Form 8-K S&W Seed Co For: Feb 12

February 12, 2019 8:02 AM


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 12, 2019



S&W SEED COMPANY
(Exact name of registrant as specified in Its charter)

 

Nevada
001-34719
27-1275784
 (State or Other Jurisdiction of Incorporation)
 (Commission File Number)
(IRS Employer Identification Number)

 

106 K Street, Suite 300
Sacramento, California

95814

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (559) 884-2535

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company      o     

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      o     




Item 2.02.    Results of Operations and Financial Condition.

On February 12, 2019, S&W Seed Company (the "Company") issued a press release announcing financial results for the second quarter of fiscal 2019 ended December 31, 2018. The text of the press release is furnished as Exhibit 99.1 to this current report.

The information in this Item 2.02 and Exhibit 99.1 hereto shall not be deemed "filed" for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Unless expressly incorporated into a filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, the information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any Company filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits

Exhibit

Description

99.1

Press Release of S&W Seed Company dated February 12, 2019, announcing financial results for the second quarter of fiscal 2019 ended December 31,2018*

______________
* This exhibit is furnished and shall not be deemed "filed" for purposes of the Exchange Act, as amended.

 

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  S&W SEED COMPANY

  By:   /s/ Matthew K. Szot
 
         Matthew K. Szot
         Executive Vice President of Finance and Administration and Chief Financial Officer

Date: February 12, 2019

 

 

3


 

EXHIBIT 99.1

S&W Announces Second Quarter Fiscal 2019 Financial Results

For Immediate Release

Company Contact:
Matthew Szot, Chief Financial Officer
S&W Seed Company
Phone: (559) 884-2535
www.swseedco.com

Investor Contact:
Robert Blum, Joe Dorame, Joe Diaz
Lytham Partners, LLC
Phone: (602) 889-9700
sanw@lythampartners.com
www.lythampartners.com

SACRAMENTO, California - February 12, 2019 - S&W Seed Company (Nasdaq: SANW) today announced financial results for the second quarter of fiscal 2019 ended December 31, 2018.

Mark Wong, President & CEO of S&W Seed Company, commented, "We believe S&W's transformation is firmly underway to becoming a multi-crop, middle-market agricultural company, with a focus on developing higher value crops through technological advances and proprietary breeding. While we only recently acquired the sorghum assets of Chromatin, our conviction in the synergies that we believed would be available is growing each day, including our belief that we can build upon a U.S. farmer-dealer network, leverage our international distribution channels, drive efficiencies in the production process, and accelerate development of next generation trait technologies. These important factors were key components behind the guidance we previously provided for revenue growth and positive EBITDA contribution from the acquisition in fiscal 2020. Overall, we believe we are delivering strong execution on the integration of the Chromatin acquisition."

"We feel that further evidence of the traction we are seeing in the turnaround of our business is our return to organic revenue growth during the second quarter and first half of fiscal 2019. On an equivalent comparable basis (excluding the impact of ASC 606 and excluding any contribution from the Chromatin acquisition), revenues increased organically by 14% during the second quarter of fiscal 2019, compared to the second quarter of fiscal 2018, and 3% during the first half of fiscal 2019, compared to the first half of fiscal 2018. Our efforts to grow sales in the United States and Australia with dedicated sales personnel, coupled with small improvements in the Saudi Arabia market, give us continued optimism that our customer centric strategies are yielding dividends. We believe this renewed sales focus, coupled with a realignment of our organization across geographic lines as opposed to products lines, has the ability to lead to continued improvement in the future."

Mr. Wong concluded, "I am enthusiastic of the opportunity we have at S&W to continue our evolution. The strategies we have implemented from an operational and strategic perspective are proceeding according to plan. The further integration of the Chromatin assets into S&W should only accelerate in future periods, which should in turn create a larger and more diverse platform from which to operate. I thank our shareholders for their continued support and look forward to the future with optimism."


Financial Results

(Note to readers: As S&W adopted the requirements of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASC 606) as of July 1, 2018, using the modified retrospective method, there is a lack of comparability of current financial results to prior fiscal periods.) 

