Sienna Resources

S&W Seed Company Announces Fiscal 2022 Financial Results

28 September 2022

S&W Seed Company (Nasdaq: SANW) today announced financial results for the fiscal year ended June 30, 2022.

"We remain focused on developing the key centers of value we outlined last quarter, while moving to align our cost structure to support those key centers and assessing potential value-generating transactions to drive the business towards profitability," commented Mark Wong, President & CEO of S&W Seed Company. "We continue to see strong adoption of our lead value driver Double Team™, a next generation non-GMO herbicide tolerant sorghum solution. We are maximizing our production capabilities to meet the strong farmer demand, with an expectation of significant step-ups in high-margin revenue attributable to Double Team™ during fiscal 2023 and the years to come."

"We continue to encounter logistical and operational challenges within our international forage business which again has resulted in the delay of shipments at the end of our fiscal year due to the lack of shipping containers. We continue to take proactive actions to remedy the situation, however certain macro forces remain outside our control given the tight timelines between harvest and shipment at the end of June. We believe the market for our products remains strong and expect to capture in the first quarter of fiscal 2023 the vast majority of any sales that were unable to be shipped last fiscal year."

"In connection with the strategic review we announced last quarter, we have begun executing on our detailed plan to reduce annual operating expenses by approximately $5 million, are working on a deal for our wheat operations in Australia, have rationalized our European sunflower operations, and are working on various alternative strategies for unlocking value within our U.S. forage operations. Additionally, we are pursuing various opportunities for our specialty crops that leverage the uniqueness of S&W's technology, knowhow and assets. Our goal remains to drive towards profitability and enable value creation in the years to come as we work to further grow market share and seek out high potential opportunities," Wong concluded.

Financial Results

Core Revenue (which we define as total revenue, excluding product revenue attributable to Pioneer) for fiscal 2022 was $71.4 million, compared to Core Revenue for fiscal 2021 of $69.9 million, an increase of $1.5 million or 2.1%. The increase in Core Revenue for fiscal 2022 can be primarily attributed to increased sales of alfalfa in the middle East region, partially offset by lower pasture product sales in Australia and a slight decline in service revenue for treating and packaging services.

As announced in May 2019, S&W entered into a termination agreement and an alfalfa license agreement with Pioneer Hi-Bred International, a subsidiary of Corteva Agriscience, to replace its prior alfalfa distribution agreement with Pioneer. Due to these agreements with Pioneer, S&W discloses Core Revenue as a metric to track performance of its business for periods in which product revenue attributable to Pioneer is reflected.

Total revenue for fiscal 2022 was $71.4 million, compared to total revenue for fiscal 2021 of $84.0 million. As of June 30, 2021, S&W had fully recorded all revenue from Pioneer under the May 2019 agreement.

GAAP gross margins during fiscal 2022 were 8.9% compared to GAAP gross margins of 16.3% in fiscal 2021. Adjusted gross margins, excluding the impact of inventory write-downs (see Table A1), were 17.8% in fiscal 2022 compared to 18.0% in fiscal 2021.

GAAP operating expenses for fiscal 2022 were $39.2 million, compared to $33.9 million in fiscal 2021. The $5.3 million increase in operating expenses for fiscal 2022 can primarily be attributed to $2.6 million increase in selling, general and administrative expenses primarily due to changes in executive leadership and other severance and $1.5 million goodwill impairment charges due to the market capitalization of the company being below book value. Further GAAP operating expenses for fiscal 2021 included the impact of a one-time $1.9 million gain on the sale of property, plant and equipment. The increase is partially offset by $0.8 million decrease in research and development expenses due to reduced investment in sunflower programs.

GAAP net loss for fiscal 2022 was $(36.4) million, or $(0.93) per basic and diluted share, compared to GAAP net loss of $(19.2) million, or $(0.55) per basic and diluted share, in fiscal 2021.

