10-Q

美国

证券交易委员会

华盛顿特区20549

表格 10-Q

(标记一个)

☒ 根据1934年证券交易法第13或15(d)条款的季度报告。

截至2024年6月30日季度结束 9月30日， 2024

或

☐ 根据 1934 年证券交易所法第 13 或 15 (d) 条的过渡报告

过渡期从___________到___________

佣金档案号码： 001-34719

S&W种子公司MPANY

（根据其组织宪章规定的正式名称）


内华达		27-1275784
（成立或组织的）州或其他辖区或组织成立的州或其他司法管辖区)		(国税局雇主识别号码)


2101 Ken Pratt Blvd, 201套房, 龙蒙, 公司		80501
（总部地址）		(邮递区号)

(720) 506-9191

(申报人的电话号码，包括区号)

根据法案第12(b)条登记的证券：


每个班级的标题	交易标的（s）	注册的每个交易所的名称
普通股，面值每股$0.001	SANW	The 纳斯达克资本市场

标示勾选处，以指示登记（1）已按照证券法第13或15(d)条的要求提交所有必须提交的报告 1934年交易所法规中规定的前12个月内，是否已提交（或对于登记人要求提交此类报告的时间较短期间内的报告并且（2）自过去90天以来一直受到此类要求的约束。

☒ Yes ☐ 不

请用勾选表示，登记申报人是否在过去12个月内（或者在要求提交此类档案的更短期间内）依照《S-t法规第405条》（本章节第232.405条）的规定，已经递交所有必须提交的互动数据档案。

☒ Yes ☐ 不

勾选此格以指示登记人是否为大型高速进行申报的申报人、高速进行申报的申报人、非高速进行申报的申报人、较小型报告公司或新兴成长公司。请参阅《交易所法令》第120亿2条中有关“大型高速进行申报人”、“高速进行申报人”、“较小型报告公司”和“新兴成长公司”的定义。


大型、加速披露的公告者	☐	加速归档人	☐
非加速归档人	☒	小型报告公司	☒
新兴成长型企业	☐

如果一家新兴成长型公司，请用勾选标记表示该申报人已选择不使用根据证交所法案13(a)条款提供的任何新的或修订过的财务会计准则的延长过渡期。 ☐

请勾选表示，是否申报人属于外壳公司（根据交易所法案第120亿2条定义）。 ☐ 是 ☒ 不

截至2024年11月20日，登记公司普通股的流通股数为 2,284,470.

S&W种子公司


第一部分。	财务信息	页码
项目 1。	基本报表（未经审计）：	4
	截至2024年9月30日及2024年6月30日的综合缩减资产负债表	4
	截止2024年和2023年9月30日的三个月简明合并收益表	5
	2024年9月30日和2023年9月30日的总体损益表	6
	截至2024年及2023年9月30日的三个月内的缩减合并 mezzanine 股本及股东权益基本报表	7
	截止2024年和2023年9月30日的三个月简明合并现金流量表	8
	附注至简明综合财务报表	9
项目2。	管理层对财务状况和业绩的讨论与分析	29
项目3。	市场风险的定量和定性披露。	38
项目4。	内部控制及程序	39
第二部分。	其他资讯	40
项目 1。	法律诉讼	40
项目1A。	风险因素	40
项目2。	股票权益的未注册销售和资金用途	40
项目3。	优先证券违约	40
项目4。	矿业安全披露	40
项目5。	其他资讯	40
第6项。	展品	41

前瞻性陈述

本季度报告书第10-Q表中包含根据1933年证券法第27A条（经修订）或证券法，以及根据1934年证券交易法第21E条（经修订）或交易法，包含前瞻性声明。除历史事实声明外的所有声明，均可视为前瞻性声明，包括但不限于：涉及我们贷款协议的声明，包括我们遵守和/或为此类贷款协议获得再融资的能力；全球宏观经济事件对我们业务的潜在影响；管理层对我们未来业务的计划、策略和目标，包括我们对2025财年新产品推出的期望；我们实施战略审查（包括我们减少年度营业费用的计划）；我们与Shell的合作伙伴关系及其在帮助我们减少营业费用并专注于关键增长重点方面的作用；我们未来筹集资本的能力；与我们产品或服务相关的期望发展、表现或市场接受程度，以及我们扩大种植者或客户基地或多样化产品供应的能力；未来经济环境或表现；我们保留关键员工的能力；以及支持上述任何内容的假设、期望和信念。这些前瞻性声明通常通过使用「预料」、「相信」、「具有」、「继续」、「可以」、「设计」、「估计」、「期望」、「打算」、「可能」、「计划」、「潜在」、「项目」、「寻求」、「应该」、「目标」、「将会」、「将」等词语来识别前瞻性声明，虽然并非所有前瞻性声言均包含这些识别词。我们基于我们对未来事件的目前预期来制定这些前瞻性声明。这些前瞻性声明受风险、不确定性和其他重要因素的影响，包括某些假设，如果这些假设永远不实现或被证明不正确，可能导致我们的实际结果以及某些事件的时间与未来结果出现重大差异，并被此类前瞻性声明表述或暗示。风险、不确定性和假设包括以下内容：

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

whether we are successful in monetizing camelina and our partnership with Shell provides its anticipated benefits;

•

S&W Australia's voluntary administration resulted in S&W Australia’s business no longer being conducted through us, which significantly reduces the scope of our overall worldwide operations and could have a material adverse effect on our business, financial position and results of operations;

•

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

•

other risks that are described herein and in the section titled “Risk Factors” contained in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, or the Annual Report, and that are otherwise described or updated from time to time in our filings with the Securities and Exchange Commission.

You are urged to carefully review the disclosures made concerning risks and uncertainties that may affect our business or operating results, which include, among others, those described above.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Many factors discussed in this Quarterly Report on Form 10-Q, some of which are beyond our control, will be important in determining our future performance. Consequently, these statements are inherently uncertain and actual results may differ materially from those that might be anticipated from the forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this Quarterly Report on Form 10-Q as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Furthermore, such forward-looking statements represent our views as of, and speak only as of, the date of this Quarterly Report on Form 10-Q, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. We undertake no obligation to publicly update any forward-looking statements, or to update the reasons why actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “the Company,” “S&W” and “S&W Seed” refer to S&W Seed Company and its subsidiaries or, as the context may require, S&W Seed Company only. Our fiscal year ends on June 30, and accordingly, the terms “fiscal 2025,” “fiscal 2024” and “fiscal 2023” in this Quarterly Report on Form 10-Q refer to the respective fiscal year ended June 30, 2025, 2024 and 2023, respectively, with corresponding meanings to any fiscal year reference beyond such dates. Trademarks, service marks and trade names of other companies appearing in this report are the property of their respective holders.

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

S&W SEED COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



ASSETS	As of September 30, 2024			As of June 30, 2024
CURRENT ASSETS
Cash and cash equivalents	$	480,359		$	286,508
Accounts receivable, net		16,588,371			14,636,722
Receivable from unconsolidated subsidiary		367,349			—
Inventories, net		26,549,387			22,628,343
Prepaid expenses and other current assets		2,616,306			3,431,226
Current assets of discontinued operations		—			22,391,691
TOTAL CURRENT ASSETS		46,601,772			63,374,490
Property, plant and equipment, net		5,980,625			6,127,198
Intellectual property, net		19,919,389			20,265,618
Other intangibles, net		3,099,003			3,206,720
Right of use assets - operating leases		890,086			1,113,833
Equity method investments		18,847,331			19,694,209
Other assets		1,272,948			1,364,532
Non-current assets of discontinued operations		—			5,578,941
TOTAL ASSETS	$	96,611,154		$	120,725,541

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	9,396,043		$	3,255,928
Payable to unconsolidated subsidiary		16,214,514			—
Deferred revenue		2,056,703			832,283
Accrued expenses and other current liabilities		5,814,941			3,770,773
Bank guarantee		5,000,000			—
Current portion of working capital lines of credit, net		16,114,500			16,174,537
Current portion of long-term debt, net		284,239			315,304
Current liabilities of discontinued operations		—			44,893,499
TOTAL CURRENT LIABILITIES		54,880,940			69,242,324
Long-term debt, net, less current portion		4,652,369			4,721,849
Other non-current liabilities		659,996			800,620
Non-current liabilities of discontinued operations		—			929,623
TOTAL LIABILITIES		60,193,305			75,694,416
MEZZANINE EQUITY
Preferred stock, $0.001 par value; 3,323 shares authorized; 1,695 issued and outstanding at September 30, 2024 and June 30, 2024		5,896,657			5,768,765
TOTAL MEZZANINE EQUITY		5,896,657			5,768,765
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 2,284,096 issued and 2,282,780 outstanding at September 30, 2024; 2,282,574 issued and 2,281,258 outstanding at June 30, 2024		43,398			43,369
Treasury stock, at cost, 1,316 shares at September 30, 2024 and June 30, 2024		(134,196	)		(134,196	)
Additional paid-in capital		169,048,535			168,807,072
Accumulated deficit		(138,448,097	)		(122,090,479	)
Accumulated other comprehensive loss		(30,156	)		(7,405,114	)
Non-controlling interests		41,708			41,708
TOTAL STOCKHOLDERS' EQUITY		30,521,192			39,262,360
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY	$	96,611,154		$	120,725,541

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

S&W SEED COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended September 30,
	2024			2023
Revenue	$	8,309,476		$	10,757,347
Cost of revenue (excluding depreciation and amortization shown separately below)		6,973,108			8,032,197
Gross profit		1,336,368			2,725,150
Operating expenses:
Selling, general and administrative expenses		4,002,211			4,153,561
Research and development expenses		741,820			778,889
Depreciation and amortization		814,453			806,835
Loss (gain) on disposal of property, plant and equipment		11,462			(22,091	)
Total operating expenses		5,569,946			5,717,194
Loss from operations		(4,233,578	)		(2,992,044	)
Other expense (income):
Foreign currency loss		7,926			570
Interest expense - amortization of debt discount		361,138			356,567
Interest expense, net		761,879			948,728
Other (income) expenses		22,686			(37,560	)
Net loss from continuing operations before income taxes		(5,387,207	)		(4,260,349	)
Provision for (benefit from) income taxes		1,142			(12,292	)
Net loss from continuing operations before equity in net earnings of affiliates		(5,388,349	)		(4,248,057	)
Equity in loss of equity method investee, net of tax		846,878			776,973
Net loss from continuing operations		(6,235,227	)		(5,025,030	)
Net loss from discontinued operations		(9,994,499	)		(931,887	)
Net loss		(16,229,726	)		(5,956,917	)
Loss attributable to non-controlling interests		—			(7,288	)
Net loss attributable to S&W Seed Company	$	(16,229,726	)	$	(5,949,629	)

Calculation of net loss per share:
Net loss attributable to S&W Seed Company	$	(16,229,726	)	$	(5,949,629	)
Dividends accrued for participating securities and accretion		(127,892	)		(120,045	)
Net loss attributable to common shareholders	$	(16,357,618	)	$	(6,069,674	)

Net loss per share from continuing operations, basic and diluted	$	(2.73	)	$	(2.22	)
Net loss per share from discontinued operations, basic and diluted	$	(4.38	)	$	(0.41	)
Net loss attributable to S&W Seed Company per common share, basic and diluted	$	(7.11	)	$	(2.63	)
Net loss attributable to common shareholders per common share, basic and diluted	$	(7.17	)	$	(2.68	)
Weighted average number of common shares outstanding, basic and diluted		2,282,780			2,263,643

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

S&W SEED COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)


	Three Months Ended September 30,
	2024			2023
Net loss	$	(16,229,726	)	$	(5,956,917	)
Foreign currency translation adjustment, net of income taxes		4,061			(160,979	)
Deconsolidation of subsidiary impact on currency translation adjustment, net of income taxes		7,370,897			—
Comprehensive loss		(8,854,768	)		(6,117,896	)
Comprehensive loss attributable to non-controlling interests		—			(7,288	)
Comprehensive loss attributable to S&W Seed Company	$	(8,854,768	)	$	(6,110,608	)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

S&W SEED COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(UNAUDITED)


