FORWARD-LOOKING STATEMENTS [Forward-Looking Statements Overview](index=3&type=section&id=Forward-Looking%20Statements%20Overview) This section cautions readers that the report contains forward-looking statements, which are subject to risks and uncertainties, including loan compliance, macroeconomic events, and product demand - All statements other than statements of historical fact are considered forward-looking, identified by words like 'anticipate,' 'believe,' 'expect,' 'intend,' 'may,' 'plan,' 'will,' etc[9](index=9&type=chunk) - Key risks and uncertainties include the ability to comply with loan agreements, potential effects of global macroeconomic events (COVID-19, inflation, supply chain, conflicts), demand for seed products (e.g., Double Team™), successful product commercialization, and the anticipated benefits of partnerships with Trigall Genetics and Shell[9](index=9&type=chunk)[10](index=10&type=chunk) - The company does not guarantee future results and undertakes no obligation to publicly update forward-looking statements, except as required by law[11](index=11&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, equity, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity significantly increased as of March 31, 2023, driven by equity method investments and prepaid expenses, while total liabilities remained stable | Metric | March 31, 2023 | June 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :------------- | :------------ | :--------- | :--------- | | Cash and cash equivalents | $1,569,463 | $2,056,508 | $(487,045) | -23.68% | | Accounts receivable, net | $20,424,589 | $19,051,236 | $1,373,353 | 7.21% | | Inventories, net | $55,666,627 | $54,515,894 | $1,150,733 | 2.11% | | Prepaid expenses and other current assets | $10,748,580 | $1,605,987 | $9,142,593 | 569.29% | | **TOTAL CURRENT ASSETS** | **$88,409,259**| **$77,229,625**| **$11,179,634**| **14.48%** | | Property, plant and equipment, net| $10,241,685 | $16,871,669 | $(6,629,984)| -39.30% | | Intangibles, net | $30,328,212 | $34,095,827 | $(3,767,615)| -11.05% | | Equity method investments | $24,121,771 | $367,970 | $23,753,801| 6455.49% | | **TOTAL ASSETS** | **$158,483,654**| **$133,787,851**| **$24,695,803**| **18.46%** | | **TOTAL LIABILITIES** | **$77,605,063**| **$77,574,363**| **$30,700** | **0.04%** | | **TOTAL STOCKHOLDERS' EQUITY** | **$75,724,512**| **$51,408,669**| **$24,315,843**| **47.30%** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company shifted from net loss to net income for the three and nine months ended March 31, 2023, primarily due to a significant gain on business interest sale, despite a three-month revenue decrease Three Months Ended March 31, | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :--------- | :--------- | | Revenue | $17,662,307 | $23,186,877 | $(5,524,570)| -23.8% | | Gross profit | $4,430,471 | $2,705,414 | $1,725,057 | 63.8% | | Loss from operations | $(3,912,749) | $(6,210,929) | $2,298,180 | -37.0% | | Government grant income | $(1,444,044) | — | $(1,444,044)| - | | Gain on sale of business interest | $(38,323,506)| — | $(38,323,506)| - | | Net income (loss) attributable to S&W Seed Company | $32,119,365 | $(7,304,923) | $39,424,288| -539.7% | | Basic EPS | $0.75 | $(0.19) | $0.94 | -494.7% | Nine Months Ended March 31, | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :--------- | :--------- | | Revenue | $50,465,974 | $51,349,967 | $(883,993) | -1.7% | | Gross profit | $11,684,273 | $7,492,447 | $4,191,826 | 55.9% | | Loss from operations | $(13,562,196)| $(20,877,021)| $7,314,825 | -35.0% | | Government grant income | $(1,444,044) | — | $(1,444,044)| - | | Gain on sale of business interest | $(38,323,506)| — | $(38,323,506)| - | | Net income (loss) attributable to S&W Seed Company | $21,624,419 | $(23,500,000)| $45,124,419| -192.0% | | Basic EPS | $0.50 | $(0.62) | $1.12 | -180.6% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income significantly improved for both three and nine months ended March 31, 2023, moving from loss to gain, reflecting substantial net income partially offset by foreign currency adjustments Comprehensive Income (Loss) Attributable to S&W Seed Company | Period | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :--------- | :--------- | | Three Months Ended March 31 | $31,946,583 | $(6,824,643) | $38,771,226| -568.1% | | Nine Months Ended March 31 | $21,276,862 | $(23,227,498)| $44,504,360| -191.6% | [Condensed Consolidated Statements of Mezzanine Equity and Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Mezzanine%20Equity%20and%20Stockholders'%20Equity) Stockholders' equity significantly increased from June 30, 2022, to March 31, 2023, driven by net income and additional paid-in capital, despite preferred stock dividend accruals Stockholders' Equity Changes | Metric | March 31, 2023 | June 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :------------- | :------------ | :--------- | :--------- | | Total Stockholders' Equity | $75,724,512 | $51,408,669 | $24,315,843| 47.30% | | Accumulated Deficit | $(84,598,398) | $(105,873,557)| $21,275,159| -20.10% | | Additional Paid-In Capital | $167,297,153 | $163,892,575 | $3,404,578 | 2.08% | - Net income of **$32,119,365** contributed to the increase in stockholders' equity for the nine months ended March 31, 2023[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended March 31, 2023, operating cash use decreased, investing activities generated significant cash from partnerships and asset sales, resulting in a net cash decrease Nine Months Ended March 31, Cash Flow Summary | Activity | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Net cash used in operating activities | $(15,828,395)| $(18,006,419)| $2,178,024 | -12.09% | | Net cash provided by (used in) investing activities | $8,360,648 | $(569,181) | $8,929,829 | -1568.9% | | Net cash provided by financing activities | $6,565,494 | $17,899,513 | $(11,334,019)| -63.32% | | Net decrease in cash & cash equivalents | $(487,045) | $(386,018) | $(101,027) | 26.17% | - Investing activities were significantly boosted by **$7.0 million** from the Vision Bioenergy partnership and **$2.0 million** from the Trigall Australia partnership in 2023[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering business information, accounting policies, leases, revenue, assets, debt, equity, and non-cash activities [NOTE 1 - GENERAL](index=10&type=section&id=NOTE%201%20-%20GENERAL) This note describes S&W Seed Company as a global multi-crop agricultural company, highlighting recent strategic partnerships with Shell and Trigall Genetics, and the divestment of its Bioceres investment - S&W Seed Company is a global multi-crop agricultural company focused on breeding, growing, processing, and selling agricultural seeds[27](index=27&type=chunk) - Formed Vision Bioenergy Oilseeds LLC partnership with Shell on February 6, 2023, for sustainable biofuel feedstocks, selling a **66% interest** to Shell[28](index=28&type=chunk) - Established Trigall Australia