Adjusted net loss (see Table A2) for fiscal 2022 was $(34.8) million, or $(0.89) per basic and diluted share, excluding goodwill impairment charge, interest expense – amortization of debt discount, change in contingent consideration obligation and dividends accrued for participating securities and accretion. Adjusted net loss (see Table A2) for fiscal 2021, excluding change in contingent consideration obligation, interest expense – amortization of debt discount and non-recurring transaction costs, was $(22.5) million, or $(0.65) per basic and diluted share.

Adjusted EBITDA (see Table B) for fiscal 2022 was $(23.8) million, compared to adjusted EBITDA of $(13.1) million in fiscal 2021.

Fiscal 2023 Guidance

S&W expects fiscal 2023 revenue to be within a range of $80 to $92 million, representing an expected increase of 12% to 29% compared to fiscal 2022 revenue of $71.4 million. Adjusted EBITDA is expected to be in the range of $(7.0) million to $(2.0) million for fiscal 2023, compared to adjusted EBITDA of $(23.8) million in fiscal 2022.

Conference Call

S&W Seed Company has scheduled a conference call for Wednesday, September 28, 2022, at 11:00 am ET (8:00 am PT) to review these results. Interested parties can access the conference call by dialing (844) 861-5498 or (412) 317-6580 or can listen via a live Internet webcast, which is available in the Investor Relations section of the Company's website at http://www.swseedco.com/investors. A teleconference replay of the call will be available for seven days at (877) 344-7529 or (412) 317-0088, confirmation #1060912. A webcast replay will be available in the Investor Relations section of the Company's website at http://www.swseedco.com/investors for 30 days.

Non-GAAP Financial Measures

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

For reconciliations of historical non-GAAP financial measures to the most comparable financial measures under GAAP, see Tables A-1, A-2 and B accompanying this release. We have not reconciled our guidance for adjusted EBITDA for fiscal 2023 to net income (loss) because the reconciling line items that impact net income (loss), including interest expense, non-cash stock-based compensation, and foreign currency (gain) loss, among others, are uncertain or out of our control and cannot be reasonably predicted. The actual amount of these items during fiscal 2023 will have a significant impact on net income (loss). Accordingly, a reconciliation of this non-GAAP measure to its most directly comparable GAAP measure is not available without unreasonable efforts.

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

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

Goodwill impairment charges.  The goodwill impairment charge relates to the full impairment of our goodwill and was a result of a decline in the market valuation of our common shares during the fourth quarter of 2022. This amount was a non-cash charge and is unrelated to our core performance during any particular period. We believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

Change in contingent consideration obligation. The change in contingent consideration obligation represents our estimated change in the value of contingent earn-out related to the February 2020 acquisition of Pasture Genetics. These amounts are non-cash and are unrelated to our core performance during any particular period. We believe it is useful to exclude these amounts in order to better understand our business performance and allow investors to compare our results with peer companies.

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

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

Adjusted gross margins. We define adjusted gross margins as gross margins, adjusted to exclude the impact of inventory write-downs. We believe that the use of adjusted gross margins is useful to investors and other users of our financial statements in evaluating our operating performance because it provides a method to compare our operating results to prior periods and to peer companies after making adjustments for amounts that can vary significantly from period to period.

Adjusted net loss and loss per share. We define non-GAAP net loss as net loss less goodwill impairment charge, interest expense – amortization of debt discount, change in contingent consideration obligation, dividends accrued for participating securities and accretion and non-recurring transaction costs. We believe that these non-GAAP financial measures provide useful supplemental information for evaluating our operating performance.

Adjusted EBITDA. We define Adjusted EBITDA as GAAP net loss, adjusted to exclude interest expense, interest expense – amortization of debt discount, provision for (benefit from) income taxes, depreciation and amortization, goodwill impairment charges, non-recurring transaction costs from SG&A, non-cash stock-based compensation, foreign currency (gain) loss, change in contingent consideration obligation, dividends accrued for participating securities and accretion and gain on sale of marketable securities. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We use adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. Management does not place undue reliance on adjusted EBITDA as its only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP.