	Mezzanine Equity				Shareholders' Equity
	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Non- controlling			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Interests			Loss			Equity
Balance, June 30, 2023		1,695	$	5,274,148		2,263,369	$	43,004		(1,316	)	$	(134,196	)	$	167,768,104		$	(91,932,808	)	$	67,120		$	(6,987,791	)	$	68,823,433
Stock-based compensation		—		—		—		—		—			—			411,820			—			—			—			411,820
Series B detachable warrant		—		25,838		—		—		—			—			—			(25,838	)		—			—			(25,838	)
Accrued dividends on Series B convertible preferred stock		—		94,207		—		—		—			—			—			(94,207	)		—			—			(94,207	)
Net issuance to settle RSUs		—		—		2,313		44		—			—			(15,220	)		—			—			—			(15,176	)
Cash paid related to stock issuance costs		—		—		—		—		—			—			(153,230	)		—			—			—			(153,230	)
Other comprehensive loss		—		—		—		—		—			—			—			—			—			(160,979	)		(160,979	)
Net loss		—		—		—		—		—			—			—			(5,949,629	)		(7,288	)		—			(5,956,917	)
Balance, September 30, 2023		1,695	$	5,394,193		2,265,682	$	43,048		(1,316	)	$	(134,196	)	$	168,011,474		$	(98,002,482	)	$	59,832		$	(7,148,770	)	$	62,828,906

Balance, June 30, 2024		1,695	$	5,768,765		2,282,574	$	43,369		(1,316	)	$	(134,196	)	$	168,807,072		$	(122,090,479	)	$	41,708		$	(7,405,114	)		39,262,360
Stock-based compensation		—		—		—		—		—			—			243,908			—			—			—			243,908
Series B detachable warrant		—		25,838		—		—		—			—			—			(25,838	)		—			—			(25,838	)
Accrued dividends on Series B convertible preferred stock		—		102,054		—		—		—			—			—			(102,054	)		—			—			(102,054	)
Net issuance to settle RSUs		—		—		1,522		29		—			—			(2,445	)		—			—			—			(2,416	)
Deconsolidation of subsidiary		—		—		—		—		—			—									—			7,370,897			7,370,897
Other comprehensive loss		—		—		—		—		—			—			—			—			—			4,061			4,061
Net loss		—		—		—		—		—			—			—			(16,229,726	)		—			—			(16,229,726	)
Balance, September 30, 2024		1,695	$	5,896,657		2,284,096	$	43,398		(1,316	)	$	(134,196	)	$	169,048,535		$	(138,448,097	)	$	41,708		$	(30,156	)	$	30,521,192

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

S&W SEED COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(16,229,726	)	$	(5,956,917	)
Net loss from discontinued operations		(9,994,499	)		(931,887	)
Net loss from continuing operations		(6,235,227	)		(5,025,030	)
Adjustments to reconcile net loss from operating activities to net loss
cash used in operating activities:
Stock-based compensation		243,908			402,641
Provision for credit losses		—			165,342
Inventory write-down		298,127			350,000
Depreciation and amortization		814,453			806,835
Loss (gain) on disposal of property, plant and equipment		11,462			(22,091	)
Equity in loss of equity method investees, net of tax		846,878			776,973
Foreign currency transactions		7,926			570
Amortization of debt discount		361,138			356,567
Accretion of note receivable		—			(63,738	)
Changes in:
Accounts receivable		(1,947,797	)		(1,596,260	)
Receivable from unconsolidated subsidiary		113,383			—
Inventories		(4,219,171	)		(455,529	)
Prepaid expenses and other current assets		814,968			(503,941	)
Other non-current assets		1,089			35,834
Accounts payable		6,140,115			5,208,316
Payable to unconsolidated subsidiary		250,495			—
Deferred revenue		1,224,420			(157,440	)
Accrued expenses and other current liabilities		2,055,445			1,761,480
Other non-current liabilities		3,050			21,985
Net cash provided by operating activities from continuing operations		784,662			2,062,514
Net cash used in operating activities from discontinuing operations		(1,434,917	)		(1,267,836	)
Net cash (used in) provided by operating activities		(650,255	)		794,678
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(138,041	)		(116,346	)
Proceeds from disposal of property, plant and equipment		25,700			74,657
Net cash used in investing activities from continuing operations		(112,341	)		(41,689	)
Net cash provided by (used in) investing activities from discontinuing operations		25,079			(105,089	)
Net cash used in investing activities		(87,262	)		(146,778	)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings and repayments on lines of credit, net		(344,155	)		(4,306,362	)
Borrowings of long-term debt		—			9,087
Repayments of long-term debt		(81,847	)		(2,420	)
Payments of debt issuance costs		(50,169	)		(41,322	)
Net proceeds from sale of common stock		—			(153,230	)
Taxes paid related to net share settlements of stock-based compensation awards		(2,416	)		(15,176	)
Net cash used in financing activities from continuing operations		(478,587	)		(4,509,423	)
Net cash provided by financing activities from discontinued operations		1,409,838			1,409,452
Net cash provided by (used) in financing activities		931,251			(3,099,971	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		117			40,700
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS		193,851			(2,411,371	)
CASH AND CASH EQUIVALENTS, beginning of the period		286,508			3,398,793
CASH AND CASH EQUIVALENTS, end of period	$	480,359		$	987,422
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	831,003		$	1,360,904
Income taxes		25			22,225

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

S&W SEED COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - GENERAL

S&W Seed Company, or the Company, is a global multi-crop, middle-market agricultural company that is principally engaged in breeding, growing, processing and selling agricultural seeds. The Company operates seed cleaning and processing facilities. The Company’s seed products are primarily grown under contract by farmers. The Company is currently focused on growing sales of their proprietary and traited products specifically through the expansion of Double TeamTM for forage and grain sorghum products and new trait introductions, including the second generation of Double Team and Prussic Acid FreeTM, or PF, improving profit margins through pricing and operational efficiencies, and developing the camelina market via a partnership formed in fiscal 2023.

Voluntary Administration Process Involving S&W Australia

On July 24, 2024, the Company's wholly-owned subsidiary S&W Seed Company Australia Pty Ltd., or S&W Australia, adopted a voluntary plan of administration based on its determination that S&W Australia is likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001.

In Australia, voluntary administration is a process whereby an insolvent company is placed in the hands of one or more independent administrators whose role is to investigate the company’s affairs, to report to creditors and to recommend to creditors whether the company should enter into a deed of company arrangement, liquidation, or be returned to its board of directors. A voluntary administration involves an investigation of available options to provide a better return to creditors and, if possible, to save the business.

A number of factors combined to lead S&W Australia to conclude that the voluntary plan of administration was necessary and advisable, including the lack of viable strategic alternatives, Saudi Arabia’s recent discontinuation of import permits for alfalfa seed, and the increased risk that S&W Australia would be unable to meet its obligations under its financing agreement with National Australia Bank Limited, or NAB.

As a result of the voluntary administration process, effective July 24, 2024, the Company no longer controls S&W Australia for accounting purposes, and on October 11, 2024, creditors of S&W Australia approved a proposed Deed of Company Arrangement, pursuant to which, among other things, the outstanding shares of S&W Australia would be transferred to a third party. The Company's expectation was that S&W Australia would no longer be its subsidiary, or owned or controlled by the Company in any manner, at the conclusion of the voluntary administration process and therefore all of the related business conducted through S&W Australia would cease to be included within the scope of its business. Since the Company no longer controls S&W Australia for accounting purposes, S&W Australia was deconsolidated from the Company's financial statements as of July 24, 2024. The Company will not regain control of S&W Australia, as detailed further in Note 15 - Subsequent Events.

S&W Australia’s entry into voluntary administration constituted an event of default and automatic acceleration of S&W Australia’s obligations under the Amended and Restated Finance Agreement with NAB, effective November 17, 2023, or the NAB Finance Agreement. However, such acceleration is stayed while S&W Australia is under voluntary administration. The NAB Finance Agreement was guaranteed by the Company, up to a maximum of AUD $15.0 million (USD $10.4 million as of September 30, 2024), or the Parent Guarantee. The Company’s obligations under the Parent Guarantee were not subject to a stay in connection with S&W Australia’s voluntary administration. On November 22, 2024, NAB released the Company from all liability under the Parent Guarantee, as detailed further in Note 15 - Subsequent Events.

S&W Australia’s entry into voluntary administration also constituted an event of default under the Company’s Amended CIBC Loan Agreement with CIBC Bank USA, or CIBC, as a result of a cross-default provision in the Amended CIBC Loan Agreement that is triggered by the event of default under the NAB Finance Agreement. On August 5, 2024, the Company received a waiver for the Event of Default from CIBC. The waiver stipulates that the occurrence of any of the following shall constitute an immediate event of default under the Amended CIBC Loan Agreement, without notice or demand of any kind:

•

Any notice of default and/or demand for payment is issued by NAB to the Company under the Parent Guarantee;

•

The institution of any legal proceedings by NAB against the Company; and

•

NAB takes any other judicial or non-judicial action under the Parent Guarantee or otherwise against the Company in connection with the Parent Guarantee.

In the event that any of the above events occur, the Company must provide immediate written notice to CIBC. The Company is also required to provide written weekly updates, in form and substance satisfactory to CIBC, addressing S&W Australia’s insolvency proceeding and/or any actions or communications from NAB with respect to S&W Australia’s insolvency proceeding or the Parent Guarantee as well as any actions or progress in furtherance of a sale of S&W Australia or all or any material part of its business. None of the events of default under the August 5, 2024 CIBC waiver have occurred as of the date of this filing and the Company has also met the weekly reporting requirements as outlined in the waiver.

Discontinued Operations

As discussed in Note 3 - Discontinued Operations, effective July 24, 2024, the Company no longer controls S&W Australia for accounting purposes and as such, deconsolidated this subsidiary. This met the criteria to be accounted for as a discontinued operation as required by Accounting Standards Codification, or ASC, 205-20, Discontinued Operations. Accordingly, the financial results of S&W Australia are reported as discontinued operations in the accompanying unaudited Condensed Consolidated Statements of Operations for all periods presented. All amounts and disclosure included in the accompanying notes to the Condensed Consolidated Financial Statements reflect only the Company's continuing operations unless otherwise noted.

Reverse Stock Split

A reverse stock split of all issued and outstanding shares of the Company's common stock, at a ratio of 1-for-19, or the Reverse Stock Split, was implemented at 5:00 p.m. Eastern Time on October 17, 2024. The Company has retroactively adjusted all share amounts and per share data herein to give effect to the Reverse Stock Split. Refer to Note 15 - Subsequent Events for additional information on the Reverse Stock Split.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair statement of the Company’s condensed consolidated balance sheets, statements of operations, comprehensive loss, cash flows and mezzanine equity and stockholders’ equity for the periods presented. Operating results for the periods presented are not necessarily indicative of the results to be expected for the full year ending June 30, 2025. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024, as filed with the SEC on November 1, 2024.

The Company has reportable segments that correspond with its operating model, management structure, and internal reporting reviewed by its Chief Operating Decision Maker, who is the Chief Executive Officer. The Company's Chief Operating Decision Maker allocates resources and assesses performance based on these segments. Effective with the loss of control of S&W Australia on July 24, 2024, this was reduced to two operating segments, each its own reportable segment, Americas and International. The Company previously had one additional operating and reportable segment, AUSDOM, which related to the Australian domestic business and was included in discontinued operations for the three months ended September 30, 2024 and is presented as such for all periods in this report. Refer to Note 10 - Business Segments for additional information regarding the Company's reportable segments.

Certain prior period information has been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in the financial statements. In the Annual Report on Form 10-K for the year ended June 30, 2024 filed with this SEC on November 1, 2024, this included the recoverability of long-lived assets and inventory valuation. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and certain intangible assets as well as valuing stock-based compensation. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows.

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Liquidity and Going Concern

The Company is not profitable and has recorded negative cash flows from operating activities for the last several years. For the three months ended September 30, 2024, the Company reported a net loss from continuing operations of $6.2 million and a net loss from

discontinued operations of $10.0 million, which included a $9.8 million loss from the deconsolidation of S&W Australia. The Company has an accumulated deficit of $138.4 million as of September 30, 2024. As of September 30, 2024, the Company had cash on hand of $0.5 million and negative working capital of $8.3 million. The Company had no unused availability from its working capital facility with CIBC as of September 30, 2024 (see Note 9 - Debt for further discussion).