      Three Months Ended     Six Months Ended
      December 31,     December 31,
      2018     2017     2018     2017
      ASC 606     ASC 605     ASC 605     ASC 606     ASC 605     ASC 605
Distribution and production agreements - Pioneer   $ 9,677,988    $ 15,966,835    $ 15,313,310    $ 29,185,614    $ 18,135,126    $ 18,101,800 
Other product sales     8,761,172      8,761,172      5,033,204      15,336,201      15,336,201      12,767,630 
Services     141,836      141,836      186,282      179,318      179,318      375,082 
    $ 18,580,996    $ 24,869,843    $ 20,532,796    $ 44,701,133    $ 33,650,645    $ 31,244,512 

For the second quarter of fiscal 2019 ended December 31, 2018, S&W reported revenue of $18.6 million, compared to revenue of $20.5 million in the second quarter of fiscal 2018. Of the $18.6 million of revenue in the second quarter of fiscal 2019, S&W recognized approximately $1.5 million from its recent sorghum acquisition which occurred on October 25, 2018. The decrease in revenue from the prior year is primarily related to the timing of revenue recognition pursuant to its adoption ASC 606 effective July 1, 2018, which accelerated revenue from its agreement with Pioneer to the first quarter of fiscal 2019 as opposed to the second quarter of fiscal 2019, offset by growth in Australia and other international markets, including MENA. Had the Company reported under the old revenue recognition standard ASC 605, revenue would have been $24.9 million in the second quarter of fiscal 2019. Excluding the impact of the Chromatin acquisition and under the old revenue recognition standard, revenues for the second quarter of fiscal 2019 would have been $23.4 million, or a 14% organic improvement from the year ago period driven by growth in Australia and other international markets, including MENA.

For the first half of fiscal 2019, S&W reported revenue of $44.7 million compared to $31.2 million for the first half of fiscal 2018. The increase in revenues for the six month period is primarily due to the acceleration of revenue recognition pursuant to the Company's adoption of ASC 606 effective July 1, 2018, as well as contributions from its acquisition of Chromatin, which occurred on October 25, 2018, and growth in Australia and other international markets, including MENA. Had the Company reported under the old revenue recognition standard ASC 605, revenue would have been $33.7 million for the first half of fiscal 2019. Excluding the impact of the Chromatin acquisition and operating under the old revenue recognition standard ASC 605, revenues for the first half of fiscal 2019 would have been $32.1 million, or a 3% organic improvement from the year ago period driven by growth contributions from Australia and MENA.

Gross margins during the second quarter of fiscal 2019 were 25.2% compared to gross margins of 22.8% in the second quarter of fiscal 2018. Gross margins during the first half of fiscal 2019 were 22.7% compared to gross margins of 22.4% in the second half of fiscal 2018. The increase in gross profit margins was primarily due to product sales mix during the current periods where the Company had a higher concentration of higher margin products including hybrids and dormant alfalfa seed.


Adjusted operating expenses, excluding transaction related expenses (see Table A1), in the second quarter of fiscal 2019 was $6.2 million compared to $4.2 million in the second quarter of fiscal 2018. Adjusted operating expenses, excluding transaction related expenses (see Table A2), in the first half of fiscal 2019 was $10.5 million compared to $8.6 million in the first half of fiscal 2018. The increase in operating expenses for the second quarter and first half of fiscal 2019 can be attributed to approximately $1.0 million of additional expenses from the newly acquired sorghum operations, coupled with additional investments in our sales and marketing and product development functions.

GAAP net loss for the second quarter of fiscal 2019 was $(2.8) million, or $(0.09) per basic and diluted share, compared to GAAP net loss of $(0.4) million, or $(0.02) per basic and diluted share, in the second quarter of fiscal 2018. GAAP net loss for the first half of fiscal 2019 was $(2.7) million, or $(0.10) per basic and diluted share, compared to GAAP net loss of $(2.2) million, or $(0.11) per basic and diluted share, in the first half of fiscal 2018.