Financial Tables

For a complete press release including financial tables, please view online at: https://swseedco.com/investors/press-releases/

About S&W Seed Company

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

Safe Harbor Statement

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan," "should" or "expected." Forward-looking statements in this release include, but are not limited to: our expectation regarding increases in high-margin revenue attributable to Double Team™ during fiscal 2023 and future years; our expectation to capture in the first quarter of fiscal 2023 the vast majority of any sales that were unable to be shipped in fiscal 2022 due to logistical and operational challenges; our ability to complete a deal for our wheat operations in Australia; our ability to unlock value within our U.S. forage operations; the enablement of value creation and our ability to drive the business towards profitability; our guidance on revenue and adjusted EBITDA for the fiscal year ending June 30, 2023; and our plans for the advancement of our business strategy. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including risks and uncertainties related to: the continued effects of the COVID-19 pandemic on our business and operations; the sufficiency of our cash and access to capital in order to meet our liquidity needs, including our ability to pay our growers as our payment obligations come due; our need to comply with the financial covenants included in our loan agreements, refinance certain of our credit facilities and raise additional capital in the future and our ability to continue as a "going concern"; our potential transactions under negotiation may not result in consummated transactions; changes in market conditions, including any unexpected decline in commodity prices, may harm our results of operations and revenue outlook; our proprietary seed trait technology products, including Double Team™, may not yield their anticipated benefits, including with respect to their impact on revenues; changes in the competitive landscape and the introduction of competitive products may negatively impact our results of operations; demand for our Double Team™ sorghum solution may not be as strong as expected; our business strategic initiatives may not achieve the expected results; previously experienced logistical challenges in shipping and transportation of our products may become amplified, delaying our ability to recognize revenue and decreasing our gross margins; and the risks associated with our ability to successfully optimize and commercialize our business. These and other risks are identified in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended June 30, 2021 and in other filings subsequently made by the Company with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.

S&W SEED COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 
  

Three Months Ended

   

Year Ended

   
  

June 30,

   

June 30,

   
  

2022

  

2021

   

2022

  

2021

   

Revenue

 

$

20,004,331

  

$

22,765,623

   

$

71,354,298

  

$

84,049,036

   

Cost of revenue

  

21,141,616

   

19,078,447

    

64,999,136

   

70,372,139

   

Gross (loss) profit

  

(1,137,285)

   

3,687,176

    

6,355,162

   

13,676,897

   

Operating expenses

                   

Selling, general and administrative expenses

  

6,209,945

   

5,465,178

    

24,470,730

   

21,867,529

   

Research and development expenses

  

1,700,470

   

2,031,891

    

7,710,642

   

8,515,786

   

Depreciation and amortization

  

1,375,767

   

1,342,805

    

5,460,321

   

5,469,581

   

Gain on disposal of property, plant and equipment

  

(45,045)

   

(553,323)

    

(31,088)

   

(1,906,738)

   

Goodwill impairment charges

  

1,548,324

   

    

1,548,324

   

   

Total operating expenses

  

10,789,461

   

8,286,551

    

39,158,929

   

33,946,158

   

Loss from operations

  

(11,926,746)

   

(4,599,375)

    

(32,803,767)

   

(20,269,261)

   

Other (income) expense

                   

Foreign currency loss (gain)

  

209,950

   

(77,509)

    

777,913

   

(94,214)

   

Change in contingent consideration obligation

  

   

(3,768,812)

    

(714,429)

   

(4,016,904)

   

Interest expense - amortization of debt discount

  

238,306

   

187,913

    

898,497

   

689,514

   

Interest expense

  

490,656

   

546,379

    

2,212,302

   

2,283,215

   

Gain on sale of marketable security

  

   

    

(68,967)

   

   

Loss before income taxes

  

(12,865,658)

   

(1,487,346)

    

(35,909,083)

   

(19,130,872)

   

(Benefit from) provision for income taxes

  

(1,213)

   

188,962

    

413,423

   

(24,358)

   

Net loss

  

(12,864,445)

   

(1,676,308)

    

(36,322,506)

   

(19,106,514)

   

Net income attributable to noncontrolling interests

  

30,905

   

8,155

    

72,844

   

64,453

   

Net loss attributable to S&W Seed Company

 

$

(12,895,350)