The Company’s Amended and Restated Loan and Security Agreement with CIBC, or the Amended CIBC Loan Agreement, is classified as current on the Company's Condensed Consolidated Balance Sheets given that the debt is due within 12 months of the September 30, 2024. The Amended CIBC Loan Agreement matures on November 30, 2024, given that we delivered to CIBC by November 8, 2024, an amended letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP Partners L.P., extending the letter of credit to December 31, 2024. The Amended CIBC Loan Agreement contains various financial covenants. Adverse geopolitical and macroeconomic events and other factors affecting the Company’s results of operations have increased the risk of the Company’s inability to comply with these covenants, which could result in acceleration of its repayment obligations and foreclosure on its pledged assets. Effective September 16, 2024, and since then, the revolving loan outstanding under the Amended CIBC Loan Agreement (as amended on July 3, 2024) has exceeded the total revolving loan commitment thereunder, which constitutes an event of default. On September 18, 2024, the Company received a reservation of rights letter from CIBC asserting the existence of such event of default, increasing the interest rate applicable to the loans by 2% per annum (which is the default rate under the Amended CIBC Loan Agreement), and reserving CIBC’s right to immediately exercise any of CIBC’s other rights or remedies under the Amended CIBC Loan Agreement as it deems appropriate. As of the date of this filing, this remains in default and CIBC has not accelerated the indebtedness under the Amended CIBC Loan Agreement. S&W Australia’s entry into voluntary administration constituted an event of default under the Company’s Amended CIBC Loan Agreement, as a result of a cross-default provision in the Amended CIBC Loan Agreement that is triggered by the event of default under the NAB Finance Agreement. On August 5, 2024, the Company received a waiver for the event of default from CIBC, which contained certain stipulations outside of the Company's control and detailed further in Note 1 - General. The voluntary administration process resulted in the transfer of S&W Australia's assets, as noted in Note 15 - Subsequent Events.

While we obtained waivers for certain defaults and covenants in the past, there can be no assurance we will be successful in meeting our covenants, avoiding future defaults, or securing future waivers and/or amendments from our lenders. If we are unsuccessful in doing so, as currently is the case with CIBC, we may need to reduce the scope of our operations, repay amounts owing to our lenders, finance our cash needs through a combination of equity and debt financings, enter into collaborations, strategic alliances and licensing arrangements, delay payments to our growers, sell certain assets or divest certain operations. Further, if the Company cannot renew or find other financing options when its debt facility with CIBC expires on November 30, 2024, it may need to reduce the scope of its operations, repay amounts owed to its lenders and/or sell certain assets. Additionally, if the Company is not able to find a buyer for S&W Australia, it may be required to pay the Parent Guarantee, which, in turn, could cause the Company to reduce the scope of its operations, repay amounts owed to its lenders, and/or sell certain assets. These operating and liquidity factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.

Cost of Revenue

The Company records purchasing and receiving costs, inspection costs and warehousing costs in Cost of revenue. When the Company is required to pay for outward freight and/or the costs incurred to deliver products to its customers, the costs are included in Cost of revenue.

Cash and Cash Equivalents

For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At times, cash and cash equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation. Cash balances located outside of the United States may not be insured and totaled $0.0 million on September 30, 2024 and June 30, 2024. Cash balances residing in the United States exceeding the Federal Deposit Insurance Corporation limit of $250,000 totaled $0.2 million and $0.0 million on September 30, 2024 and June 30, 2024, respectively.

International Operations

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

For the three months ended September 30, 2024 and 2023, the Company recognized the following foreign currency transaction gains in Cost of revenue and losses in Foreign currency loss within Other expense (income) in the Condensed Consolidated Statements of Operations:


	Three Months Ended September 30,
	2024			2023
Cost of revenue	$	(453	)	$	(233	)
Foreign currency loss		7,926			570
Total	$	7,473		$	337

Accounts Receivable

The Company provides an allowance for credit losses equal to the estimated uncollectible amounts. Prior to July 1, 2023, that estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer’s trade accounts receivable. Effective July 1, 2023, in determining the Company's reserve for credit losses, receivables are assigned an expected loss based on historical information adjusted for forward-looking economic factors. The allowance for credit losses was $0.5 million on September 30, 2024 and June 30, 2024.

Inventories

Inventories consist of seed and packaging materials.

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

Inventory is periodically reviewed to determine if it is marketable, obsolete or impaired. Inventory that is determined to be obsolete or impaired is written off to expense at the time the impairment is identified. Inventory quality is a function of germination percentage. Our experience has shown that our alfalfa seed quality tends to be stable under proper storage conditions; therefore, we do not view inventory obsolescence for alfalfa seed as a material concern. Hybrid crops (sorghum and sunflower) seed quality may be affected by warehouse storage pests such as insects and rodents. The Company maintains a strict pest control program to mitigate risk and maximize hybrid seed quality.

Components of inventory are as follows:


	As of September 30, 2024		As of June 30, 2024
Raw materials and supplies	$	1,614,377	$	1,324,087
Work in progress		8,388,736		2,305,572
Finished goods		16,546,274		18,998,684
Inventories, net	$	26,549,387	$	22,628,343

Property, Plant and Equipment

Property, plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset - periods of 5 to 35 years for buildings, 3 to 20 years for machinery and equipment, 7 to 10 years for leasehold improvements, and 2 to 5 years for vehicles.

Intangible Assets

Intangible assets acquired in business acquisitions are reported at their initial fair value less accumulated amortization. Intangible assets are amortized using the straight-line method over the estimated useful life of the asset. Periods of 10 to 30 years for technology/IP/germplasm, 5 to 20 years for customer relationships and trade names and 10 to 20 for other intangible assets. The weighted average estimated useful lives are 25 years for technology/IP/germplasm, 19 years for customer relationships, 16 years for trade names, and 18 years for other intangible assets as of September 30, 2024.

Investments

The Company has one partnership resulting in a 34% ownership interest in Vision Bioenergy. Following the initial recording of this investment, the Company assesses and records its share of equity earnings from the investment on a quarterly basis, resulting in the investment carrying value increasing or decreasing depending on whether a gain or loss is recorded.

Research and Development Costs

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

Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities, as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company’s effective tax rate for the three months ended September 30, 2024 and 2023 has been affected by the valuation allowance on the Company’s deferred tax assets.

Net Loss Per Common Share Data

The Company computes earnings per share using the two-class method. The two-class method requires an earnings allocation formula that determines earnings per share for common shareholders and participating security holders according to dividends declared and participating rights in undistributed earnings. The Company's Series B Preferred Stock and related warrant, or Series B Warrant (see Note 14 - Series B Redeemable Convertible Preferred Stock of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC), are participating securities because holders of such shares have non-forfeitable dividend rights and participate in any undistributed earnings with common stock. Under the two-class method, total dividends provided to the holders of participating securities and undistributed earnings allocated to participating securities, are subtracted from net income attributable to the Company in determining net loss attributable to common shareholders in the two-class earnings per share, or EPS, calculation. Accretion to the redemption value for the Series B Preferred Stock is also treated as a deemed dividend and subtracted from net income attributable to shareholders. There were no undistributed earnings to allocate to the participating securities in the three months ended September 30, 2024 and 2023.

The calculation of net loss per common share is shown in the table below:


	Three Months Ended September 30,
	2024			2023
Numerator:
Net loss from continuing operations	$	(6,235,227	)	$	(5,025,030	)
Net loss from discontinued operations		(9,994,499	)		(931,887	)
Net loss		(16,229,726	)		(5,956,917	)
Loss attributable to non-controlling interests		—			(7,288	)
Net loss attributable to S&W Seed Company		(16,229,726	)		(5,949,629	)
Dividends accrued for participating securities		(102,054	)		(94,207	)
Accretion of Series B Preferred Stock redemption value		(25,838	)		(25,838	)
Numerator for net loss per common share - basic and diluted	$	(16,357,618	)	$	(6,069,674	)
Denominator:
Denominator for basic and diluted net loss per share - weighted average shares		2,282,780			2,263,643
Net loss per common share - basic and diluted	$	(7.17	)	$	(2.68	)

Anti-dilutive shares, which have been excluded from the computation of diluted loss per share, included 279,670 employee stock options, 67,960 restricted stock units, 89,211 shares issuable upon conversion of the Series B Convertible Preferred Stock, warrants to purchase 138,600 shares of common stock related to the MFP Loan Agreement (as defined below), and 29,440 warrants issued with the Company's Series B Convertible Preferred Stock. The terms and conditions of these securities are more fully described in Note 13 - Equity-Based Compensation and Note 14 - Series B Redeemable Convertible Preferred Stock of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC. For the period ended September 30, 2024 and 2023, all potentially dilutive shares were anti-dilutive and excluded from the calculation of diluted loss per share because net losses were recognized.

Concentrations

One customer accounted for 20% and another customer accounted for an additional 16% of revenue for the three months ended September 30, 2024. One customer accounted for 22% and another customer accounted for 18% of the Company's revenue for the three months ended September 30, 2023.

One customer accounted for 15% and another customer accounted for an additional 10% of the Company's accounts receivable as of September 30, 2024 and one customer accounted for 17% and another customer accounted for an additional 16% of the Company’s accounts receivable as of June 30, 2024.

The Company sells a substantial portion of its products to international customers (see Note 5 - Revenue Recognition). Sales to international markets represented 65% and 72% of revenue during the three months ended September 30, 2024 and 2023, respectively. The net book value of fixed assets located outside the United States was 0% of total fixed assets on September 30, 2024 and June 30, 2023, respectively, from continuing operations.

Fair Value of Financial Instruments

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

•

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

•

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

•

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

The carrying value of cash and cash equivalents, accounts payable, short-term and all long-term borrowings, as reflected in the condensed consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments or interest rates commensurate with market rates. There have been no changes in operations and/or credit characteristics since the date of issuance that could impact the relationship between interest rate and market rates.

The Company’s obligations under the Parent Guarantee were not subject to stay in connection with S&W Australia’s voluntary administration and follows the terms of the facilities S&W Australia has with NAB, with the primary borrowing base line expiring on March 31, 2025. As the Company lost control and deconsolidated S&W Australia as a result from the voluntary administration process, the Company must recognize a liability for the fair value of the Parent Guarantee per ASC 460, Guarantees. In order for this any payments to occur, NAB must first make a claim under the Parent Guarantee, which has not occurred as of September 30, 2024. The Company assessed the fair value of the Parent Guarantee as of July 24, 2024 and elected to record the guarantee at fair value at each reporting date, with any changes in fair value being recorded as a gain or loss in the Company's Condensed Consolidated Statements of Operations. The Company obtained an independent valuation, assigning probabilities under various scenarios and applying estimated recovery and discount rates, which resulted in a $5.0 million liability being recorded for the Parent Guarantee under Bank guarantee on the Company's Condensed Consolidated Balance Sheets as of July 24, 2024 and September 30, 2024. The Company determined the fair value of the Parent Guarantee based on a scenario analysis, which included a discount rate ranging between 25.4% and 35.4% as of July 24, 2024 and 25.5% and 35.5% as of September 30, 2024, and a weighted average recovery rate of 57.8% as of July 24, 2024 and September 30, 2024. As discussed further in Note - 15, Subsequent Events, the Company was released of the Parent Guarantee from NAB on November 22, 2024.