Pty Ltd partnership with Trigall Genetics S.A. on December 23, 2022, for wheat variety development and marketing in Australia, selling an **80% interest** to Trigall[29](index=29&type=chunk) - Sold the remainder of its investment in Bioceres, S.A. for net proceeds of **$400,000** during the nine months ended March 31, 2023, realizing a gain of **$32,030**[30](index=30&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details significant accounting policies, including liquidity, going concern, foreign currency, inventory, ERC, income tax, EPS, revenue/asset concentrations, derivatives, and fair value measurements for the Vision Bioenergy Purchase Option - The company has recorded negative cash flows from operations for several years and had **$1.6 million** cash on hand as of March 31, 2023, raising substantial doubt about its ability to continue as a going concern, despite meeting financial covenants as of that date[36](index=36&type=chunk)[37](index=37&type=chunk) - Recognized **$1.4 million** in Government grant income for the Employee Retention Credit (ERC) for the period April 1, 2021, to September 30, 2021, accounted for by analogy to IAS 20[42](index=42&type=chunk) Inventory Components | Component | March 31, 2023 | June 30, 2022 | | :---------------------- | :------------- | :------------ | | Raw materials and supplies | $3,312,634 | $2,645,764 | | Work in progress | $12,890,422 | $6,677,980 | | Finished goods | $39,463,571 | $45,192,150 | | **Inventories, net** | **$55,666,627**| **$54,515,894**| - International sales represented **55%** and **75%** of total revenue for the three and nine months ended March 31, 2023, respectively, indicating significant foreign market concentration[49](index=49&type=chunk) - The Purchase Option related to the Vision Bioenergy partnership was valued at **$0.6 million** using a lattice option valuation model, incorporating unobservable inputs like risk-free rate (**3.8%-4.9%**), stock price volatility (**60%-65%**), lack of control premium (**13%**), and lack of marketability premium (**30%**)[55](index=55&type=chunk)[56](index=56&type=chunk) [NOTE 3 - LEASES](index=15&type=section&id=NOTE%203%20-%20LEASES) The company leases office, laboratory, research, and equipment space; as of March 31, 2023, total lease assets were **$3.98 million** and liabilities were **$4.24 million**, with operating lease costs as the largest expense Lease Assets and Liabilities (March 31, 2023) | Category | Amount | | :-------------------------------- | :------------- | | Right of use assets - finance leases, net | $631,867 | | Right of use assets - operating leases | $3,344,109 | | **Total lease assets** | **$3,975,976** | | Current lease liabilities - finance leases | $402,164 | | Current lease liabilities - operating leases | $1,254,357 | | Long-term portion of lease liabilities - finance leases | $246,977 | | Long-term portion of lease liabilities - operating leases | $2,337,168 | | **Total lease liabilities** | **$4,240,666** | Total Lease Costs (Nine Months Ended March 31, 2023) | Category | Amount | | :-------------------------------- | :------------- | | Operating lease cost (Cost of revenue) | $540,260 | | Operating lease cost (SG&A) | $155,288 | | Operating lease cost (R&D) | $316,833 | | Finance lease cost (Depreciation and amortization) | $385,901 | | Finance lease cost (Interest expense, net) | $30,033 | | **Total lease costs** | **$1,428,315** | [NOTE 4 - REVENUE RECOGNITION](index=17&type=section&id=NOTE%204%20-%20REVENUE%20RECOGNITION) Revenue primarily from seed product sales, recognized upon shipment with 30-180 day payment terms, saw significant growth in Double Team™ Sorghum sales, with international markets like Australia and Saudi Arabia as key sources - Revenue from seed product sales is recognized at the point of transfer of control, generally upon shipment[61](index=61&type=chunk) Double Team™ Sorghum Seed Sales | Period | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Three Months Ended March 31 | $3.8 million | $1.7 million | $2.1 million | 123.5% | | Nine Months Ended March 31 | $5.0 million | $1.7 million | $3.3 million | 194.1% | Revenue by Type of Contract | Type | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Nine Months Ended March 31, 2023 | Nine Months Ended March 31, 2022 | | :--------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Seed sales | $17,382,360 | $22,791,148 | $50,054,978 | $49,946,635 | | Services | $279,947 | $395,729 | $410,996 | $1,403,332 | | **Total** | **$17,662,307** | **$23,186,877** | **$50,465,974** | **$51,349,967** | Revenue by Destination Country (Nine Months Ended March 31, 2023) | Country | Revenue ($) | % of Total | | :------------- | :---------- | :--------- | | United States | $12,751,506 | 25% | | Australia | $12,522,642 | 25% | | Saudi Arabia | $7,631,494 | 15% | | Mexico | $4,297,823 | 8% | | Libya | $2,995,608 | 6% | | Sudan | $2,303,702 | 5% | | Pakistan | $1,594,026 | 3% | | South Africa | $1,063,255 | 2% | | Algeria | $912,040 | 2% | | Argentina | $803,264 | 2% | | Other | $3,590,614 | 7% | | **Total** | **$50,465,974**| **100%** | [NOTE 5 – INTANGIBLE ASSETS](index=18&type=section&id=NOTE%205%20%E2%80%93%20INTANGIBLE%20ASSETS) Net intangible assets decreased to **$30.33 million** as of March 31, 2023, from **$34.10 million** at June 30, 2022, primarily due to amortization and intellectual property transfer to Trigall Australia Intangible Assets, Net | Category | March 31, 2023 | June 30, 2022 | | :-------------------- | :------------- | :------------ | | Trade name | $931,424 | $1,084,791 | | Customer relationships| $5,103,313 | $5,499,815 | | Intellectual property | $21,996,763 | $23,035,925 | | License agreement | $0 | $1,986,598 | | **Total Intangibles, net**| **$30,328,212**| **$34,095,827**| - Amortization expense for intangible assets totaled **$548,438** for the three months ended March 31, 2023, and **$1,719,646** for the nine months ended March 31, 2023[71](index=71&type=chunk) - The license agreement intangible asset was reduced to **$0** due to the transfer of intellectual property rights to Trigall Australia[70](index=70&type=chunk)[71](index=71&type=chunk) [NOTE 6 - PROPERTY, PLANT AND EQUIPMENT](index=19&type=section&id=NOTE%206%20-%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) Net property, plant, and equipment decreased to **$10.24 million** as of March 31, 2023, from **$16.87 million** at June 30, 2022, due to depreciation and Vision Bioenergy partnership contributions Property, Plant and Equipment, Net | Category | March 31, 2023 | June 30, 2022 | | :-------------------------- | :------------- | :------------ | | Land and improvements | $942,919 | $2,265,087 | | Buildings and improvements | $3,371,017 | $8,119,960 | | Machinery and equipment | $12,622,765 | $14,972,462 | | Vehicles | $608,002 | $1,085,342 | | Leasehold improvements | $552,810 | $552,810 | | Construction in progress | $20,000 | $110,107 | | **Total PPE** | **$18,117,513**| **$27,105,768**| | Less: accumulated