  

$

(1,684,463)

   

$

(36,395,350)

  

$

(19,170,967)

   
                    

Calculation of net loss for loss per share:

                   

Net loss attributable to S&W Seed Company

 

$

(12,895,350)

  

$

(1,684,463)

   

$

(36,395,350)

  

$

(19,170,967)

   

Dividends accrued for participating securities and
accretion

  

(113,103)

   

-

    

(166,298)

   

-

   

Net loss attributable to common shareholders

 

$

(13,008,453)

  

$

(1,684,463)

   

$

(36,561,648)

  

$

(19,170,967)

   
                    

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

                   

Basic

 

$

(0.31)

  

$

(0.05)

   

$

(0.93)

  

$

(0.55)

   

Diluted

 

$

(0.31)

  

$

(0.05)

   

$

(0.93)

  

$

(0.55)

   

Weighted average number of common shares outstanding:

                   

Basic

  

41,821,784

   

36,440,732

    

39,133,681

   

34,590,883

   

Diluted

  

41,821,784

   

36,440,732

    

39,133,681

   

34,590,883

   

TABLE A1

                  

S&W SEED COMPANY

ITEMIZED RECONCILIATION BETWEEN GROSS PROFIT AND NON-GAAP ADJUSTED GROSS PROFIT

(UNAUDITED)

                   
  

Three Months Ended June 30,

   

Year Ended June 30,

  
  

2022

  

2021

   

2022

  

2021

  

Gross (loss) profit

 

$

(1,137,285)

  

$

3,687,176

   

$

6,355,162

  

$

13,676,897

  
                   

Inventory write-downs

  

4,488,313

   

162,956

    

6,365,542

   

1,416,029

  
                   

Non-GAAP adjusted gross profit

 

$

3,351,028

  

$

3,850,132

   

$

12,720,704

  

$

15,092,926

  
                   

Non-GAAP adjusted gross margin

  

16.8

%

  

16.9

%

   

17.8

%

  

18.0

%

 

TABLE A2

                  

S&W SEED COMPANY

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

(UNAUDITED)

                   
  

Three Months Ended June 30,

   

Year Ended June 30,

  
  

2022

  

2021

   

2022

  

2021

  

Net loss attributable to S&W Seed
Company

 

$

(12,895,350)

  

$

(1,684,463)

   

$

(36,395,350)

  

$

(19,170,967)

  
                   

Goodwill impairment charges

  

1,548,324

   

    

1,548,324

   

  
                   

Interest expense - amortization of debt
discount

  

238,306

   

187,913

    

898,497

   

689,514

  
                   

Non-recurring transaction costs

  

   

    

   

20,000

  
                   

Change in contingent consideration
obligation

  

   

(3,768,812)

    

(714,429)

   

(4,016,904)

  
                   

Dividends accrued for participating
securities and accretion

  

(113,103)

   

    

(166,298)

   

  
                   

Non-GAAP adjusted net loss

 

$

(11,221,823)

  

$

(5,265,362)

   

$

(34,829,256)

  

$

(22,478,357)

  
                   

Non-GAAP adjusted net loss attributable
to S&W Seed Company per common
share:

                  

Basic

 

$

(0.27)

  

$

(0.14)

   

$

(0.89)

  

$

(0.65)

  

Diluted

 

$

(0.27)

  

$

(0.14)

   

$

(0.89)

  

$

(0.65)

  

Weighted average number of common
shares outstanding:

                  

Basic

  

41,821,784

   

36,440,732

    

39,133,681

   

34,590,883

  

Diluted

  

41,821,784

   

36,440,732

    

39,133,681

   

34,590,883

  
                   

TABLE A3

S&W SEED COMPANY

ITEMIZED RECONCILIATION BETWEEN NET LOSS AND NON-GAAP ADJUSTED EBITDA

(UNAUDITED)

 
   

Three Months Ended

 

Year Ended

  
   

June 30

 

June 30

  
   

2022

   

2021

   

2022

   

2021

  

Net loss attributable to S&W Seed Company

 

$

 

(12,895,350)

  

$

 

