||
Options Granted, Weighted-Average Remaining Contractual Term (in years) | 9.7 | |||
Weighted-Average Remaining Contractual Term (in years), Vested and expected to vest | 7 years 252 days | |||
Options, Outstanding, Aggregate Intrinsic Value | $ | $ 0 | $ 100,344 | $ 10,413 | |
Options, vested and xxercisable, Aggregate Intrinsic Value | $ | 0 | |||
Options, Vested and expected to vest, Aggregate Intrinsic Value | $ | $ 0 |
Equity-Based Compensation (Sc_2
Equity-Based Compensation (Schedule Of Other Than Option Plan Activity) (Details) - Nonvested RSU's | 6 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Nonvested units outstanding at beginning | 89,193 |
Granted | 99,902 |
Vested | (44,507) |
Forfeited | 0 |
Nonvested units outstanding at end | 144,588 |
Units granted, weighted average grant date fair value per unit | $ / shares | $ 3.06 |
Units vested, weighted average grant date fair value per unit | $ / shares | 3.72 |
Nonvested units outstanding, weighted average grant date fair value per unit | $ / shares | $ 3.43 |
Weighted-average remaining contractual life (years) | 2 years 36 days |
Equity-Based Compensation (Narr
Equity-Based Compensation (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-based compensation | $ 222,153 | $ 193,571 | $ 377,458 | $ 451,033 |
Stock Options | ||||
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 2 years 14 days | |||
Stock Options | ||||
Unrecognized stock compensation expense, net of estimated forfeitures, related to options | 414,026 | $ 414,026 | ||
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 2 years 72 days | |||
Nonvested RSU's | ||||
Unrecognized stock compensation expense related to restricted stock grants | $ 288,327 | $ 288,327 | ||
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 2 years 40 days | |||
Stock-based compensation | $ 222,431 | $ 311,067 |
Non-Cash Investing Activities f
Non-Cash Investing Activities for Statements of Cash Flows (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Non-cash Investing Activities For Statements Of Cash Flows | ||
Fair value of assets acquired | $ 29,446,067 | $ 0 |
Cash paid for the acquisition | (26,450,000) | 0 |
Liabilities assumed | $ (2,996,067) | $ 0 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) | 6 Months Ended |
Dec. 31, 2017 | |
Subsequent Events Narrative | |
Subsequent Event, Description | At the Annual Meeting of Stockholders of the Company, held on January 16, 2019 (the "Annual Meeting"), the Company's stockholders approved the S&W Seed Company 2019 Equity Incentive Plan (the "2019 Plan") as a successor to and continuation of the Company's Amended and Restated 2009 Equity Incentive Plan (the "2009 Plan"). 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 will not exceed 4,246,878 shares, which is the sum of (i) 2,750,000 new shares, plus (ii) 353,431 shares that remained available for grant under the 2009 Plan as of January 16, 2019, plus (iii) 1,143,447 shares subject to outstanding stock awards granted under the 2009 Plan.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p>" id="sjs-B4"><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0">At the Annual Meeting of Stockholders of the Company, held on January 16, 2019 (the "Annual Meeting"), the Company's stockholders approved the S&W Seed Company 2019 Equity Incentive Plan (the "2019 Plan") as a successor to and continuation of the Company's Amended and Restated 2009 Equity Incentive Plan (the "2009 Plan"). 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 will not exceed 4,246,878 shares, which is the sum of (i) 2,750,000 new shares, plus (ii) 353,431 shares that remained available for grant under the 2009 Plan as of January 16, 2019, plus (iii) 1,143,447 shares subject to outstanding stock awards granted under the 2009 Plan.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"></p> |