In conjunction with the Vision Bioenergy partnership transaction, S&W received a one-time option, or Purchase Option, exercisable at any time on or before the fifth anniversary of the closing of the partnership transaction, to repurchase a 6% membership interest from Shell. The option repurchase prices range between approximately $7.1 and $12.0 million, depending on the date on which such purchase is completed. The Purchase Option was valued at $0.7 million using a lattice option valuation model. The valuation model incorporated significant, unobservable inputs including a discounted cash flow model based on management projections of future Vision Bioenergy results and an estimate of the current per share value of Vision Bioenergy shares. In the model, the estimate of the current per share value was discounted to account for lack of control and marketability, which were considered to be part of the unit of account given the restrictions of the limited liability company agreement that governs the ownership rights of the members. Other unobservable inputs included the risk-free rates and the estimated future stock volatility based on the historical stock price volatilities of other market participants. A full fair value analysis will be performed at each fiscal year-end or when there is an indication that there may be an impairment to the valuation. Management will estimate and adjust the balance for interim periods. A full fair value analysis will be performed whenever there is a potential indicator of impairment to the valuation. No indicators have been identified for the three months ended September 30, 2024 to suggest any material change in the fair value of the purchase option.

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


	Fair Value as of September 30, 2024		Valuation Technique	Unobservable Input	Range
Purchase Option	$	695,000	Option Model	Risk-free rate	3.8% - 4.9%
				Stock price volatility	60% - 65%
				Lack of control premium	13%
				Lack of marketability premium	30%

Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows as of September 30, 2024 and June 30, 2024:


	Fair Value Measurements as of September 30, 2024:
	Level 1		Level 2		Level 3
Bank guarantee		—		—	$	5,000,000
Vision Bioenergy interest purchase option		—		—		695,000
Total	$	—	$	—	$	5,695,000


	Fair Value Measurements as of June 30, 2024:
	Level 1		Level 2		Level 3
Vision Bioenergy interest purchase option		—		—	$	695,000
Total	$	—	$	—	$	695,000

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, or ASU 2023-07, which requires an enhanced disclosure of segments on an annual and interim basis, including the title of the chief operating decision maker, significant segment expenses, and the composition of other segment items for each segment's reported profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and adoption of ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this standard.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, or ASU 2023-09, expanding the disclosures requirement for income taxes primarily by requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and adoption of ASU 2023-09 can be applied prospectively or retrospectively. The Company is currently evaluating the impact of this standard.

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our condensed consolidated statements of operations, comprehensive income, balance sheets, or cash flows.

NOTE 3 - DISCONTINUED OPERATIONS

On July 24, 2024, S&W Australia adopted a voluntary plan of administration based on its determination that S&W Australia is likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001. As a result of the voluntary plan of administration, the Company no longer controls S&W Australia for accounting purposes and was deconsolidated as of July 24, 2024. The Company does not expect to regain control of S&W Australia at the conclusion of the voluntary administration process. This represents a strategic shift given that S&W Australia represents a material component of the Company's operations, including as one of the Company's reportable segments, AUSDOM, and a material part of another reportable segment, International, for the year ended June 30, 2024. This met the criteria to be accounted for as a discontinued operation as of July 24, 2024 under ASC 205-20, Discontinued Operations.

S&W Australia's entry into voluntary administration constituted a reconsideration event, requiring the Company to reassess S&W Australia's status as a Variable Interest Entity, or VIE. The Company deconsolidated the entity because it no longer has the power to direct the activities that most significantly impact the S&W Australia's economic performance. As the Company lost control of but retained its ownership shares in S&W Australia effective July 24, 2024, it met the criteria to be classified as a VIE under ASC 810, Consolidation, with the investment not having any value. The Company has been providing limited services and support to S&W Australia as they have been going through the voluntary administration process, which did not result in a material amount being less than $0.1 million for the three months ended September 30, 2024.

Accordingly, the operating results of the discontinued operations for the three months ended September 30, 2024 and 2023 are presented in the Condensed Consolidated Statements of Operations within Net loss from discontinued operations. For the three months ended September

30, 2024, this includes S&W Australia activity from July 1, 2024 through July 24, 2024, the date the Company no longer controlled and deconsolidated S&W Australia. A reconciliation to Net loss from discontinued operations is as follows:


	Three Months Ended September 30,
	2024			2023
Revenue	$	842,545		$	5,675,119
Cost of revenue (excluding depreciation and amortization shown separately below)		572,862			3,388,955
Gross profit		269,683			2,286,164
Operating expenses
Selling, general and administrative expenses		276,096			1,633,018
Research and development expenses		50,713			307,623
Depreciation and amortization		47,660			262,187
Loss (gain) on disposal of property, plant and equipment		25,696			(10,864	)
Total operating expenses		400,165			2,191,964
(Loss) income from operations		(130,482	)		94,200
Other (income) expense
Loss on deconsolidation of subsidiary		9,828,253			—
Foreign currency (gain) loss		(120,877	)		371,619
Interest expense - amortization of debt discount		6,799			99,007
Interest expense, net		149,842			457,039
Net loss from discontinued operations before income taxes		(9,994,499	)		(833,465	)
Provision for income taxes from discontinued operations		—			13,499
Net loss from discontinued operations before equity in net earnings of affiliates		(9,994,499	)		(846,964	)
Equity in loss of equity method investee, net of tax, from discontinued operations		—			84,923
Net loss from discontinued operations	$	(9,994,499	)	$	(931,887	)

The following table presents assets and liabilities of discontinued operations as of June 30, 2024:


ASSETS	As of June 30, 2024
CURRENT ASSETS
Cash and cash equivalents	$	7,506
Accounts receivable, net		6,228,502
Inventories, net		15,478,760
Prepaid expenses and other current assets		676,923
CURRENT ASSETS OF DISCONTINUED OPERATIONS		22,391,691
NON-CURRENT ASSETS
Property, plant and equipment, net		3,540,075
Intangibles, net		576,669
Right of use assets - operating leases		1,134,985
Other assets		327,212
NON-CURRENT ASSETS OF DISCONTINUED OPERATIONS		5,578,941
TOTAL ASSETS OF DISCONTINUED OPERATIONS	$	27,970,632
LIABILITIES
CURRENT LIABILITIES
Accounts payable	$	10,235,898
Deferred revenue		40,456
Accrued expenses and other current liabilities		3,123,721
Current portion of working capital lines of credit, net		27,549,620
Current portion of long-term debt, net		3,943,804
CURRENT LIABILITIES OF DISCONTINUED OPERATIONS		44,893,499
Long-term debt, net, less current portion		151,387
Other non-current liabilities		778,236
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS		929,623
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS	$	45,823,122

The Company recorded a loss on the deconsolidation of S&W Australia of $9.8 million on July 24, 2024, which is included within Net loss from discontinued operations in the Condensed Consolidated Statements of Operations for the three months ended September 30, 2024. In accordance with ASC 810, Consolidation, the recorded loss was measured as the excess liabilities over assets in S&W Australia's ledger as of July 24, 2024, less all currency translation adjustments related to S&W Australia, as all unrealized gains and losses must be realized upon deconsolidation. The Company also recognized the fair value of the Parent Guarantee as of September 30, 2024 as a liability, with the offset going to Loss on deconsolidation of subsidiary. Below is a reconciliation of the loss on deconsolidation of S&W Australia:


	As of July 24, 2024
Realization of currency translation adjustments from accumulated other comprehensive loss	$	7,289,430
Recognition of bank guarantee (see Note 1)		5,000,000
S&W Australia total assets		43,168,611
S&W Australia total liabilities		(45,629,788	)
Loss on deconsolidation of subsidiary	$	9,828,253

A reconciliation of S&W Australia total assets and total liabilities as of July 24, 2024 is as follows:


	As of July 24, 2024
CURRENT ASSETS
Cash and cash equivalents	$	85,876
Accounts receivable, net		6,311,994
Receivable from unconsolidated subsidiary		15,549,595
Inventories, net		15,274,546
Prepaid expenses and other current assets		666,509
TOTAL CURRENT ASSETS		37,888,520
Property, plant and equipment, net		3,322,273
Other intangibles, net		554,850
Right of use assets - operating leases		1,093,946
Other assets		309,022
TOTAL ASSETS	$	43,168,611
CURRENT LIABILITIES
Accounts payable	$	9,150,910
Payable to unconsolidated subsidiary		520,213
Deferred revenue		33,047
Accrued expenses and other current liabilities		2,947,985
Current portion of working capital lines of credit, net		28,263,338
Current portion of long-term debt, net		3,828,839
TOTAL CURRENT LIABILITIES		44,744,332
Long-term debt, net, less current portion		127,288
Other non-current liabilities		758,168
TOTAL LIABILITIES	$	45,629,788

NOTE 4 - LEASES

The Company leases office and laboratory space, research plots and equipment used in connection with its operations under various operating and finance leases. The components of lease assets and liabilities as of September 30, 2024 and June 30, 2024 are as follows:


Leases	Balance Sheet Classification:	As of September 30, 2024			As of June 30, 2024
Assets:
Right of use assets - finance leases		$	1,050,072		$	1,086,667
Accumulated amortization - finance leases			(553,172	)		(499,275	)
Right of use assets - finance leases, net	Other assets		496,900			587,392
Right of use assets - operating leases	Right of use assets - operating leases		890,086			1,113,833
Total lease assets		$	1,386,986		$	1,701,225
Liabilities:
Current lease liabilities - finance leases	Current portion of long-term debt, net	$	295,671		$	314,980
Current lease liabilities - operating leases	Accrued expenses and other current liabilities		327,048			380,492
Long-term portion of lease liabilities - finance leases	Long-term debt, net, less current portion		223,454			303,395
Long-term portion of lease liabilities - operating leases	Other non-current liabilities		659,996			800,620
Total lease liabilities		$	1,506,169		$	1,799,487

The components of lease cost are as follows:


		Three Months Ended September 30,
Lease cost:	Income Statement Classification:	2024		2023
Operating lease cost	Cost of revenue	$	60,766	$	60,944
Operating lease cost	Selling, general and administrative expenses		33,026		36,542
Operating lease cost	Research and development expenses		21,310		37,135
Finance lease cost	Depreciation and amortization		57,386		67,497
Finance lease cost	Interest expense, net		14,163		10,036
Total lease costs		$	186,651	$	212,154

Maturities of lease liabilities as of September 30, 2024, are as follows:


Fiscal Year	Operating Leases			Finance Leases
Remainder of 2025	$	311,147		$	247,175
2026		354,960			277,359
2027		241,622			44,615
2028		183,599			—
2029		56,967			—
Total lease payments		1,148,295			569,149
Less: Interest		(161,251	)		(50,024	)
Present value of lease liabilities	$	987,044		$	519,125

The following are the weighted average assumptions used for lease term and discount rate and supplemental cash flow information related to leases as of September 30, 2024:



	As of September 30, 2024
Operating lease remaining lease term	3.3 years
Operating lease discount rate		8.53	%
Finance lease remaining lease term	1.6 years
Finance lease discount rate		9.48	%
Cash paid for operating leases	$	114,089
Cash paid for finance leases	$	105,709

NOTE 5 - REVENUE RECOGNITION

The Company derives its revenue primarily from the sale of seed products to seed distributors. From time to time, the Company utilizes excess capacity to provide conditioning, treating and packaging services to other seed producers. The Company also derives service revenue from its partnership with Vision Bioenergy Oilseeds LLC, or Vision Bioenergy, by providing administrative services under a service level agreement.

Revenue from seed product sales is recognized at the point in time at which control of the product is transferred to the customer. Generally, this occurs upon shipment of the product. Pricing for such transactions is negotiated and determined at the time the contracts are signed. We have elected the practical expedient that allows us to account for shipping and handling activities as a fulfillment cost, and we accrue those costs when the related revenue is recognized.

The Company has certain contracts with customers that offer a limited right of return on certain branded products through the end of the current sales year (September through August). The products must be in an unopened and undamaged state and must be resalable in the sole opinion of the Company to qualify for a refund. The Company uses a historical returns percentage to estimate the refund liability and records a reduction of revenue in the period in which revenue is recognized.

ADAMA Collaboration Agreement

The Company has an amended collaboration agreement, or Amended Collaboration Agreement, with Makhteshim Agan of North America, Inc., or ADAMA, for the development and commercialization of the Double Team Sorghum Weed Control System, or DT, which is comprised of ADAMA’s ACCase herbicide used in concert with the Company’s ACCase tolerant ATS Sorghum product, Double Team Sorghum Cropping Solution. Although the DT product is designed to be used as a system, the Company sells only the Double Team sorghum seed portion of the system and recognizes the revenue consistent with its sales of other seed products.