(1,684,463)

  

$

 

(36,395,350)

  

$

 

(19,170,967)

  
                      

Interest expense

   

490,656

    

546,379

    

2,212,302

    

2,283,215

  
                      

Interest expense - amortization of debt discount

   

238,306

    

187,913

    

898,497

    

689,514

  
                      

(Benefit from) provision for income taxes

   

(1,213)

    

188,962

    

413,423

    

(24,358)

  
                      

Depreciation and amortization

   

1,375,767

    

1,342,805

    

5,460,321

    

5,469,581

  
                      

Goodwill impairment charges

   

1,548,324

    

    

1,548,324

    

  
                      

Non-recurring transaction costs

   

    

    

    

20,000

  
                      

Non-cash stock-based compensation

   

445,372

    

462,914

    

2,267,180

    

1,766,353

  
                      

Foreign currency loss (gain)

   

209,950

    

(77,509)

    

777,913

    

(94,214)

  
                      

Change in contingent consideration obligation

   

    

(3,768,812)

    

(714,429)

    

(4,016,904)

  
                      

Dividends accrued for participating securities and accretion

   

(113,103)

    

    

(166,298)

    

  
                      

Gain on sale of marketable securities

   

    

    

(68,967)

    

  
                      

Non-GAAP adjusted EBITDA

 

$

 

(8,701,291)

  

$

 

(2,801,811)

  

$

 

(23,767,084)

  

$

 

(13,077,780)

  
                      

S&W SEED COMPANY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 
   

June 30,

   

June 30,

 
   

2022

   

2021

 

ASSETS

          
           

CURRENT ASSETS

          

Cash and cash equivalents

 

$

 

2,056,508

  

$

 

3,527,937

 

Accounts receivable, net

   

19,051,236

    

19,389,213

 

Inventories, net

   

54,515,894

    

63,395,256

 

Prepaid expenses and other current assets

   

1,605,987

    

1,555,530

 

TOTAL CURRENT ASSETS

   

77,229,625

    

87,867,936

 

Property, plant and equipment, net

   

16,871,669

    

17,740,974

 

Intangibles, net

   

34,095,827

    

37,130,942

 

Goodwill

   

    

1,651,634

 

Other assets

   

5,590,730

    

7,079,490

 

TOTAL ASSETS

 

$

 

133,787,851

  

$

 

151,470,976

 

LIABILITIES, SERIES B CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY

          

CURRENT LIABILITIES

          

Accounts payable

 

$

 

15,901,116

  

$

 

15,947,918

 

Deferred revenue

   

605,960

    

385,328

 

Accrued expenses and other current liabilities

   

10,788,740

    

9,134,869

 

Current portion of working capital lines of credit, net

   

12,678,897

    

33,946,565

 

Current portion of long-term debt, net

   

8,316,783

    

1,681,166

 

TOTAL CURRENT LIABILITIES

   

48,291,496

    

61,095,846

 

Long-term working capital lines of credit, less current portion

   

21,703,286

    

 

Long-term debt, net, less current portion

   

3,992,540

    

11,590,500

 

Contingent consideration obligation

   

    

741,552

 

Other non-current liabilities

   

3,587,041

    

3,649,885

 

TOTAL LIABILITIES

   

77,574,363

    

77,077,783

 

SERIES B CONVERTIBLE PREFERRED STOCK

          

Preferred stock, $0.001 par value; 3,323 shares authorized;

1,695 shares issued and outstanding at June 30, 2022;

none issued and outstanding at June 30, 2021

   

4,804,819

    

 

TOTAL SERIES B CONVERTIBLE PREFERRED STOCK

   

4,804,819

    

 

STOCKHOLDERS' EQUITY

  

.