depreciation | $(7,875,828) | $(10,234,099) | | **PPE, net** | **$10,241,685**| **$16,871,669**| - Depreciation expense totaled **$438,505** for the three months ended March 31, 2023, and **$1,591,997** for the nine months ended March 31, 2023[73](index=73&type=chunk)[74](index=74&type=chunk) [NOTE 7 - DEBT](index=20&type=section&id=NOTE%207%20-%20DEBT) Net total debt decreased to **$4.71 million** as of March 31, 2023, from **$12.31 million** at June 30, 2022, primarily due to the Shell payoff, with CIBC, NAB, and MFP loan agreements amended for extended maturities and increased facilities Total Debt Outstanding, Net | Category | March 31, 2023 | June 30, 2022 | | :-------------------------------- | :------------- | :------------ | | Total working capital lines of credit, net | $42,783,136 | $34,382,183 | | Total long-term debt, net | $4,706,783 | $12,309,323 | | **Total debt, net** | **$47,489,919**| **$46,691,506**| - The CIBC Loan Agreement was amended on March 22, 2023, extending its maturity to August 31, 2024, and providing a senior secured credit facility of up to **$25.0 million** (seasonal)[77](index=77&type=chunk)[78](index=78&type=chunk) - The Rooster Note, with approximately **$6.6 million** outstanding, was paid off in full by Shell on February 6, 2023, as part of the Vision Bioenergy partnership[83](index=83&type=chunk) - The NAB Finance Agreement was amended in October 2022 and February 2023, increasing the seasonal credit facility to **AUD $40.0 million** (**USD $26.8 million**) and extending maturities, with an undertaking to maintain a net related entity position of not more than **USD $18.5 million**[85](index=85&type=chunk)[87](index=87&type=chunk) - The MFP Loan Agreement was amended to increase the maximum term loan advances to **$13.0 million** and extend the MFP Letter of Credit maturity to September 30, 2024, with the MFP Loan Agreement maturing on November 30, 2025[89](index=89&type=chunk)[90](index=90&type=chunk) [NOTE 8 - FOREIGN CURRENCY FORWARD CONTRACTS AND OPTIONS](index=23&type=section&id=NOTE%208%20-%20FOREIGN%20CURRENCY%20FORWARD%20CONTRACTS%20AND%20OPTIONS) The company uses foreign currency forward contracts and call options to manage exchange rate exposure, holding **$10.6 million** notional value in forward contracts and recording **$812,362** liability, with **$167,688** in gains for the nine months ended March 31, 2023 - Held foreign currency forward contracts with a notional value of **$10,621,155** as of March 31, 2023, maturing from April to June 2023[93](index=93&type=chunk) Foreign Currency Contract Liabilities and Gains | Metric | March 31, 2023 | June 30, 2022 | | :-------------------------------- | :------------- | :------------ | | Foreign currency contract liability | $812,362 | $996,106 | | Gains on foreign currency forward contracts (9 months ended Mar 31) | $167,688 | $(50,971) | - Acquired foreign currency options with a total notional amount of **$9.0 million** in March 2023, with premiums of **$31,055** recorded as current assets[95](index=95&type=chunk) [NOTE 9 – EQUITY](index=23&type=section&id=NOTE%209%20%E2%80%93%20EQUITY) The company generated **$0.2 million** from ATM common stock sales for the nine months ended March 31, 2023, with **$6.2 million** remaining, and issued MFP Warrants for **2,633,400** common shares to MFP Partners, L.P ATM Common Stock Sales Proceeds | Period | Gross Proceeds | | :-------------------------------- | :------------- | | Three Months Ended March 31, 2023 | $0.2 million | | Nine Months Ended March 31, 2023 | $0.2 million | | Three Months Ended March 31, 2022 | $6.2 million | | Nine Months Ended March 31, 2022 | $6.2 million | - As of March 31, 2023, **$6.2 million** remained available for sale under the ATM Agreement[97](index=97&type=chunk) - Issued warrants to purchase a total of **2,633,400** shares of common stock to MFP Partners, L.P. during the nine months ended March 31, 2023, with exercise prices ranging from **$1.60** to **$2.15** per share[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - An aggregate value of **$1,894,901** related to the MFP Warrants was capitalized and **$626,141** was amortized as interest expense during the nine months ended March 31, 2023[101](index=101&type=chunk) [NOTE 10 - EQUITY-BASED COMPENSATION](index=24&type=section&id=NOTE%2010%20-%20EQUITY-BASED%20COMPENSATION) The company granted **1,289,675** stock options and **495,196** restricted stock units, incurring **$1.38 million** in stock-based compensation expense for the nine months ended March 31, 2023, with **$1.13 million** and **$0.46 million** unrecognized for options and RSUs, respectively Stock Option Activity (Nine Months Ended March 31, 2023) | Metric | Number of Options | Weighted-Average Exercise Price Per Share | | :-------------------------- | :---------------- | :---------------------------------------- | | Outstanding at June 30, 2022| 4,637,100 | $2.64 | | Granted | 1,289,675 | $1.26 | | Exercised | (1,050) | $0.95 | | Canceled/forfeited/expired | (844,545) | $2.79 | | **Outstanding at March 31, 2023**| **5,081,180** | **$2.27** | Restricted Stock Unit Activity (Nine Months Ended March 31, 2023) | Metric | Number of Nonvested Restricted Stock Units | Weighted-Average Grant Date Fair Value | | :-------------------------------- | :--------------------------------------- | :------------------------------------- | | Nonvested restricted units outstanding at June 30, 2022 | 267,919 | $2.66 | | Granted | 495,196 | $1.14 | | Vested | (224,164) | $2.55 | | Forfeited | (8,750) | $2.50 | | **Nonvested restricted units outstanding at March 31, 2023**| **530,201** | **$1.29** | Stock-Based Compensation Expense | Period | 2023 | 2022 | | :-------------------------------- | :----------- | :----------- | | Three Months Ended March 31 | $620,887 | $413,293 | | Nine Months Ended March 31 | $1,382,895 | $1,821,808 | - As of March 31, 2023, **$1,131,866** of unrecognized stock compensation expense related to options and **$461,652** for restricted stock units remained[104](index=104&type=chunk)[106](index=106&type=chunk) [NOTE 11 - INVESTMENTS](index=25&type=section&id=NOTE%2011%20-%20INVESTMENTS) Equity method investments significantly increased to **$24.12 million** as of March 31, 2023, driven by partnerships with Shell (Vision Bioenergy) and Trigall Genetics (Trigall Australia), resulting in **$38.3 million** and **$1.8 million** gains respectively, with the Bioceres investment fully divested - The Shell Partnership (Vision Bioenergy) involved S&W contributing facilities and assets, Shell contributing **$13.2 million** cash to Vision Bioenergy, paying **$7.0 million** to S&W, and retiring **$6.8 million** of S&W's debt. S&W retained a **34% interest**, and Shell received **66%**[110](index=110&type=chunk)[113](index=113&type=chunk) - A gain of **$38.3 million** was recognized on the sale of the **66% interest** in Vision Bioenergy to Shell, based on total consideration of **$43.8 million** less the **$5.5 million** carrying