Under the Amended Collaboration Agreement, the Company will only label and promote ATS Sorghum products with ADAMA herbicides, while ADAMA will not sell ACCase herbicides for use on competing ATS Sorghum products. Further, all DT related trademarks are jointly owned by the Company and ADAMA, and each company grants the other a royalty-free license to use these DT related trademarks. The costs of breeding, trait introgression, variety evaluation, performing quality assurance activities and obtaining seed registrations will be borne by the Company while the cost of development, performance evaluation, performing quality assurance activities and obtaining chemical registrations will be borne by ADAMA. The parties have agreed to share all other costs, except those associated with marketing communications.

Double Team sorghum seed sales were ($0.1) million and $0.5 million for the three months ended September 30, 2024 and 2023, respectively.

Payment Terms and Related Balance Sheet Accounts

Accounts receivable represent amounts that are payable to the Company by its customers subject only to the passage of time. Payment terms on invoices are generally 30 to 180 days for export customers and end of sales season (October 31st) for branded products sold within the United States. As the period between the transfer of goods and/or services to the customer and receipt of payment is less than one year, the Company does not separately account for a financing component in its contracts with customers.

The Company had $0.2 million in unbilled receivables as of September 30, 2024 and June 30, 2024, which related to its service level agreement with Vision Bioenergy, as the Company bills Vision Bioenergy on a quarterly basis.

Losses on accounts receivable and unbilled receivables are recognized using a forward-looking approach. The Company considers current and expected future economic conditions as well as the performance of borrowers to determine the allowance for credit losses. During the three months ended September 30, 2024 and 2023, the Company recognized bad debt expense of $0.0 million and $0.2 million, respectively, associated with impaired accounts receivable.

Deferred revenue represents payments received from customers in advance of completion of the Company's performance obligation. During the three months ended September 30, 2024 and 2023, the Company recognized $0.2 million and $0.4 million of revenue, respectively, that was included in the deferred balance as of June 30, 2024 and 2023, respectively.

Disaggregation of Revenue

The Company disaggregates revenue by type of contract and by destination country. The following table shows revenue from external sources by type of contract:


	Three Months Ended September 30,
	2024		2023
Seed sales:
Alfalfa	$	6,708,003	$	7,086,370
Sorghum		1,432,857		3,509,966
Other		11,224		(46,649	)
Services		157,392		207,660
Total revenue	$	8,309,476	$	10,757,347

The following tables show revenue and percentage of revenue from external sources by destination country:


	Three Months Ended September 30,
	2024				2023
United States	$	2,934,716	35	%	$	3,014,244	28	%
Libya		1,295,550	16	%		1,072,800	10	%
Mexico		1,052,781	13	%		1,562,814	9	%
Sudan		807,530	10	%		1,267,933	12	%
South Africa		533,125	6	%		1,195,553	11	%
Egypt		496,360	6	%		—	0	%
Uganda		299,640	4	%		40,000	0	%
Morocco		287,994	3	%		—	0	%
Qatar		148,574	2	%		58,500	1	%
Argentina		89,289	1	%		35,400	0	%
Saudi Arabia		—	0	%		2,208,738	26	%
Other		363,917	4	%		301,365	3	%
Total revenue	$	8,309,476	100	%	$	10,757,347	100	%

NOTE 6 – INTANGIBLE ASSETS

Intangible assets consist of the following:


	Balance at June 30, 2024										Balance at September 30, 2024
	Gross Carrying Amount		Accumulated Amortization			Net		Amortization			Gross Carrying Amount		Accumulated Amortization			Net
Intellectual property	$	33,325,737	$	(13,060,119	)	$	20,265,618	$	(346,229	)	$	33,325,737	$	(13,406,348	)	$	19,919,389
Trade name		1,831,928		(1,178,972	)		652,956		(21,120	)		1,831,928		(1,200,092	)		631,836
Customer relationships		1,596,653		(1,019,623	)		577,030		(22,602	)		1,596,653		(1,042,225	)		554,428
GI customer list		121,786		(93,131	)		28,655		(1,791	)		121,786		(94,922	)		26,864
Supply agreement		1,512,667		(888,692	)		623,975		(18,908	)		1,512,667		(907,600	)		605,067
Grower relationships		2,343,977		(1,223,208	)		1,120,769		(26,352	)		2,343,977		(1,249,560	)		1,094,417
Internal use software		677,776		(474,441	)		203,335		(16,944	)		677,776		(491,385	)		186,391
	$	41,410,524	$	(17,938,186	)	$	23,472,338	$	(453,946	)	$	41,410,524	$	(18,392,132	)	$	23,018,392

Amortization expense totaled $0.5 million and $0.5 million for the three months ended September 30, 2024 and 2023, respectively.

Estimated aggregate remaining amortization is as follows:


	Remainder of 2025		2026		2027		2028		2029		Thereafter
Amortization expense	$	1,343,921	$	1,714,386	$	1,663,502	$	1,606,211	$	1,586,728	$	15,103,644

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT

Components of property, plant and equipment were as follows:



	As of September 30, 2024			As of June 30, 2024
Land and improvements	$	586,849		$	586,849
Buildings and improvements		2,365,835			2,371,565
Machinery and equipment		8,785,882			8,621,280
Vehicles		663,778			648,836
Leasehold improvements		473,307			552,810
Construction in progress		3,341			28,453
Total property, plant and equipment		12,878,992			12,809,793
Less: accumulated depreciation		(6,898,367	)		(6,682,595	)
Property, plant and equipment, net	$	5,980,625		$	6,127,198

Depreciation expense totaled $0.3 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively.

NOte 8 - investments

Shell Partnership

The terms and conditions of the Contribution and Membership Interest Purchase Agreement, or Purchase Agreement, with Shell relating to the February 6, 2023 partnership for the development and production of sustainable biofuel feedstocks through Vision Bioenergy are presented in Note 7 - Investments to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024. No new activity occurred during the three months ended September 30, 2024. Activity in the period consisted of the recording of the Company's 34% share of Vision Bioenergy's loss for the period, which is recorded to Equity in loss of equity method investees, net of tax in the Condensed Consolidated Statements of Operations.

The summarized unaudited balance sheet presented below reflects the financial information of Vision Bioenergy as of September 30, 2024 and June 30, 2024:


	As of September 30, 2024 (Unaudited)		As of June 30, 2024 (Unaudited)
Cash	$	4,523,734	$	6,327,459
Other current assets		6,689,246		3,138,627
Fixed assets		17,818,133		17,866,091
Intangible assets		18,976,035		19,624,187
Goodwill		11,564,157		11,564,157
Other assets		155,214		235,613
TOTAL ASSETS	$	59,726,519	$	58,756,134
Current liabilities	$	4,957,388	$	1,485,283
Long-term liabilities		77,845		133,070
Equity		54,691,286		57,137,781
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	59,726,519	$	58,756,134

The summarized unaudited income statement presented below reflects the financial information of Vision Bioenergy for the three months ended September 30, 2024 and 2023:


	Three Months Ended September 30,
	2024 (Unaudited)			2023 (Unaudited)
Revenue	$	307,772		$	110,900
Gross loss		(486,271	)		(549,607	)
Loss from operations		(2,497,925	)		(2,432,762	)
Net loss		(2,446,495	)		(2,362,135	)

The following summarizes the carrying amount of the Company's equity method investments reflected in the Condensed Consolidated Balance Sheets:


	As of September 30, 2024					As of June 30, 2024
	Carrying Amount		Economic Interest			Carrying Amount		Economic Interest
Vision Bioenergy	$	18,847,331		34	%	$	19,694,209		34	%
Total equity method investments	$	18,847,331				$	19,694,209

For the three months ended September 30, 2024, the following activity occurred in the Company's equity method investments:


	Vision Bioenergy
Carrying amount at June 30, 2024	$	19,694,209
Equity in loss of equity method investment		(846,878	)
Carrying amount at September 30, 2024	$	18,847,331

NOTE 9 - DEBT

Total debt outstanding is presented on the Company's Condensed Consolidated Balance Sheets as follows:



	As of September 30, 2024			As of June 30, 2024
Current portion of working capital lines of credit
CIBC	$	16,169,873		$	16,279,194
Debt issuance costs		(55,373	)		(104,657	)
Total working capital lines of credit, net	$	16,114,500		$	16,174,537
Current portion of long-term debt
Finance leases	$	295,671		$	314,980
Vehicle loans - Ford Credit		95,096			106,852
Debt issuance costs		(106,528	)		(106,528	)
Total current portion, net	$	284,239		$	315,304
Long-term debt, less current portion
Finance leases	$	223,454		$	303,395
Vehicle loans - Ford Credit		205,674			222,063
Secured real estate note - AgAmerica		4,300,000			4,300,000
Debt issuance costs		(76,759	)		(103,609	)
Total long-term portion, net	$	4,652,369		$	4,721,849
Total debt, net	$	4,936,608		$	5,037,153

CIBC Loan Agreement

On December 26, 2019, the Company entered into the CIBC Loan Agreement with CIBC, which originally provided for a $35.0 million credit facility, or the CIBC Credit Facility. As described in Note 8 - Debt to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024, the CIBC Loan Agreement was subsequently amended on several occasions, including on March 22, 2023, when the Company entered into the Amended CIBC Loan Agreement. During the three months ended September 30, 2024, the Amended CIBC Loan Agreement was amended as follows:

•

On July 3, 2024, the Company entered into a Third Amendment to the Amended and Restated Loan and Security Agreement, or the Third Amendment, with CIBC, which amended the Amended CIBC Loan Agreement, by and among the Company, as borrower, and CIBC, as administrative agent and sole lead arranger. The Third Amendment, effective as of July 1, 2024, among other things:

subject to the satisfaction of certain post-closing covenants, extended the maturity date from August 31, 2024 to October 31, 2024, or the Maturity Date;

modified the maximum loan commitment under the Amended CIBC Loan Agreement to (i) $20.0 million from July 1, 2024 through July 31, 2024, (ii) $18.5 million from August 1, 2024 through September 1, 2024, (iii) $17.5 million from September 2, 2024 through September 15, 2024, (iv) $15.0 million from September 16, 2024 through October 9, 2024, and (v) $13.0 million from October 10, 2024 through the Maturity Date;

modified the eligible inventory sublimit under the Amended CIBC Loan Agreement from $5.0 million from July 1, 2024 through August 31, 2024 to (i) $8.5 million from July 1, 2024 through July 14, 2024, (ii) $7.5 million from July 15, 2024 through August 14, 2024, (iii) $7.0 million from August 15, 2024 through September 15, 2024, (iv) $6.5 million from September 16, 2024 through September 29, 2024, and (v) $5.0 million from September 30, 2024 through the Maturity Date;

added certain post-closing covenants which, should the Company not comply with the amended terms, shall constitute an immediate event of default under the Amended CIBC Loan Agreement;

added a fee of $15,000 payable by the Company to CIBC on the date of the Third Amendment;

added a fee of $10,000 payable by the Company to CIBC monthly beginning July 1, 2024, and payable only if the eligible inventory sublimit is greater than $5.0 million; and

added a fee of $25,000 payable by the Company to CIBC on October 1, 2024, and payable only if the Company does not repay the obligations under the Amended CIBC Loan Agreement in full by September 30, 2024.

Except as modified by the Third Amendment, all terms and conditions of the Amended CIBC Loan Agreement remain in full force and effect as of September 30, 2024. On October 31, 2024, the Maturity Date was extended to November 30, 2024, detailed further in Note 15 - Subsequent Events.

The proceeds of advances under the Amended CIBC Credit Facility may be used to finance the Company’s ongoing working capital requirements and other general corporate purposes. Availability of funds under the Amended CIBC Credit Facility is subject to a borrowing base equal to (a) up to 85% of eligible domestic accounts receivable, plus (b) up to 90% of eligible foreign accounts receivable, plus (c) up to the lesser of (i) 65% of eligible inventory and (ii) 85% of the appraised net orderly liquidation value of eligible inventory, in each case subject to an eligible inventory sublimit, in each case ((a), (b) and (c)), as more fully set forth in the Amended CIBC Loan Agreement and subject to lender reserves that CIBC may establish from time to time in its sole discretion, determined in good faith. Advances under the Amended CIBC Credit Facility bear interest at a rate per annum equal to a reference rate equal to CIBC’s prime rate at any time (or, if greater, the federal funds rate at such time plus 0.5%) plus an applicable margin of 2.5%. The interest rate for the Amended CIBC Credit Facility was 10.50% as of September 30, 2024. The Company’s obligations under the Amended CIBC Loan Agreement are secured by a first priority security interest in substantially all of the Company’s assets (subject to certain exceptions), including intellectual property.