Adjusted non-GAAP net loss (see Table A1) for the second quarter of fiscal 2019, excluding various items (transaction costs and interest expense - amortization of debt discount), was $(2.1) million, or $(0.07) per basic and diluted share. Adjusted non-GAAP net loss (see Table A1) for the second quarter of fiscal 2018, excluding various items (transactions costs, change in derivative warrant liabilities, interest expense - amortization of debt discount) was $(20,000), or $(0.00) per basic and diluted share. Adjusted non-GAAP net loss (see Table A2) for the first half of fiscal 2019, excluding various items (transaction costs and interest expense - amortization of debt discount), was $(1.6) million, or $(0.06) per basic and diluted share. Adjusted non-GAAP net loss (see Table A2) for the first half of fiscal 2018, excluding various items (transactions costs, change in derivative warrant liabilities, interest expense - amortization of debt discount) was $(2.5) million, or $(0.12) per basic and diluted share.

Adjusted EBITDA (see Table B) for the second quarter of fiscal 2019 was $(249,000), compared to adjusted EBITDA of $1.6 million in the second quarter of fiscal 2018. Adjusted EBITDA (see Table B) for the first half of fiscal 2019 was $1.9 million, compared to adjusted EBITDA of $617,000 in the first half of fiscal 2018.

Balance Sheet

In December 2018, to support future growth initiatives, including its recent acquisition of the Chromatin sorghum assets, S&W Seed Company expanded the size of its working capital facility with KeyBank to $45 million and extended the maturity date to December 2020.  

Conference Call

S&W Seed Company has scheduled a conference call for today, Tuesday, February 12, 2019, 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 three days at (877) 344-7529 or (412) 317-0088, confirmation #10128507. 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"), the Company has provided the following non-GAAP financial measures in this release and the accompanying tables: adjusted EBITDA, adjusted non-GAAP net income (loss) and adjusted earnings (loss) per share. S&W uses these non-GAAP financial measures internally to facilitate period-to-period comparisons and analysis of its operating performance and liquidity, and believes they are useful to investors as a supplement to GAAP measures in analyzing, trending and benchmarking the performance and value of the Company's 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 and B accompanying this release.

In order to calculate these non-GAAP financial measures, the Company makes targeted adjustments to certain GAAP financial line items found on its Consolidated Statement of Operations, backing out non-recurring or unique items or items that the Company believes otherwise distort the underlying results and trends of the ongoing business. The Company has 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 a portion of SG&A expense and operating expenses related to transaction expenses related to acquisitions and financings. Acquisition-related expenses include 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.

Changes in derivative warrant liabilities. Change in derivative warrant liabilities are related to the change in fair value of the warrants issued in conjunction with our Convertible Debentures issued in December 2014. These amounts are non-cash gains and/or losses, 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.


Non-GAAP Tax Rate. The estimated non-GAAP effective tax rate adjusts the tax effect to quantify the tax consequences of the excluded non-GAAP items.

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

Adjusted net income (loss) and non-GAAP earnings (loss) per share. We define non-GAAP net income (loss) as net income (loss) less non-recurring transaction charges, change in derivative warrant liabilities, and interest expense - amortization of debt discount. However, in order to provide a complete picture of our recurring core business operating results, we also exclude from non-GAAP net income (loss) the tax effects of these adjustments. We used an effective tax rate that we believe would be applied had our income approximated the non-GAAP net income (loss) for the presented periods. We caution investors that the tax effects of these adjustments are based on management's estimates. We believe that these non-GAAP financial measures provide useful supplemental information for evaluating our operating performance.

Adjusted EBITDA is a non-GAAP financial measure that we define as GAAP net income (loss), adjusted to exclude non-recurring transaction costs, depreciation and amortization, non- cash stock-based compensation, foreign currency (gain) loss, change in derivative warrant liabilities, interest expense - amortization of debt discount, interest expense, and provision (benefit) for income taxes. We believe that the use of adjusted EBITDA is useful to investors and other users of the Company's 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.

About S&W Seed Company
Founded in 1980, S&W Seed Company is a global agricultural company headquartered in Sacramento, California. 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 alfalfa seed and sorghum hybrid, with significant research and development, production and distribution capabilities. S&W also provides hybrid sunflower and 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" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." Forward-looking statements in this release include, but are not limited to, the progress of our transition to becoming a multi-crop, middle-market agricultural company; our achievement of the anticipated synergies from our acquisition of Chromatin's assets; our execution on, and the timing of, the integration of the Chromatin acquisition; our return to organic growth; our expectations of continued improvement in our business due to our customer centric strategies and realignment of our organization across geographic lines; and statements regarding the advancement of our strategic plans.  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 the risk that the integration of the Chromatin acquisition may not provide the anticipated benefits; our shift to customer centric strategies and the realignment of our organization across geographic lines may not meet our expectations; our strategic initiatives may not achieve the expected results; and 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, 2018 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.