      

Common stock, $0.001 par value; 75,000,000 shares authorized;

   42,608,758 issued and 42,583,758 outstanding at June 30, 2022;

   36,772,983 issued and 36,747,983 outstanding at June 30, 2021;

   

42,609

    

36,773

 

Treasury stock, at cost, 25,000 shares

   

(134,196)

    

(134,196)

 

Additional paid-in capital

   

163,892,575

    

149,684,357

 

Accumulated deficit

   

(105,873,557)

    

(69,311,909)

 

Accumulated other comprehensive loss

   

(6,560,600)

    

(5,850,826)

 

Noncontrolling interests

   

41,838

    

(31,006)

 

TOTAL STOCKHOLDERS' EQUITY

   

51,408,669

    

74,393,193

 

TOTAL LIABILITIES, SERIES B CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY

 

$

 

133,787,851

  

$

 

151,470,976

 

S&W SEED COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 
   

Year Ended June 30,

 
   

2022

   

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

          

Net loss

 

$

 

(36,322,506)

  

$

 

(19,106,514)

 

Adjustments to reconcile net loss from operating activities to net

          

cash used in operating activities:

          

Stock-based compensation

   

2,267,180

    

1,766,353

 

Change in allowance for doubtful accounts

   

216,466

    

(235,201)

 

Inventory write-down

   

6,365,542

    

1,416,029

 

Depreciation and amortization

   

5,460,321

    

5,469,581

 

Loss (gain) on disposal of property, plant and equipment

   

(31,088)

    

(1,906,738)

 

Change in deferred tax provision

   

78,954

    

 

Change in foreign exchange contracts

   

971,386

    

79,403

 

Change in contingent consideration obligation

   

(714,429)

    

(4,016,904)

 

Amortization of debt discount

   

898,497

    

689,514

 

Changes in:

        

-

 

Accounts receivable

   

(422,335)

    

504,021

 

Inventories

   

688,903

    

648,448

 

Prepaid expenses and other current assets

   

(104,442)

    

(120,030)

 

Other non-current asset

   

(137,320)

    

54,259

 

Accounts payable

   

977,036

    

7,265,195

 

Deferred revenue

   

223,586

    

(5,786,697)

 

Accrued expenses and other current liabilities

   

1,226,353

    

(964,282)

 

Other non-current liabilities

   

(15,243)

    

22,521

 

Net cash used in operating activities

   

(18,373,139)

    

(14,221,042)

 

CASH FLOWS FROM INVESTING ACTIVITIES

          

Additions to property, plant and equipment

   

(2,098,535)

    

(1,079,880)

 

Proceeds from disposal of property, plant and equipment

   

200,605

    

782,645

 

Net proceeds from the sale of marketable securities

   

988,504

    

 

Proceeds from sale of assets held for sale

   

    

2,771,480

 

Acquisition of germplasm

   

    

(8,499)

 

Net cash (used in) provided by investing activities

   

(909,426)

    

2,465,746

 

CASH FLOWS FROM FINANCING ACTIVITIES

          

Net proceeds from sale of common stock

   

11,777,690

    

10,223,311

 

Net proceeds from sale of Series B convertible preferred stock

   

5,000,250

    

 

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

   

(192,545)

    

(111,532)

 

Borrowings and repayments on lines of credit, net

   

1,770,219

    

4,954,687

 

Borrowings of long-term

   

868,372

    

385,636

 

Capital contribution from minority shareholder of subsidiary

   

    

25,000

 

Debt issuance costs

   

(692,779)

    

(196,952)

 

Repayments of long-term debt

   

(1,392,533)

    

(4,387,465)

 

Net cash provided by financing activities

   

17,138,674

    

10,892,685

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

   

672,462

    

267,454

 

NET DECREASE IN CASH & CASH EQUIVALENTS

   

(1,471,429)

    

(595,157)

 

CASH AND CASH EQUIVALENTS, beginning of the period

   

3,527,937

    

4,123,094

 

CASH AND CASH EQUIVALENTS, end of period

 

$

 

2,056,508

  

$

 

3,527,937

 

Company Contact:

 

Investor Contact:

Betsy Horton, Chief Financial Officer

 

Robert Blum

S&W Seed Company

 

Lytham Partners, LLC

Phone: (720) 593-3570

 

Phone: (602) 889-9700

www.swseedco.com

 

This email address is being protected from spambots. You need JavaScript enabled to view it.

  

www.lythampartners.com

   

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