The Amended CIBC Loan Agreement contains certain customary representations and warranties, events of default, and affirmative and negative covenants, including limitations with respect to debt, liens, fundamental changes, asset sales, restricted payments, investments and transactions with affiliates, subject to certain exceptions. Amounts due under the Amended CIBC Loan Agreement may be accelerated upon an “event of default,” as defined in the Amended CIBC Loan Agreement, such as failure to pay amounts owed thereunder when due, breach of a covenant, material inaccuracy of a representation, or occurrence of bankruptcy or insolvency, subject in some cases to cure periods. Additionally, upon the occurrence and during the continuance of an event of default, CIBC may elect to increase the existing interest rate on all of the Company’s outstanding obligations by 2.0% per annum.

As of September 16, 2024, and since then, the revolving loan outstanding under the Amended CIBC Loan Agreement (as amended by the Third Amendment) has exceeded the total revolving loan commitment thereunder, which constitutes an event of default under the Amended CIBC Loan Agreement. On September 18, 2024, the Company received a reservation of rights letter from CIBC asserting the existence of such event of default, increasing the interest rate applicable to the loans by 2.0% per annum (which is the default rate under the Amended CIBC Loan Agreement), and reserving CIBC’s right to immediately exercise any of CIBC’s other rights or remedies under the Amended CIBC Loan Agreement as it deems appropriate. As of the date of this filing, CIBC has not accelerated the indebtedness under the Amended CIBC Loan Agreement.

AgAmerica Note

As described in Note 8 - Debt to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024, the Company entered into a term loan agreement, or the AgAmerica Loan Agreement, with AgAmerica on June 20, 2023 pursuant to which AgAmerica issued a term loan of $4.3 million to the Company and, as security therefor, the Company granted to AgAmerica a mortgage on approximately 31 acres of land located in Lubbock and Moore Counties, Texas, and certain personal property thereon. No changes to this agreement have occurred during the three months ended September 30, 2024. Per the agreement, interest will accrue at a rate per annum equal to 4.85% plus the Term SOFR Rate, defined as the forward-looking term rate based on the secured overnight financing rate, or SOFR, computed based on the actual number of days elapsed divided by a 360-day year. The annual interest rate as of September 30, 2024 was 9.81%. Interest payments are due quarterly in arrears, commencing on June 20, 2023, and on the last day of each quarter thereafter, unless otherwise accelerated in accordance with the terms of the AgAmerica Loan Agreement.

The AgAmerica Loan Agreement contains certain customary representations and warranties, events of default, and affirmative and negative covenants, including (among others) limitations with respect to liens, fundamental changes, asset sales and formation and acquisition of subsidiaries, subject to certain exceptions. Upon the occurrence of an event of default, and subject to certain cure periods, AgAmerica may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the AgAmerica Loan Agreement, as applicable, provided that in the event of bankruptcy, all such amounts shall automatically become due and payable. Due to the delayed filing of the Annual Report on Form 10-K for the year ended June 30, 2024, the Company was not in compliance with the reporting requirements per the AgAmerica Loan Agreement; however, a waiver was received from AgAmerica for such non-compliance, executed on November 1, 2024. The Company is in compliance with all reporting requirements as of the date of this filing.

MFP Loan Agreement

On September 22, 2022, the Company’s largest stockholder, MFP Partners, L.P., or MFP, provided a letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, with an initial face amount of $9.0 million, or the MFP Letter of Credit, for the benefit of CIBC, as additional collateral to support the Company’s obligations under the CIBC Loan Agreement.

Concurrently, on September 22, 2022, the Company entered into a Subordinate Loan and Security Agreement, or the MFP Loan Agreement, with MFP, pursuant to which any draw CIBC may make on the MFP Letter of Credit will be deemed to be a term loan advance made by MFP to the Company. The MFP Loan Agreement initially provided for up to $9.0 million of term loan advances. In

connection with the Company’s entry into the Amended CIBC Loan Agreement, the MFP Letter of Credit was amended to increase the maximum amount of term loan advances to $13.0 million and extend the maturity date to September 30, 2024.

On July 16, 2024, the Company entered into a Fourth Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Fourth Amendment, amending the MFP Loan Agreement with MFP, to (i) extend the maturity date of the letter of credit to November 30, 2024 and (ii) extend the maturity date of the MFP Loan Agreement to May 31, 2025. On October 31, 2024, the MFP Letter of Credit was further extended to December 31, 2024. See Note 15 - Subsequent Events for further details. Except as modified by these amendments, all terms and conditions of the MFP Loan Agreement remain in full force and effect.

Pursuant to the amended MFP Loan Agreement, the Company accrues a cash fee to be paid to MFP equal to 4.25% per annum on all amounts remaining undrawn under the MFP Letter of Credit. In the event any term advances are deemed made under the MFP Loan Agreement, such advances will bear interest at a rate per annum equal to term SOFR (with a floor of 1.25%) plus 9.25%, 50% of which will be payable in cash on the last day of each fiscal quarter and 50% of which will accrue as payment in kind interest payable on the maturity date, unless, with respect to any quarterly payment date, the Company elects to pay such interest in cash.

As of September 30, 2024, no amounts were outstanding. The MFP Loan Agreement, as amended, includes customary affirmative and negative covenants and events of default and is secured by substantially all of the Company’s assets and is subordinated to the CIBC Loan Agreement. Upon the occurrence and during the continuance of an event of default, MFP may declare all outstanding obligations under the MFP Loan Agreement immediately due and payable and take such other actions as set forth in the MFP Loan Agreement.

Maturities of Long-Term Debt

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


Fiscal Year	Amount
Remainder of 2025	$	95,096
2026		4,395,096
2027		95,096
2028		15,482
Total	$	4,600,770

NOTE 10 - BUSINESS SEGMENTS

Segment Reporting

Prior to the voluntary administration of S&W Australia, the Company had three operating and reportable segments that corresponded with its operating model, management structure, and internal reporting reviewed by its Chief Operating Decision Maker, who is the Company's President and Chief Executive Officer. Effective with the loss of control of S&W Australia on July 24, 2024, this was reduced to two operating and reportable segments. The Company's Chief Operating Decision Maker currently allocates resources and assesses performance based on these two segments, with a key performance metric utilized being gross profit. The Company's two operating segments, each its own reportable segment, are Americas and International. Note, as a result of the voluntary administration of S&W Australia, the Company's Chief Operating Decision Maker no longer allocates resources and assesses performance for the AUSDOM segment and for the International segment related to S&W Australia.

Americas: Consists of operations in the United States that results in sales across North and South America. Revenue in the Americas segment is largely made up of sorghum and alfalfa products.

As presented in the table below, Other consists of intercompany activity with S&W Australia. This has historically been eliminated; however, with the deconsolidation of this subsidiary, the activity is no longer eliminated on a go forward basis as of July 24, 2024.

Below is a summary of business activity by segment that is reviewed by the Company's Chief Operating Decision Maker for the three months ended September 30, 2024 and 2023:


		Three Months Ended September 30,
		2024				2023
Revenue
Americas	$		4,132,935		$		4,854,052
International			4,089,006				5,903,295
Other			87,535				—
Revenue			8,309,476				10,757,347

Gross profit (excluding depreciation and amortization)
Americas			728,263				952,325
International			797,183				1,773,768
Other			(189,078	)			(943	)
Gross profit (excluding depreciation and amortization)		$	1,336,368			$	2,725,150

The Company does not allocate Other (income) expense, Equity in loss of equity method investees, net of tax, or Assets by segment as these are not provided to its Chief Operating Decision Maker.

NOTE 11 – EQUITY

MFP Warrants

On September 22, 2022, the Company entered into a Subordinate Loan and Security Agreement, or the MFP Loan Agreement, with MFP, pursuant to which any draw CIBC may make on the MFP Letter of Credit will be deemed to be a term loan advance made by MFP to the Company (see Note 9 - Debt). Pursuant to the terms and conditions of the MFP Loan Agreement and subsequent amendments on October 28, 2022, December 22, 2022 and March 22, 2023, warrants to purchase a total of 138,600 shares of the Company’s common stock were issued to MFP in fiscal 2023. All warrants will expire five years from the date of issuance and have exercise prices ranging from $30.40 - $40.85 per share. The stated purchase prices of all of the MFP Warrants are subject to adjustment in connection with any stock dividends and splits, distributions with respect to common stock and certain fundamental transactions as described in the MFP Warrant. The MFP Warrants were valued using the Black-Scholes-Merton model as of the respective issue dates and recorded as financial commitment assets within Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The MFP Warrants financial commitment assets are amortized on a straight-line basis over the period from their initial issue dates through the end of the related MFP Letter of Credit commitment periods. During the three months ended September 30, 2024 and 2023, $0.2 million and $0.2 million, respectively, was amortized as interest expense.

MFP is the Company’s largest shareholder. One of the Company’s directors, Alexander C. Matina, was Portfolio Manager of MFP Investors LLC, the general partner of MFP, until December 31, 2023, at which point he transitioned to an advisor role for MFP Investors LLC. Mr. Matina continues to serve on the Company's board of directors, or the Board.

NOTE 12 - EQUITY-BASED COMPENSATION

Stock Options

The Company utilizes a Black-Scholes-Merton option pricing model, which includes assumptions regarding the risk-free interest rate, dividend yield, life of the award, and the volatility of the Company's common stock to estimate the fair value of employee options grants. During the three months ended September 30, 2024 and 2023, the Company did not grant options to its directors, certain members of the executive management team or other employees.

A summary of stock option activity for the three months ended September 30, 2024 is presented below:


	Number of Options		Weighted - Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 30, 2024		279,670	$	39.14		6.8	$	—
Granted		—		—		—		—
Exercised		—		—		—		—
Canceled/forfeited/expired		—		—		—		—
Outstanding at September 30, 2024		279,670	$	39.14		6.5	$	—
Options vested and exercisable at September 30, 2024		241,434	$	42.67		6.2	$	—
Options vested and expected to vest at September 30, 2024		279,422	$	39.20		6.5	$	—

On September 30, 2024, the Company had $209,592 of unrecognized stock compensation expense, net of estimated forfeitures, related to the options under the S&W Seed Company 2019 Equity Incentive Plan, or 2019 Plan, which will be recognized over the weighted average remaining service period of 1.7 years. The Company settles employee stock option exercises with newly issued shares of common stock.

Restricted Stock Units

During the three months ended September 30, 2024 and 2023, the Company issued 5,246 and 1,361 restricted stock units, respectively, to its directors, certain members of the executive management team, other employees, and non-employee service providers. The restricted stock units have varying vesting periods ranging from immediate vesting to quarterly or annual installments over one to three years. The fair value of the awards granted during the three months ended September 30, 2024 and 2023 totaled $35,375 and $29,373, respectively, and was based on the closing stock price on the date of grants.

A summary of activity related to non-vested restricted stock units is presented below:


	Number of Nonvested Restricted Stock Units			Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Vesting Period (Years)
Nonvested restricted units outstanding at June 30, 2024		64,595		$	11.40		1.2
Granted		5,246			11.34		0.3
Vested		(1,881	)		17.04		—
Nonvested restricted units outstanding at September 30, 2024		67,960			10.83	1.14

On September 30, 2024, the Company had $278,144 of unrecognized stock compensation expense related to the restricted stock units, which will be recognized over the weighted average remaining service period of 1.1 years.

Stock-based Compensation Expense

Stock-based compensation expense recorded for grants of stock options, restricted stock grants and restricted stock units for the three months ended September 30, 2024 and 2023 totaled $243,908 and $411,820, respectively.