value of contributed assets[114](index=114&type=chunk)[115](index=115&type=chunk) - The Trigall Australia Partnership involved S&W Australia transferring intellectual property and equipment for **$2.0 million** cash, a **$1.0 million** promissory note, and a **20% ownership interest**. A **$1.8 million** gain was recognized on this asset sale[124](index=124&type=chunk)[125](index=125&type=chunk) Equity Method Investments | Investment | March 31, 2023 (Carrying Amount) | June 30, 2022 (Carrying Amount) | | :---------------- | :------------------------------- | :------------------------------ | | Vision Bioenergy | $23,340,657 | — | | Trigall Australia | $781,114 | — | | Bioceres | — | $367,970 | | **Total** | **$24,121,771** | **$367,970** | [NOTE 12 – SERIES B CONVERTIBLE PREFERRED STOCK](index=30&type=section&id=NOTE%2012%20%E2%80%93%20SERIES%20B%20CONVERTIBLE%20PREFERRED%20STOCK) Series B Convertible Preferred Stock increased to **$5.15 million** as of March 31, 2023, from **$4.80 million** at June 30, 2022, primarily due to accrued dividends and warrant discount accretion Series B Convertible Preferred Stock Changes | Metric | Amount | | :-------------------------------- | :------------- | | Balance at June 30, 2022 | $4,804,819 | | Dividends accrued | $271,746 | | Accretion of discount for warrants | $77,514 | | **Balance at March 31, 2023** | **$5,154,079** | [NOTE 13 - NON-CASH ACTIVITIES FOR STATEMENTS OF CASH FLOWS](index=31&type=section&id=NOTE%2013%20-%20NON-CASH%20ACTIVITIES%20FOR%20STATEMENTS%20OF%20CASH%20FLOWS) This note outlines significant non-cash activities for the nine months ended March 31, 2023, including ROU assets, Shell consideration for Vision Bioenergy equity, and intangible asset contribution to Trigall Non-Cash Activities (Nine Months Ended March 31, 2023) | Activity | Amount | | :-------------------------------- | :------------- | | ROU assets financed by lease liabilities | $498,143 | | Settlement of long-term debt principal, interest and other related costs (Shell) | $6,840,879 | | Note receivable (Shell) | $5,747,127 | | Membership purchase option (Shell)| $604,000 | | Contribution of property, plant and equipment and inventory to Vision Bioenergy for equity interest | $(5,532,694) | | Contribution of intangible assets to Trigall in exchange for equity investment and promissory note | $(1,750,000) | | Warrants issued for financial commitment asset | $1,894,901 | | Dividends accrued for participating securities | $271,746 | | Accretion of discount for Series B preferred stock warrants | $77,514 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and operational results, detailing strategic initiatives, global economic impacts, income statement analysis, and liquidity and capital resources [Strategic Review](index=32&type=section&id=Strategic%20Review) The company's strategic review focuses on sorghum technology, international forage, and specialty crops, with partnerships with Trigall Genetics and Shell expected to reduce operating expenses, provide liquidity, and sharpen growth priorities - Strategic review focuses on sorghum technology (Double Team™), international/U.S. forage operations, and specialty crops (stevia, camelina)[136](index=136&type=chunk)[137](index=137&type=chunk) - Partnerships with Trigall Genetics (wheat in Australia) and Shell (sustainable biofuel feedstocks via Vision Bioenergy) are expected to reduce operating expenses, provide liquidity, and sharpen focus on key growth priorities[139](index=139&type=chunk)[140](index=140&type=chunk)[143](index=143&type=chunk) - The company plans to reduce annual operating expenses by approximately **$4.0 to $5.0 million**, including streamlining European sunflower operations and reducing headcount[143](index=143&type=chunk)[149](index=149&type=chunk) [Global Economic Conditions](index=33&type=section&id=Global%20Economic%20Conditions) Adverse geopolitical and macroeconomic events, including conflicts, inflation, and supply chain disruptions, continue to impact the business, with the Sudan conflict and Saudi Arabian market conditions expected to shift **$10.0 million** in alfalfa orders to fiscal 2024 - Adverse geopolitical and macroeconomic events (COVID-19, Russia-Ukraine conflict, Sudan conflict, inflation, supply chain disruptions, bank failures) continue to pose risks to operations[143](index=143&type=chunk)[145](index=145&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - The armed conflict in Sudan has disrupted shipments, leading to cancellation of orders and efforts to find alternative customers[146](index=146&type=chunk) - Unregistered, lower-priced European seed in Saudi Arabia has created a short-term market imbalance, causing the company to strategically avoid discounting its high-value seed[146](index=146&type=chunk) - Approximately **$10.0 million** in alfalfa orders are expected to shift to the first half of fiscal 2024 due to the Sudan conflict and Saudi Arabia market conditions[146](index=146&type=chunk) - Logistical challenges, including truck availability and port congestion, are expected to persist throughout fiscal 2023, potentially delaying revenue recognition[148](index=148&type=chunk) [Components of Our Statements of Operations Data](index=34&type=section&id=Components%20of%20Our%20Statements%20of%20Operations%20Data) Revenue primarily from proprietary seed varieties (alfalfa, sorghum, pasture) fluctuates due to market instability; cost of revenue includes procurement and packaging, while operating expenses, including R&D, focus on high-value traits for alfalfa and sorghum - Revenue is primarily from proprietary seed varieties and hybrids, with alfalfa, sorghum, and pasture seed expected to be substantial contributors[151](index=151&type=chunk) - Revenue fluctuates due to customer order timing and global market instability (COVID-19, Russia-Ukraine, Sudan conflicts, supply chain, inflation)[153](index=153&type=chunk) - Specialty crops (stevia, biofuels) have not yet generated meaningful revenue, but the Vision Bioenergy partnership with Shell aims to develop camelina sativa for biofuels[154](index=154&type=chunk) - Gross margin is expected to improve with increased market acceptance of Double Team™ sorghum[155](index=155&type=chunk) - Research and development efforts are focused on high-value activities, including differentiating forage quality traits for alfalfa and higher value grain products and herbicide tolerance for sorghum[158](index=158&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Results for the three and nine months ended March 31, 2023, show a significant shift from net loss to net income, primarily due to a substantial gain on the Vision Bioenergy business interest sale, with gross profit improving from higher-margin sales [Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022](index=36&type=section&id=Three%20Months%20Ended%20March%2031,%202023%20Compared%20to%20the%20Three%20Months%20Ended%20March%2031,%202022) Revenue decreased by **23.8%** due to lower sales, but gross