 

 


Table A-1

S&W SEED COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

 

      Three Months Ended     Three Months Ended
      December 31,     December 31,
      2018     2017
                                 
          NON-GAAP     NON-GAAP         NON-GAAP     NON-GAAP
      GAAP   Adjustments     Adjusted     GAAP   Adjustments     Adjusted
                                 
                                 
Revenue   $ 18,580,996    -     $ 18,580,996    $ 20,532,796    -     $ 20,532,796 
                                 
Cost of revenue     13,897,455    -       13,897,455      15,860,629    -       15,860,629 
                                 
Gross profit     4,683,541    -       4,683,541      4,672,167    -       4,672,167 
                                 
Operating expenses                                
     Selling, general and administrative expenses     4,342,696    (586,800)     3,755,896      2,446,955    (5,784)     2,441,171 
     Research and development expenses     1,373,554    -       1,373,554      855,164    -       855,164 
     Depreciation and amortization     1,035,606    -       1,035,606      870,981    -       870,981 
     Disposal of property, plant and equipment loss (gain)      3,463    -       3,463      (15,413)   -       (15,413)
                                 
          Total operating expenses     6,755,319    (586,800)     6,168,519      4,157,687    (5,784)     4,151,903 
                                 
Income (loss) from operations     (2,071,778)   586,800      (1,484,978)     514,480    5,784      520,264 
                                 
Other expense                                
     Foreign currency (gain) loss     (32,987)   -       (32,987)     7,472    -       7,472 
     Change in derivative warrant liabilities       -       -       341,199    (341,199)     -  
     Interest expense - amortization of debt discount     68,914    (68,914)     -       33,100    (33,100)     -  
     Interest expense      641,479    -       641,479      383,894    -       383,894 
                                 
Income (loss) before income taxes     (2,749,184)   655,714      (2,093,470)     (251,185)   380,083      128,898 
     Provision for income taxes     (4,801)   -       (4,801)     148,702    -       148,702 
Net income (loss) including noncontrolling interests   $ (2,744,383)   655,714    $ (2,088,669)   $ (399,887)   380,083    (19,804)
                                 
     Net income attributed to noncontrolling interest     21,673        21,673    #      
Net income (loss) attributed to S&W Seed Company   $ (2,766,056)   655,714      (2,110,342)   $ (399,887)   380,083      (19,804)
                                 
Net income (loss) attributed to S&W Seed Company per common share:                                
     Basic   $ (0.09)       $ (0.07)   $ (0.02)       $ (0.00)
     Diluted   $ (0.09)       $ (0.07)   $ (0.02)       $ (0.00)
                                 
Weighted average number of common shares outstanding:                                
     Basic     29,153,852          29,153,852      21,130,960          21,130,960 
     Diluted     29,153,852          29,153,852      21,130,960          21,130,960 

 


Table A-2

S&W SEED COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

 

      Six Months Ended     Six Months Ended
      December 31,     December 31,
      2018     2017
                                 
          NON-GAAP     NON-GAAP         NON-GAAP     NON-GAAP
      GAAP   Adjustments     Adjusted     GAAP   Adjustments     Adjusted
                                 
                                 
Revenue   $ 44,701,133    -     $ 44,701,133    $ 31,244,512    -     $ 31,244,512 
                                 
Cost of revenue     34,554,463    -       34,554,463      24,236,757    -       24,236,757 
                                 
Gross profit     10,146,670    -       10,146,670      7,007,755    -       7,007,755 
                                 
Operating expenses                                
     Selling, general and administrative expenses     7,230,074    (995,316)     6,234,758      5,361,035    (34,947)     5,326,088 
     Research and development expenses     2,365,667    -       2,365,667      1,597,081    -       1,597,081 
     Depreciation and amortization     1,890,714    -       1,890,714      1,759,233    -       1,759,233 
     Disposal of property, plant and equipment loss (gain)      3,463    -       3,463      (81,776)   -       (81,776)
                                 