On September 30, 2024, there were 8,676 shares available under the 2019 Plan for future grants and awards.

NOTE 13 – SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK

The terms and conditions of the Company’s Series B Redeemable Convertible Preferred Stock and accompanying warrant are presented in Note 14 - Series B Redeemable Convertible Preferred Stock to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024. No issuances or conversions of Series B Redeemable Convertible Preferred Stock occurred during the three months ended September 30, 2024. Activity in the period consisted of accrual of dividends and accretion of the discount on the warrants.

The following summarizes changes to the Series B Convertible Preferred Stock:


Balance at June 30, 2024	$	5,768,765
Dividends accrued		102,054
Accretion of discount for warrants		25,838
Balance at September 30, 2024	$	5,896,657

NOTE 14 - NON-CASH ACTIVITIES FOR STATEMENTS OF CASH FLOWS

The below table represents supplemental information to the Company’s condensed consolidated statements of cash flows for non-cash activities during the three months ended September 30, 2024 and 2023, respectively, for continuing operations, unless otherwise specified:


	Three Months Ended September 30,
	2024			2023
Non-cash investing activities:
ROU assets financed by lease liabilities and lease modifications and reassessments	$	(106,838	)	$	487,611
Non-cash financing activities:
Dividends accrued for participating securities		102,054			94,207
Accretion of discount for Series B preferred stock warrants		25,838			25,838

NOTE 15 - SUBSEQUENT EVENTS

CIBC Fourth Amendment

On October 31, 2024, the Company entered into a Fourth Amendment to the Amended and Restated Loan and Security Agreement with CIBC, or the Fourth Amendment, which amended the Amended CIBC Loan Agreement by and among the Company, as borrower, and CIBC, as administrative agent and sole lead arranger. The Fourth Amendment, effective as of October 31, 2024, among other things:

•

extended the maturity date from October 31, 2024 to November 30, 2024, contingent upon the Company's delivery to CIBC of an amended letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, and for the benefit of CIBC, that expires on December 31, 2024, which was delivered on November 8, 2024; and

•

provided for a fee of $25,000 payable by the Company to CIBC on the date of the Fourth Amendment.

Except as modified by the Fourth Amendment, all terms and conditions of the Amended CIBC Loan Agreement remain in full force and effect.

MFP Fifth Amendment

On October 31, 2024, the Company entered into a Fifth Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Fifth Amendment, further amending the MFP Loan Agreement with MFP, to extend the maturity date of the letter of credit to December 31, 2024. Except as modified by the MFP Fifth Amendment, all terms and conditions of the MFP Loan Agreement remain in full force and effect.

Reverse Stock Split

At the Company's special meeting of stockholders held on September 26, 2024, or the Special Meeting, the Company's stockholders approved, pursuant to Nevada Revised Statutes, or NRS, 78.2055, a reverse stock split of the Company's common stock at a ratio in the range of 1-for-5 to 1-for-20, with such ratio to be determined in the discretion of the Board and with such reverse stock split to be effected at such time and date as determined by the Board in its sole discretion (but in no event later than January 31, 2025). Following the Special Meeting, on October 4, 2024, the Board unanimously approved, pursuant to NRS 78.2055, a reverse stock split of all issued and outstanding shares of our common stock, at a ratio of 1-for-19, or the Reverse Stock Split. The Reverse Stock Split was implemented at 5:00 p.m. Eastern Time on October 17, 2024, or the Effective Time.

The terms of the Reverse Stock Split are such that every 19 shares of the Company’s issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in par value per share. As a result of the Reverse Stock Split, proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all then outstanding stock options, restricted stock units and warrants, which resulted in a proportional decrease in the number of shares of the Company's common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock units and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants. In addition, the number of shares reserved for issuance under the Company's equity compensation plans immediately prior to the Effective Time was reduced proportionately.

No fractional shares were issued in connection with the Reverse Stock Split. Stockholders of record were issued one whole share of common stock in exchange for any fractional interest that such stockholder would have otherwise received as a result of the Reverse Stock Split. The Reverse Stock Split affected all stockholders of record proportionately and did not affect any stockholder’s percentage

ownership of the Company’s common stock, except to the extent that the Reverse Stock Split resulted in any stockholder owning an additional share.

The Company's common stock began trading on a split-adjusted basis commencing upon market opening on The Nasdaq Capital Market on October 18, 2024.

S&W Australia

As previously reported, S&W Australia adopted a voluntary plan of administration on July 24, 2024, and on October 11, 2024, creditors of S&W Australia approved a proposed Deed of Company Arrangement, or DOCA, pursuant to which, among other things, the outstanding shares of S&W Australia would be transferred to a third party. In order to facilitate the satisfaction of certain conditions to the effectiveness of the DOCA, on November 22, 2024, the Company entered into (i) a Business Transfer Agreement, (ii) a Transitional Services Deed, and (iii) a Deed of Settlement and Release with S&W Australia. The Company also entered into a Deed of Release of US Corporate Guarantee with NAB, and obtained a release of certain applicable liens from CIBC.

Business Transfer Agreement

Under the Business Transfer Agreement, the Company transferred certain intellectual property rights related to alfalfa and white clover seeds necessary for S&W Australia’s continued operations, or the IP Rights, along with certain related inventory valued at approximately $6.0 million, to S&W Australia. The value of the IP Rights is currently being assessed. Pursuant to the agreement, S&W Australia granted the Company a non-exclusive, non-transferable, royalty-bearing license to the IP Rights for the sale of products in the United States, Mexico, Canada, Central America, and South America for a term of five years. S&W Australia is entitled to receive a royalty in the mid-single digits from the Company on gross revenue generated from the licensed IP Rights.

Transitional Services Deed

Under the Transitional Services Deed, the Company agreed to continue providing certain services it has generally provided to S&W Australia on a temporary basis to support the transition of services from the Company to S&W Australia. Each party will be responsible for its own transition costs. The services provided per the Transitional Services Deed will terminate between February 22, 2025 and August 31, 2025, unless terminated earlier pursuant to its terms.

Deed of Settlement and Release

Under the Deed of Settlement and Release, in consideration for the Company’s (i) transfers under the Business Transfer Agreement, (ii) services rendered under the Transitional Services Deed and (iii) certain other payments, S&W Australia released the Company from all its net intercompany liabilities and obligations owed to S&W Australia, which is represented in Payable to unconsolidated subsidiary and Receivable from unconsolidated subsidiary in the Company's Condensed Consolidated Balance Sheets as of September 30, 2024.

Deed of Release of US Corporate Guarantee

Under the Deed of Release of US Corporate Guarantee, NAB released the Company from all liability under the Parent Guarantee related to the NAB Finance Agreement.

Lien Release

Pursuant to the Company’s Amended CIBC Loan Agreement, CIBC obtained a security interest in the Company’s assets. In connection with the execution of the agreements listed above, CIBC consented to the transfer of, and released its security interests in, the assets of the Company to be transferred to S&W Australia pursuant to the Business Transfer Agreement as described above.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations in conjunction with our Condensed Consolidated Financial Statements and the related notes included in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements as referred to under the heading “Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Factors that could cause or contribute to these differences include those discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, particularly in Part I, Item 1A., “Risk Factors.”

Strategic Review

We have maintained our strategic path for operations and future growth in sorghum while continuing to execute and refine our key centers of value for our alfalfa business. With grower adoption of our Double Team sorghum solution accelerating since its fiscal 2022 launch and the continued technological development of our traited forage and grain sorghum products planned in fiscal 2025, including the introduction of two new traits - the second generation of Double Team and Prussic Acid Free - we believe we are in a unique position to be the leading technology provider of this important global crop.

We have continued to align our cost structure to support our key centers of value in order to drive the business towards profitability. We have reduced obsolescence costs through improved life cycle management and SKU optimization efforts with the reduction of low margin forage lines and seed treatment offerings. In fiscal 2024, we recognized improvement in our seed cost position as additional operational efficiency plans are implemented and guided by best-in-class cost standards.

In fiscal 2025, we plan to launch a new business model for many of our private label customers focused on licensing our product for them to sell. There will be multiple components, including a production agreement, germplasm agreement, and trait agreement, where applicable. The production agreement will provide customers with their requested, high quality seed, while the germplasm and trait agreements will only allow us to collect revenue based on the product the customer sells, which is treated as a royalty. We believe that by switching to this strategy, we will not only be more aligned with our competitors, but also provide our customers with more flexibility and control over their costs.

Voluntary Administration Process Involving S&W Australia

We previously announced in 2023 that we were evaluating the possibility of a strategic transaction involving our international operations, which is headquartered within S&W Seed Company Australia Pty Ltd, or S&W Australia, our wholly-owned subsidiary. That process has not resulted in the consummation of a transaction and on July 24, 2024, S&W Australia adopted a voluntary plan of administration based on its determination that S&W Australia is likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001. In Australia, voluntary administration is a process whereby an insolvent company is placed in the hands of one or more independent administrators whose role is to investigate the company’s affairs, to report to creditors and to recommend to creditors whether the company should enter into a deed of company arrangement, liquidation, or be returned to its board of directors. A number of factors combined to lead S&W Australia to conclude that the voluntary plan of administration was necessary and advisable, including the lack of viable strategic alternatives for the entity, Saudi Arabia’s recent discontinuation of import permits for alfalfa seed, and the increased risk that S&W Australia would be unable to meet its loan obligations.

As a result of the voluntary administration process, as of July 24, 2024 we no longer control S&W Australia for accounting purposes, and on October 11, 2024, creditors of S&W Australia approved a proposed Deed of Company Arrangement, pursuant to which, among other things, the outstanding shares of S&W Australia would be transferred to a third party. Our expectation was that S&W Australia would no longer be our subsidiary, or owned or controlled by us in any manner, at the conclusion of the voluntary administration process and therefore all of the related business conducted through S&W Australia would cease to be included within the scope of our business. Since we no longer control S&W Australia for accounting purposes, S&W Australia was deconsolidated from our financial statements as of July 24, 2024. We will not regain control of S&W Australia at the conclusion of the voluntary administration process, as detailed further in Note 15 - Subsequent Events in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q. The financial statements provided in this Item 2 do not include financial results from S&W Australia.

Reverse Stock Split

At a special meeting of stockholders held on September 26, 2024, our stockholders approved a reverse stock split of our common stock at a ratio in the range of 1-for-5 to 1-for-20, with such ratio to be determined in the discretion of our board of directors, or Board, and on October 4, 2024 the Board unanimously approved a reverse stock split of all issued and outstanding shares of our common stock, at a ratio of 1-for-19, or the Reverse Stock Split. The Reverse Stock Split was implemented at 5:00 p.m. Eastern Time on October 17, 2024.

Our common stock began trading on a split-adjusted basis commencing upon market opening on The Nasdaq Capital Market on October 18, 2024. We have retroactively adjusted all share amounts and per share data herein to give effect to the Reverse Stock Split.

Global Economic Conditions

We are subject to additional risks and uncertainties as a result of adverse geopolitical and macroeconomic events, such as the ongoing military conflict between Ukraine and Russia and related sanctions, the armed conflict in Sudan, the conflict in the Middle East, the import ban on alfalfa seed in Saudi Arabia, uncertain market conditions, including higher inflation and supply chain disruptions, recent bank failures, and other global events, which have had and may continue to have an adverse impact on our business, operations and the markets and communities in which we, our partners and customers operate.

Following the invasion of Ukraine by Russia in early 2022, the U.S. and global financial markets experienced volatility, which has led to disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity globally. In response to the invasion, the United States, United Kingdom and European Union, along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future. The full economic and social impact of the sanctions imposed on Russia and possible future punitive measures that may be implemented, as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia and related sanctions, which could conceivably expand into the surrounding region, remains uncertain; however, both the conflict and related sanctions have resulted and could continue to result in disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity on acceptable terms, in both Europe and globally, and has introduced significant uncertainty into global markets.

The armed conflict in Sudan, which began in April 2023, has disrupted our shipments to the country. In Saudi Arabia, the Department of Ministry discontinued their approval of import permits for all forage seed, which includes alfalfa and all grasses, as a means of water conservation in May 2024, which is expected to last several years. To help mitigate any reduction in seed sales to Sudan and Saudi Arabia, we are actively exploring sales into adjacent markets in the region.