profit increased by **63.8%** from higher-margin Double Team™ sorghum and reduced inventory write-downs, leading to a net income improvement from a **$7.3 million** loss to a **$32.1 million** gain, driven by a **$38.3 million** business interest sale gain and **$1.4 million** government grant income Key Financial Changes (Three Months Ended March 31, 2023 vs 2022) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Revenue | $17,662,307 | $23,186,877 | $(5,524,570)| -23.8% | | Gross profit | $4,430,471 | $2,705,414 | $1,725,057 | 63.8% | | Selling, general and administrative expenses | $5,990,651 | $5,582,060 | $408,591 | 7.3% | | Research and development expenses | $1,208,038 | $1,904,631 | $(696,593) | -36.6% | | Loss from operations | $(3,912,749) | $(6,210,929) | $2,298,180 | -37.0% | | Government grant income | $(1,444,044) | — | $(1,444,044)| - | | Gain on sale of business interest | $(38,323,506)| — | $(38,323,506)| - | | Net income (loss) | $32,113,573 | $(7,262,255) | $39,375,828| -542.2% | - Revenue decrease was primarily due to a **$3.9 million** decrease in alfalfa sales (MENA, US, Europe, Asia, South Africa), a **$2.0 million** decrease in pastures and forages sales in Australia, and a **$1.1 million** decrease in conventional sorghum sales to the US[167](index=167&type=chunk) - Gross margin improvement was driven by increased sales of higher-margin Double Team™ sorghum in the US, reduced lower-margin dormant alfalfa sales, and lower inventory write-downs (**$0.4 million** in 2023 vs **$1.1 million** in 2022)[168](index=168&type=chunk) - Other (income) expenses included **$1.5 million** in lender fees written off due to uncompleted financing efforts[178](index=178&type=chunk) [Nine Months Ended March 31, 2023 Compared to the Nine Months Ended March 31, 2022](index=38&type=section&id=Nine%20Months%20Ended%20March%2031,%202023%20Compared%20to%20the%20Nine%20Months%20Ended%20March%2031,%202022) Revenue slightly decreased by **1.7%**, but gross profit increased by **55.9%** due to improved margin and reduced inventory write-downs, leading to a net income improvement from a **$23.5 million** loss to a **$21.6 million** gain, driven by a **$38.3 million** business interest sale gain and a **$1.8 million** intangible asset disposal gain Key Financial Changes (Nine Months Ended March 31, 2023 vs 2022) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Revenue | $50,465,974 | $51,349,967 | $(883,993) | -1.7% | | Gross profit | $11,684,273 | $7,492,447 | $4,191,826 | 55.9% | | Selling, general and administrative expenses | $17,289,120 | $18,260,785 | $(971,665) | -5.3% | | Research and development expenses | $4,226,891 | $6,010,172 | $(1,783,281)| -29.7% | | Loss from operations | $(13,562,196)| $(20,877,021)| $7,314,825 | -35.0% | | Government grant income | $(1,444,044) | — | $(1,444,044)| - | | Gain on sale of business interest | $(38,323,506)| — | $(38,323,506)| - | | Gain on disposal of intangible assets | $(1,796,252)| — | $(1,796,252)| - | | Net income (loss) | $21,607,777 | $(23,458,061)| $45,065,838| -192.1% | - Revenue decrease was primarily due to a **$4.6 million** decrease in alfalfa sales (US, Europe, Asia, South Africa) and a **$4.0 million** decrease in conventional sorghum sales (US, Asia, South Africa, MENA), partially offset by increases in sorghum sales to MENA and LATAM[184](index=184&type=chunk) - Gross margin improvement was driven by increased sales of higher-margin Double Team™ sorghum and non-dormant alfalfa, reduced lower-margin sorghum Sudan sales, and lower inventory write-downs (**$0.9 million** in 2023 vs **$1.9 million** in 2022)[185](index=185&type=chunk)[186](index=186&type=chunk) - SG&A expenses decreased by **$1.0 million** due to reduced stock-based compensation, payroll, bad debt, advertising, and consulting expenses, partially offset by increased one-time transaction costs[187](index=187&type=chunk) - R&D expenses decreased by **$1.8 million** due to reductions in salaries, field trial expenses, consulting fees, and investment in sunflower programs[188](index=188&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is influenced by seasonal working capital and historical reliance on debt/equity financing; the company, not profitable from operations, requires additional funding, expecting to meet short-term needs via cash, partnership payments, and debt facilities, but faces long-term financing and covenant compliance risks [Overview](index=40&type=section&id=Overview) Working capital requirements fluctuate seasonally, peaking in the second and third fiscal quarters due to grower payments, with sales and cash receipts highly dependent on distributor delivery and payment timing - Working capital needs are highest in the second and third fiscal quarters (October-March) due to progressive payments to North American contracted growers[200](index=200&type=chunk) - Sales and cash receipts are highly dependent on the timing of deliveries and payments from large distributors, leading to significant period-to-period fluctuations[201](index=201&type=chunk) - Historically, funding has relied on occasional sales of debt and equity securities and credit facilities from financial institutions[203](index=203&type=chunk) [Capital Resources and Material Cash Requirements](index=40&type=section&id=Capital%20Resources%20and%20Material%20Cash%20Requirements) Excluding the Vision Bioenergy gain, the company is unprofitable with negative operating cash flow, requiring additional funding; it expects to cover 12-month needs via cash, Shell payments, and debt facilities, but faces critical challenges in securing long-term funding and maintaining debt covenant compliance - Excluding the Vision Bioenergy partnership gain, the company is not profitable and has had negative cash flow from operations for several years, requiring additional funding[204](index=204&type=chunk) - Expected to meet cash requirements for the next 12 months through cash flow from operations, cash payments from Shell (**$7.0 million** received, **$6.0 million** expected in Feb 2024), and undrawn availability under existing debt facilities[205](index=205&type=chunk)[207](index=207&type=chunk) - The CIBC Loan Agreement was amended on March 22, 2023, extending maturity to August 31, 2024, with a credit facility up to **$25.0 million** (seasonal). As of March 31, 2023, the company was in compliance with all CIBC covenants[209](index=209&type=chunk)[210](index=210&type=chunk) - The NAB Finance Agreement was amended to increase credit limits and extend maturities, with an undertaking to maintain a net related entity position of not more than **USD $18.5 million**. As of March 31, 2023, the company was in compliance with all NAB covenants[213](index=213&type=chunk)[214](index=214&type=chunk) - The MFP Loan Agreement was amended to increase term loan advances to **$13.0 million** and extend the MFP Letter of Credit maturity to September 30, 2024, with the MFP Loan Agreement maturing on November 30, 