          Total operating expenses     11,489,918    (995,316)     10,494,602      8,635,573    (34,947)     8,600,626 
                                 
Loss from operations     (1,343,248)   995,316      (347,932)     (1,627,818)   34,947      (1,592,871)
                                 
Other expense                                
     Foreign currency (gain) loss     (58,430)   -       (58,430)     22,030    -       22,030 
     Change in derivative warrant liabilities       -       -       (431,300)   431,300      -  
     Interest expense - amortization of debt discount     135,392    (135,392)     -       67,099    (67,099)     -  
     Interest expense      1,298,709    -       1,298,709      731,623    -       731,623 
                                 
Income (loss) before income taxes     (2,718,919)   1,130,708      (1,588,211)     (2,017,270)   (329,254)     (2,346,524)
     Provision for income taxes     4,533    -       4,533      200,123    -       200,123 
Net income (loss) including noncontrolling interests   $ (2,723,452)   1,130,708    $ (1,592,744)   $ (2,217,393)   (329,254)   $ (2,546,647)
                                 
     Net income attributed to noncontrolling interest     21,673        21,673    #      
Net income (loss) attributed to S&W Seed Company   $ (2,745,125)   1,130,708    $ (1,614,417)   $ (2,217,393)   (329,254)   $ (2,546,647)
                                 
                                 
                                 
Net income (loss) attributed to S&W Seed Company per common share:                                
     Basic   $ (0.10)       $ (0.06)   $ (0.11)       $ (0.12)
     Diluted   $ (0.10)       $ (0.06)   $ (0.11)       $ (0.12)
                                 
Weighted average number of common shares outstanding:                                
     Basic     26,996,483          26,996,483      20,643,973          20,643,973 
     Diluted     26,996,483          26,996,483      20,643,973          20,643,973 

 


Table B

S&W SEED COMPANY
ITEMIZED RECONCILIATION BETWEEN NET LOSS AND NON-GAAP ADJUSTED EBITDA
(unaudited)

 

      Three Months Ended     Six Months Ended
      December 31,     December 31,
      2018     2017     2018     2017
                         
Net income (loss)   $ (2,766,056)   $ (399,887)   $ (2,745,125)   $ (2,217,393)
                         
Non-recurring transaction costs     586,800      5,784      995,316      34,947 
                         
Non-cash stock based compensation     222,153      193,572      377,458      451,033 
                         
Depreciation and amortization     1,035,606      870,981      1,890,715      1,759,233 
                         
Foreign currency (gain) loss     (32,987)     7,472      (58,430)     22,030 
                         
Change in derivative warrant liabilities     -       341,199      -       (431,300)
                         
Interest expense - amortization of debt discount     68,914      33,100      135,392      67,099 
                         
Interest expense      641,479      383,894      1,298,709      731,623 
                         
Provision for income taxes     (4,801)     148,702      4,533      200,123 
                         
Non-GAAP Adjusted EBITDA   $ (248,892)   $ 1,584,817    $ 1,898,568    $ 617,395 

 


S&W SEED COMPANY
CONSOLIDATED BALANCE SHEETS
(unaudited)

      December 31,     June 30,
      2018     2018
ASSETS            
             
CURRENT ASSETS            
     Cash and cash equivalents   $ 2,471,381    $ 4,320,894 
     Accounts receivable, net     23,178,997      13,861,932 
     Unbilled accounts receivable, net     11,206,984     
     Inventories, net     88,455,980      60,419,276 
     Prepaid expenses and other current assets     1,158,738      1,279,794 
     Assets held for sale     1,930,400     
          TOTAL CURRENT ASSETS     128,402,480      79,881,896 
             
Property, plant and equipment, net     22,731,765      13,180,132 
Intangibles, net     39,823,195      33,109,780 
Goodwill     11,865,811      10,292,265 
Other assets     1,302,705      1,303,135 
          TOTAL ASSETS   $ 204,125,956    $ 137,767,208 
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
CURRENT LIABILITIES            
     Accounts payable   $ 31,594,475    $ 5,935,454 
     Deferred revenue     2,443,574      212,393 
     Accrued expenses and other current liabilities     3,471,881      3,114,799 
     Lines of credit, net     46,310,464      32,630,559 
     Current portion of long-term debt, net     991,140      503,012 
          TOTAL CURRENT LIABILITIES     84,811,534      42,396,217 
             