2025[217](index=217&type=chunk)[220](index=220&type=chunk) - Failure to renew/refinance debt or secure additional capital could lead to reduced operations, repayment acceleration, or asset sales[223](index=223&type=chunk)[224](index=224&type=chunk) [Summary of Cash Flows](index=44&type=section&id=Summary%20of%20Cash%20Flows) For the nine months ended March 31, 2023, operating activities used **$15.8 million** cash (down from **$18.0 million** in 2022), investing activities provided **$8.4 million** (up from **$0.6 million** used in 2022), and financing activities provided **$6.6 million** (down from **$17.9 million** in 2022) Cash Flow Summary (Nine Months Ended March 31) | Activity | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Cash flows from operating activities | $(15,828,395)| $(18,006,419)| $2,178,024 | -12.09% | | Cash flows from investing activities | $8,360,648 | $(569,181) | $8,929,829 | -1568.9% | | Cash flows from financing activities | $6,565,494 | $17,899,513 | $(11,334,019)| -63.32% | | Net decrease in cash and cash equivalents | $(487,045) | $(386,018) | $(101,027) | 26.17% | - Investing activities were positively impacted by **$7.0 million** from the Vision Bioenergy partnership and **$2.0 million** from the Trigall Australia partnership[229](index=229&type=chunk) - Financing activities in 2023 included **$7.8 million** in net borrowings on working capital lines of credit and **$0.3 million** in long-term debt borrowings, offset by **$1.4 million** in long-term debt repayments[231](index=231&type=chunk) [Inflation Risk](index=45&type=section&id=Inflation%20Risk) Inflationary pressures on labor and commodity prices impacted operations during the nine months ended March 31, 2023, and are expected to continue, with management attempting to mitigate costs through price increases and product mix changes - Inflationary pressures on labor and commodity prices directly impacted results and are expected to continue through fiscal year 2023[233](index=233&type=chunk) - Strategies to manage inflationary costs include selective price increases and changes in product mix[233](index=233&type=chunk) - Rapidly changing inflationary pressures and competitive markets may limit the ability to fully recover cost increases[233](index=233&type=chunk) [Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates include revenue recognition, internal-use software, and business combinations, with the Vision Bioenergy partnership introducing new estimates for Purchase Option valuation and gain on sale, requiring future financial performance and interest rate projections - Critical accounting estimates include revenue recognition, internal-use software, and business combinations[235](index=235&type=chunk) - The Purchase Option from the Vision Bioenergy partnership is valued at **$0.6 million** using a lattice option valuation model with significant unobservable inputs[236](index=236&type=chunk) - The gain on sale of business interest from the Vision Bioenergy transaction was based on fair value adjustments of contributed assets and current/future payments, requiring estimates of future financial performance and interest rates[237](index=237&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, S&W Seed Company is not required to provide detailed quantitative and qualitative market risk disclosures in this quarterly report - The company is a smaller reporting company and is not required to provide detailed market risk disclosures[239](index=239&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and procedures and reports on any changes in internal control over financial reporting [Disclosure Controls and Procedures](index=46&type=section&id=Disclosure%20Controls%20and%20Procedures) Management evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2023, concluding they were effective at a reasonable assurance level - Disclosure controls and procedures were evaluated as of March 31, 2023, and deemed effective at the reasonable assurance level[240](index=240&type=chunk) [Changes in Internal Control over Financial Reporting](index=46&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No significant changes in internal control over financial reporting occurred during the period that materially affected or are reasonably likely to affect these controls - No significant changes in internal control over financial reporting occurred during the period[241](index=241&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, but no matters are expected to have a material adverse impact on its business, results of operations, financial condition, or cash flows - No matters pending are expected to have a material adverse impact on the company's business, results of operations, financial condition, or cash flows[243](index=243&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, S&W Seed Company is not required to provide risk factor information in this Form 10-Q, referring to its Annual Report on Form 10-K - The company is a smaller reporting company and is not required to provide risk factor information in this Form 10-Q[244](index=244&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds occurred[245](index=245&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities for the period - No defaults upon senior securities occurred[246](index=246&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to S&W Seed Company - Mine Safety Disclosures are not applicable to the company[247](index=247&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) The company reports no other information for the period - No other information is reported[248](index=248&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, common stock certificates, warrants, partnership agreements, loan agreements, and certifications - Exhibits include organizational documents (Articles of Incorporation, Bylaws), common stock certificates, various Common Stock Purchase Warrants (including those issued to MFP Partners, L.P.), the Contribution and Membership Interest Purchase Agreement with Shell, the Amended and Restated Loan and Security Agreement with CIBC Bank USA, the Third Amendment to Loan and Security Agreement with MFP Partners, L.P., and certifications by the CEO and CFO[250](index=250&type=chunk) [SIGNATURES](index=50&type=section&id=SIGNATURES) The report was duly signed on behalf of S&W Seed Company by Elizabeth Horton, Chief Financial Officer, on May 11, 2023 - The report was signed by Elizabeth Horton, Chief Financial Officer, on May 11, 2023[257](index=257&type=chunk)

Forward-Looking Statements Strategic Review In 2022, S&W underwent a strategic review to determine areas it believes are 'Key Centers of Value' and align its cost structure to drive revenue growth and value generation. 2019 (141,073) Est. FY 23 Growth Operating Expense Reduction $(2) - $(7) Million 1 Figures on this slide represent S&W Seed Company's estimates of future performance. Adjusted EBITDA is a non-GAAP financial measure; for further information, see "Non-GAAP Financial Measures" in the appendix. 2 ...

S&W Seed Company (NASDAQ:SANW) Q2 2023 Earnings Conference Call February 13, 2023 11:00 AM ET Company Participants Robert Blum - IR, Lytham Partners Mark Wong - President and Chief Executive Officer Betsy Horton - Chief Financial Officer Conference Call Participants Ben Klieve - Lake Street Gerry Sweeney - Roth Capital Operator Good day, and welcome to the S&W Seed Company’s Second Quarter 2023 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please no ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, detailing the company's financial position, results, and cash flows for the period ended December 31, 2022 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2022, total assets were $134.2 million, total liabilities increased to $87.1 million, and stockholders' equity decreased to $42.1 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | June 30, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $81,662 | $77,230 | | **Total Assets** | $134,221 | $133,788 | | **Total Current Liabilities** | $80,065 | $48,291 | | **Total Liabilities** | $87,136 | $77,574 | | **Total Stockholders' Equity** | $42,052 | $51,409 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended December 31, 2022, revenue increased and net loss significantly narrowed compared to the prior year Statement of Operations Summary (Three Months Ended Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $12,937,802 | $12,631,409 | | Gross Profit | $2,749,291 | $1,660,364 | | Loss from Operations | $(6,249,547) | $(8,897,022) | | Net Loss Attributable to S&W | $(5,986,005) | $(9,795,102) | | Net Loss per Share | $(0.14) | $(0.25) | Statement of Operations Summary (Six Months Ended Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $32,803,667 | $28,163,090 | | Gross Profit | $7,253,802 | $4,787,033 | | Loss from Operations | $(9,649,447) | $(14,666,093) | | Net Loss Attributable to S&W | $(10,494,946) | $(16,195,077) | | Net Loss per Share | $(0.25) | $(0.43) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended December 31, 2022, operating cash flow remained negative, while investing activities provided cash, leading to a net decrease in cash Cash Flow Summary (Six Months Ended Dec 31) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,399,653) | $(8,065,824) | | Net cash provided by (used in) investing activities | $2,248,663 | $(1,206,255) | | Net cash provided by financing activities | $5,446,944 | $8,699,613 | | **Net Decrease in Cash** | **$(728,336)** | **$(805,871)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes highlight a 'going concern' warning, strategic partnerships with Trigall and Shell, and details on revenue sources and debt structure - The company's financial statements include a 'going concern' warning, citing a net loss of **$10.5 million** and **$8.4 million** in cash used by operations for the six months ended Dec 31, 2022. This raises substantial doubt about its ability to continue operating[36](index=36&type=chunk)[37](index=37&type=chunk) - Effective December 23, 2022, the company partnered with Trigall Genetics, selling an 80% interest in its Australian wheat subsidiary for **$2.0 million** in cash, a **$1.0 million** promissory note, and a 20% equity stake[28](index=28&type=chunk) - Subsequent to the quarter end, on February 6, 2023, the company entered a major partnership with Shell for biofuel feedstock development. Shell contributed cash, paid **$7.0 million** to S&W, and paid off S&W's **~$7.0 million** Rooster Note[99](index=99&type=chunk)[102](index=102&type=chunk) Revenue by Destination Country (Six Months Ended Dec 31) | Country | 2022 Revenue | % of Total | 2021 Revenue | % of Total | | :--- | :--- | :--- | :--- | :--- | | Saudi Arabia | $7,337,966 | 22% | $5,147,756 | 18% | | United States | $6,104,580 | 19% | $6,069,406 | 22% | | Australia | $5,059,366 | 15% | $5,679,852 | 20% | | Other | $14,301,455 | 44% | $11,266,526 | 40% | | **Total** | **$32,803,667** | **100%** | **$28,163,090** | **100%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strategic focus on sorghum and forages, improved operational results, and ongoing liquidity challenges including debt refinancing [Strategic Review](index=23&type=section&id=Strategic%20Review) The company's strategic review focuses on core value centers, aiming to reduce operating expenses and improve liquidity through key partnerships - The company is implementing a plan to reduce annual operating expenses by approximately **$4.0 to $5.0 million** through strategic partnerships, streamlining European operations, and reducing headcount[111](index=111&type=chunk) - A key strategic initiative is the partnership with Shell to develop camelina and other oilseeds for biofuel production, leveraging S&W's capabilities in seed production and processing[105](index=105&type=chunk)[108](index=108&type=chunk) - The partnership with Trigall Genetics for wheat development in Australia involved S&W contributing its breeding program for **$2.0 million** cash, a **$1.0 million** note, and a 20% ownership stake in the new entity, Trigall Australia[107](index=107&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Operational results show increased revenue, improved gross profit, and reduced net loss for both the three and six-month periods ended December 31, 2022 Three Months Ended Dec 31, 2022 vs 2021 | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $12.9M | $12.6M | +2.4% | | Gross Profit | $2.7M | $1.7M | +65.6% | | Operating Expenses | $9.0M | $10.6M | -14.8% | | Net Loss | $(6.0)M | $(9.8)M | -38.8% | Six Months Ended Dec 31, 2022 vs 2021 | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $32.8M | $28.2M | +16.5% | | Gross Profit | $7.3M | $4.8M | +51.5% | | Operating Expenses | $16.9M | $19.5M | -13.1% | | Net Loss | $(10.5)M | $(16.2)M | -35.1% | - The improvement in gross margin for Q2 was driven by increased sales of higher-margin alfalfa in the MENA region and grain sorghum in North America, coupled with decreased sales of lower-margin products[133](index=133&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces significant liquidity challenges, including historical covenant non-compliance and debt refinancing needs, but expects sufficiency for the next 12 months - The company has a history of non-compliance with covenants in its CIBC Loan Agreement and was required to obtain waivers. The agreement matures on March 23, 2023, and the company is actively pursuing refinancing[167](index=167&type=chunk)[177](index=177&type=chunk) - To support its obligations, the company's largest stockholder, MFP Partners, provided a letter of credit and a subordinate loan agreement for up to **$12.0 million**[171](index=171&type=chunk)[172](index=172&type=chunk) - The company believes cash flow from operations, payments from the Shell partnership, and existing debt facilities will be sufficient to meet cash requirements for the next 12 months[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, S&W Seed Company is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide information regarding market risk[193](index=193&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2022, with no significant changes to internal controls - Based on an evaluation as of December 31, 2022, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective[195](index=195&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[196](index=196&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, other information, and exhibits [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters but expects no material adverse impact from current pending proceedings - The company reports no pending legal proceedings that are expected to have a material adverse impact on its business or financials[198](index=198&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, S&W Seed Company is not required to provide risk factor disclosures - The company is a smaller reporting company and is not required to provide risk factor disclosures in its Form 10-Q[199](index=199&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[200](index=200&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[201](index=201&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) The company's Australian subsidiary amended its NAB Finance Agreement to revise the maximum permissible net related entity position - On February 8, 2023, the NAB Finance Agreement was amended to change the maximum net related entity position from **AUD $25.0 million** to **USD $18.5 million**[203](index=203&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including loan agreement amendments and officer certifications