Long-term debt, net, less current portion     12,264,273      12,977,087 
Other non-current liabilities     656,994      651,780 
             
          TOTAL LIABILITIES     97,732,801      56,025,084 
             
STOCKHOLDERS' EQUITY            
     Preferred stock, $0.001 par value; 5,000,000 shares authorized;            
          no shares issued and outstanding        
     Common stock, $0.001 par value; 50,000,000 shares authorized;            
          33,246,141 issued and 33,221,141 outstanding at December 31, 2018;            
          24,367,906 issued and 24,342,906 outstanding at June 30, 2018;     33,246      24,367 
     Treasury stock, at cost, 25,000 shares     (134,196)     (134,196)
     Additional paid-in capital     136,495,216      108,803,991 
     Accumulated deficit     (23,906,501)     (21,161,376)
     Accumulated other comprehensive loss     (6,116,283)     (5,790,662)
     Noncontrolling interests     21,673     
          TOTAL STOCKHOLDERS' EQUITY     106,393,155      81,742,124 
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 204,125,956    $ 137,767,208 

 


S&W SEED COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

      Six Months Ended
      December 31,
      2018     2017
CASH FLOWS FROM OPERATING ACTIVITIES            
     Net loss   $ (2,723,452)   $ (2,217,393)
     Adjustments to reconcile net loss from operating activities to net             
          cash used in operating activities            
          Stock-based compensation     377,458      451,033 
          Change in allowance for doubtful accounts     (154,364)     20,547 
          Depreciation and amortization     1,890,715      1,759,233 
          Loss (gain) on disposal of property, plant and equipment     3,463      (81,776)
          Change in foreign exchange contracts     2,626      100,864 
          Change in derivative warrant liabilities     -       (431,300)
          Amortization of debt discount     135,392      67,099 
          Changes in:            
               Accounts receivable     (8,336,183)     (1,960,907)
               Unbilled accounts receivable     (11,206,984)     -  
               Inventories     (21,513,547)     (38,850,545)
               Prepaid expenses and other current assets     123,752      (377,920)
               Other non-current asset     -       (4,963)
               Accounts payable     23,698,244      25,606,471 
               Accounts payable - related parties     -       (216,112)
               Deferred revenue     1,458,655      (614,523)
               Accrued expenses and other current liabilities     384,628      (67,000)
               Other non-current liabilities     (40,855)     148,147 
                    Net cash used in operating activities     (15,900,452)     (16,669,045)
             
CASH FLOWS FROM INVESTING ACTIVITIES            
     Additions to property, plant and equipment     (336,623)     (815,063)
     Additions to internal use software     (43,000)     -  
     Proceeds from disposal of property, plant and equipment     24,106      46,218 
     Acquisition of business, net of cash acquired     (26,354,951)     -  
                    Net cash used in investing activities     (26,710,468)     (768,845)
             
CASH FLOWS FROM FINANCING ACTIVITIES            
     Net proceeds from sale of common stock     4,927,682      22,519,216 
     Net proceeds from sale of preferred stock     22,420,462      -  
     Taxes paid related to net share settlements of stock-based compensation awards     (25,497)     (113,688)
     Borrowings and repayments on lines of credit, net     14,299,326      38,574 
     Payment of contingent consideration obligation     -       (2,500,000)
     Borrowings of long-term debt     2,369,071      12,500,000 
     Debt issuance costs     (354,589)     (257,964)
     Repayments of long-term debt     (2,682,056)     (10,113,415)
                    Net cash provided by financing activities     40,954,399      22,072,723 
             
EFFECT OF EXCHANGE RATE CHANGES ON CASH     (192,992)     74,860 
             
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS     (1,849,513)     4,709,693 
             
CASH AND CASH EQUIVALENTS, beginning of the period   $ 4,320,894    $ 745,001 
             
CASH AND CASH EQUIVALENTS, end of period   $ 2,471,381    $ 5,454,694 

 


 

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