Financial Data and Key Metrics Changes - The company reported Q1 2023 revenue of $19.9 million, an increase of 28% compared to $15.5 million in Q1 2022 [12][40] - Adjusted EBITDA improved from negative $4.0 million to negative $1.6 million, a $2.4 million improvement [12][48] - Gross profit margins improved by 260 basis points compared to Q1 of fiscal 2022 [12][14] Business Line Data and Key Metrics Changes - The U.S. sorghum technology operations, particularly the Double Team product, generated approximately $3 million in sales, with expectations of $12 million in total sales for the year [16][20] - International forage operations saw a $3.5 million increase in sales, primarily driven by strong alfalfa results [40][28] - The U.S. forage business remains steady, with expected annual revenue of $10 million to $11 million [30] Market Data and Key Metrics Changes - Alfalfa pricing increased by 22% compared to the same period last year, contributing to improved margins [25] - The company faced challenges in the Australian market due to flooding, impacting domestic business but expects recovery later in the year [27] Company Strategy and Development Direction - The company is focused on commercial execution and profitability, leveraging four key centers of value: sorghum technology, international forage operations, U.S. forage operations, and specialty crops [10][11] - Plans to expand Double Team sales through private label partnerships to enhance distribution and market penetration [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving the high end of revenue guidance for fiscal 2023, expecting sales between $80 million and $92 million [36][42] - The company is actively pursuing long-term financing and partnerships to support growth and manage cash burn [58][85] Other Important Information - The company has entered into a new credit facility with the National Australian Bank, increasing borrowing capacity to approximately $31.8 million USD [34][54] - Management highlighted the importance of inventory management and lifecycle management to avoid significant write-downs in the future [45][46] Q&A Session Summary Question: Update on camelina initiative and expected plantings - The company plans to plant about 300 acres of camelina, targeting the biodiesel market and emphasizing the importance of stable seed supply [65][68] Question: Discussion on private label business model for sorghum - Management explained the strategy to increase sales through private label partnerships, aiming for significant growth in 2024 [70][75] Question: Insights on technology growth areas and future guidance - Management acknowledged changes in market conditions but remains optimistic about technology-based products and profitability [79][82] Question: Impact of credit line adjustments on working capital - Management confirmed that recent credit facility adjustments provide sufficient working capital to manage cash burn [84][85] Question: Potential for non-core business development for cash infusion - Management emphasized focus on core opportunities and potential partnerships in the biodiesel market [87][90]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ S&W SEED COMPANY (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) N ...

S&W Seed Company (NASDAQ:SANW) Q4 2022 Earnings Conference Call September 28, 2022 11:00 AM ET Company Participants Robert Blum - IR, Lytham Partners Mark Wong - CEO Betsy Horton - CFO Conference Call Participants Ben Klieve - Lake Street Capital Markets Arvind Mallik - KMF Investments Operator Good morning, and welcome to the S&W Seed Company’s Fourth Quarter and Fiscal Year 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, that thi ...

S&W Seed Company (NASDAQ:SANW) Q3 2022 Earnings Conference Call May 16, 2022 11:00 AM ET Company Participants Robert Blum – Investor Relations-Lytham Partners Mark Wong – President and Chief Executive Officer Betsy Horton – Chief Financial Officer Conference Call Participants Ben Klieve – Lake Street Capital Markets Kurt Caramanidis – Carl M.Hennig, Inc Jonathon Fite – KMF Investments. Brett Reiss – Janney Montgomery Scott Operator Good morning, and welcome to the S&W Seed Company’s Third Quarter Fiscal Yea ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q For the transition period from _____________ to _____________ Commission File Number: 001-34719 S&W SEED COMPANY (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) Nevada 27-1275784 (I.R.S. Employer Identification No.) 2101 Ken Pratt Blvd, Suite 201, Longmont, CO 80501 (Address of Principal Executive Of ices) (Zip Code) (Mark One) ☒ QUARTERLY REPORT PURSUANT TO ...

Financial Data and Key Metrics Changes - Core revenue for Q2 2022 was $12.6 million, a 15% increase from $11 million in Q2 2021, primarily driven by sales to the Middle East, Argentina, and South Africa [35][36][38] - GAAP gross margins were 13.1%, slightly down from 13.5% in the prior year, while adjusted gross margins improved to 16.6% from 13.8%, indicating a 680 basis point increase on a relative basis [41][42] - Adjusted EBITDA for the quarter was a negative $6.5 million, compared to a negative $5.5 million in the prior year [46][47] Business Line Data and Key Metrics Changes - The second quarter is characterized by lower margin international alfalfa seed sales, with higher margin sorghum sales expected in the third and fourth quarters [36] - Strong demand for alfalfa is noted, particularly due to rising dairy prices, leading to increased prices for high-performing alfalfa varieties [24][25] - The introduction of Double Team sorghum is highlighted as a significant opportunity, with margins expected to be much higher than other products [19][50] Market Data and Key Metrics Changes - The USDA projected net farm income for 2022 at $113 billion, down 4.5% from 2021, indicating a cautious outlook for farmers amid rising costs [10][12] - The sorghum crop planted area increased by 24% to 7.3 million acres, reflecting farmers' interest in more profitable alternatives to corn [20][21] Company Strategy and Development Direction - The company is focusing on maximizing high-margin crops like Double Team sorghum while reducing emphasis on lower-margin crops [57][58] - There is an ongoing evaluation of financing and strategic alternatives to support growth, particularly in the Double Team product line [58][60] - The company is exploring opportunities in biofuels and bioplastics, leveraging its sorghum portfolio for additional revenue streams [70] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing supply chain challenges affecting revenue timing and shipment logistics, with expectations for these issues to persist throughout the year [39][40] - The company remains optimistic about achieving revenue growth and margin improvements in the second half of the fiscal year, driven by the Double Team product [50][51] Other Important Information - The company is implementing price increases across its product lines to address rising costs and improve gross margins [43] - Operating expenses for Q2 2022 were $10.6 million, up from $9.4 million in the prior year, primarily due to non-recurring employee-related expenses [44] Q&A Session Summary Question: Can you elaborate on the restructuring mentioned in the press release? - Management indicated that as market share grows with Double Team, the focus will shift to high-margin crops, minimizing efforts on low-margin products [57] Question: What is the status of financing and strategic alternatives? - The company is exploring options to maximize available debt and may need to raise equity to support growth initiatives, particularly for Double Team [58][60] Question: What needs to happen to achieve the $130 million revenue target and 10% EBITDA margin by fiscal '24? - Management expects continued growth in the core business and significant contributions from Double Team to meet these targets [61][62] Question: Are supply chain issues affecting the scaling of inventory for Double Team? - Currently, the limitation is on seed multiplication biology rather than supply chain issues, with no expected problems on the seed side [68][69] Question: How does the company view opportunities in biofuels and bioplastics? - The company is focused on producing second crops that do not enter the food chain, allowing for the use of advanced agricultural technologies [70] Question: What is the approach to maintaining or reducing operating expenses? - The company aims to reduce operating expenses both in absolute terms and as a percentage of revenue, focusing on efficiency across its portfolio [72]