Additionally, in October 2023, Hamas initiated an attack against Israel, resulting in a state of war. The conflict, and the potential continued escalation or expansion of the conflict, could result in additional sanctions, cause disruptions to global economic conditions and affect the stability of the Middle East region and our business in that region. For example, we have experienced disruptions and significant delays in shipping through this region due to threats of piracy in the Red Sea area, in which Jeddah, Saudi Arabia (a main port of entry for Saudi Arabia) is located, and which is the primary access point for shipments through the Suez Canal.

Our product revenue is predicated on our ability to timely fulfill customer orders, which depends in large part upon the consistent availability and operation of shipping and distribution networks operated by third parties. Farmers typically have a limited window during which they can plant seed, and their buying decisions can be shaped by actual or perceived disruptions in our distribution and supply channels, or concerns about our ability to timely fulfill their orders. If our customers delay or decrease their orders due to potential disruptions in our distribution and supply channels, including as a result of adverse geopolitical and macroeconomic events, this will adversely affect our product revenue.

The ultimate impact of adverse geopolitical and macroeconomic events will have on our Condensed Consolidated Financial Statements remains uncertain and ultimately will be dictated by the length and severity of such events and any broad-based supply chain disruptions, labor shortages, rising levels of inflation and interest rates, tightening of credit markets or other developments resulting from recent geopolitical and macroeconomic events. We will continue to evaluate the nature and extent of those potential and evolving impacts to our business and Condensed Consolidated Financial Statements.

Components of Our Statements of Operations Data

Revenue

We derive most of our revenue from the sale of our proprietary seed varieties and hybrids. We expect that over the next several years, a substantial majority of our revenue will be generated from the sale of sorghum and alfalfa, although we are continually assessing other possible product offerings or means to increase revenue, including expanding into higher margin crops.

The mix of our product offerings will continue to change over time with the introduction of new seed varieties and hybrids resulting from our robust research and development efforts. Potential sources of new revenue include expansion of novel, non-GMO product lines, entry into gene-edited product markets, entry into specialty crop markets, such as biofuels, and additional strategic transactions.

Our revenue will fluctuate depending on the timing of orders from our customers and distributors and the extent to which markets are impacted by sources of instability and volatility in global markets and industries. In fiscal 2024, we were impacted, among other things, by the military conflict between Russia and Ukraine, the armed conflict in Sudan, the conflict in the Middle East, the import ban on alfalfa seed in Saudi Arabia, supply chain issues and global inflation. Because some of our large customers and distributors order in bulk only one or two times per year, our product revenue can fluctuate significantly from period to period. Some of this fluctuation is offset by having operations in both the northern and southern hemispheres. In addition, due to the numerous logistical challenges we have experienced in our shipping and distribution networks resulting from current geopolitical and macroeconomic events, our product revenue has fluctuated, and our ability to recognize revenues within a particular fiscal period has been impacted. We expect our product revenue will fluctuate from period to period as a result of current geopolitical and macroeconomic conditions.

Cost of Revenue (Excluding Depreciation and Amortization) and Gross Profit

Cost of revenue relates to sale of our seed products and consists of the cost of procuring seed, plant conditioning and packaging costs, direct labor and raw materials and overhead costs. Gross profit represents the profit remaining after deducting these costs from total revenue. As Double Team sorghum continues to gain market acceptance, we expect to see additional favorability in our gross profit.

Operating Expenses

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of employee costs, including salaries, employee benefits and share-based compensation, as well as professional service fees, insurance, marketing, travel and entertainment expense, public company expense and other overhead costs. We proactively take steps on an ongoing basis to control selling, general and administrative expenses as much as is reasonably possible.

Research and Development Expenses

Research and development expenses consist of costs incurred in the discovery, development, breeding and testing of new products incorporating the traits we have specifically selected. These expenses consist primarily of employee salaries and benefits, consultant services, land leased for field trials, chemicals and supplies and other external expenses.

Overall, we have been focused on controlling research and development expenses, while balancing that objective against the recognition that continued advancement in product development is an important part of our strategic planning. We intend to focus our resources on high value activities. For sorghum, we plan to invest in higher value grain products, proprietary herbicide tolerance traits and improved safety and palatability in forage products. We expect our research and development expenses will fluctuate from period to period as a result of the timing of various research and development projects.

Our internal research and development costs are expensed as incurred, while third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. The costs associated with equipment or facilities acquired or constructed for research and development activities that have alternative future uses are capitalized and depreciated on a straight-line basis over the estimated useful life of the asset.

Depreciation and Amortization

We amortize intangible assets, including Chromatin Inc. in 2018 and from SV Genetics Pty Ltd in 2016, using the straight-line method over the estimated useful life of the asset, consisting of periods of 10 to 30 years for technology/IP/germplasm, 5 to 20 years for customer relationships and trade names and 10 to 20 years for other intangible assets. Property, plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset, consisting of periods of 5 to 35 years for buildings, 3 to 20 years for machinery and equipment, 7 to 10 years for leasehold improvements and 2 to 5 years for vehicles.

Other (Income) Expense

Other (income) expense consists of foreign currency losses, interest expense, interest expense resulting from the amortization of debt discount, and other income. Interest expense and interest expense - amortization of debt discount primarily consists of interest costs related to outstanding borrowings on our working capital credit facilities. Amortization of the MFP Letter of Credit (as defined below) asset is also recorded to Interest expense - amortization of debt discount.

Provision (Benefit) for Income Taxes

Our effective tax rate is based on income, statutory tax rates, differences in the deductibility of certain expenses and inclusion of certain income items between financial statement and tax return purposes, and tax planning opportunities available to us in the various jurisdictions in which we operate. Under U.S. generally accepted accounting principles, or GAAP, if we determine that a tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. Tax regulations require certain items to be included in the tax return at different times than when those items are required to be recorded in the Condensed Consolidated Financial Statements. As a result, our effective tax rate reflected in our Condensed Consolidated Financial Statements is different from that reported in our tax returns. Some of these differences are permanent, such as meals and entertainment expenses that are not fully deductible on our tax return, and some are temporary differences, such as depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax return in future years for which we have already recorded the tax benefit in our Condensed Consolidated Statements of Operations. Based on financial projections, we do not believe that it is more likely than not that our U.S. deferred tax assets will be realized, and a full valuation allowance is recorded against them.

Equity in loss of equity method investee, net of tax

Equity in loss of equity method investee, net of tax, represents our proportionate share of loss from our 34% interest in Vision Bioenergy for the periods presented.

Results of Operations

Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

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


	Three Months Ended September 30,
	2024						2023						Change
	$			% of Revenue(1)			$			% of Revenue(1)			$			% Change
Revenue	$	8,309,476			100.0	%	$	10,757,347			100.0	%	$	(2,447,871	)		(22.8	)%
Cost of revenue (excluding depreciation and amortization shown separately below)		6,973,108			83.9	%		8,032,197			74.7	%		(1,059,089	)		(13.2	)%
Gross profit		1,336,368			16.1	%		2,725,150			25.3	%		(1,388,782	)		(51.0	)%
Operating expenses:
Selling, general and administrative expenses		4,002,211			48.2	%		4,153,561			38.6	%		(151,350	)		(3.6	)%
Research and development expenses		741,820			8.9	%		778,889			7.2	%		(37,069	)		(4.8	)%
Depreciation and amortization		814,453			9.8	%		806,835			7.5	%		7,618			0.9	%
Loss (gain) on disposal of property, plant and equipment		11,462			0.1	%		(22,091	)		(0.2	)%		33,553			(151.9	)%
Total operating expenses		5,569,946			67.0	%		5,717,194			53.1	%		(147,248	)		(2.6	)%
Loss from operations		(4,233,578	)		(50.9	)%		(2,992,044	)		(27.8	)%		(1,241,534	)		41.5	%
Other expense (income):
Foreign currency loss		7,926			0.1	%		570			0.0	%		7,356			1291.0	%
Interest expense - amortization of debt discount		361,138			4.3	%		356,567			3.3	%		4,571			1.3	%
Interest expense, net		761,879			9.2	%		948,728			8.8	%		(186,849	)		(19.7	)%
Other expenses (income)		22,686			0.3	%		(37,560	)		(0.3	)%		60,246			(160.4	)%
Net loss from continuing operations before income taxes		(5,387,207	)		(64.8	)%		(4,260,349	)		(39.6	)%		(1,126,858	)		26.4	%
Provision for (benefit from) income taxes		1,142			0.0	%		(12,292	)		(0.1	)%		13,434			(109.3	)%
Net loss from continuing operations before equity in net earnings of affiliates		(5,388,349	)		(64.8	)%		(4,248,057	)		(39.5	)%		(1,140,292	)		26.8	%
Equity in loss of equity method investee, net of tax		846,878			10.2	%		776,973			7.2	%		69,905			9.0	%
Net loss from continued operations	$	(6,235,227	)		(75.0	)%	$	(5,025,030	)		(46.7	)%	$	(1,210,197	)		24.1	%
Net loss from discontinued operations		(9,994,499	)		(120.3	)%		(931,887	)		(8.7	)%		(9,062,612	)		972.5	%
Net loss	$	(16,229,726	)		(195.3	)%	$	(5,956,917	)		(55.4	)%	$	(10,272,809	)		172.5	%

(1) Amount in column may not foot due to rounding

The discussion and analysis presented below is concerned with material changes in our results of operations between the three months ended September 30, 2024 and the three months ended September 30, 2023. All comparisons presented are with respect to the prior year period, unless stated otherwise. This discussion and analysis should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC on November 1, 2024. If activity is consistent year-over-year, explanations may not be given.

Revenue

The $2.4 million year-over-year decrease in revenue is due to a $1.5 million decrease in non-dormant alfalfa sales in the Middle East and North Africa region driven by the import ban on alfalfa in Saudi Arabia, a $0.8 million decrease in sorghum sales in Mexico related to tightening of credit policies and carryover seed from the prior year in the market, a $0.5 million decrease in Double Team sorghum revenue, a $0.4 million decrease in sorghum sales to South Africa due to limited inventory supply of compatible hybrids, and a $0.3 million decrease in conventional sorghum sales due to an extended sales season in the prior year. This decrease was offset by a $0.5 million increase in non-dormant alfalfa sales in the United States, a $0.3 million increase in non-dormant alfalfa sales in Mexico, and a $0.3 million increase in dormant alfalfa sales in the United States.

Cost of Revenue (Excluding Depreciation and Amortization) and Gross Profit

Cost of revenue decreased year-over-year and the gross profit percentage decreased to 16.1% from 25.3% compared to the prior year period. The profit decrease was driven by a 6.5 point decrease attributable to the International segment, with a 3.8 point decrease related to lower selling prices in the Middle East North Africa region due lower demand, and a 2.7 point decrease in margin related to South Africa sorghum sales due to the available supply of reduced quality and low cost seed in the prior year. The net gross profit for the Americas segment decreased primarily due to inventory write-offs.

Selling, General and Administrative Expenses

The $0.2 million decrease in selling, general and administrative expenses is attributable to a $0.2 million decrease in stock based compensation, a $0.2 million decrease in other operating expenses related primarily to no bad debt expense in the three months ended September 30, 2024, a $0.1 million decrease in office expenses related to lower software expenses, a $0.1 million decrease in compensation and benefits and other personnel expenses, and a $0.1 million decrease in audit fees related to higher fees for the fiscal 2023 financial statements seen in the prior year period. The cost savings were offset by a $0.2 million increase in restructuring charges

related to the Australian legal entity, a $0.2 million increase in legal fees, and a $0.1 million increase in board of director expenses in part due to their being an additional board member.

Interest Expense, Net

Interest expense for the three months ended September 30, 2024 and 2023 primarily consisted of interest incurred on our CIBC working capital facility, the AgAmerica loan, the MFP Loan, and equipment capital leases. The $0.2 million decrease was primarily due to the decreased outstanding loan amounts resulting in lower interest owed to lenders.

Provision for (Benefit from) Income Taxes

The income tax expense totaled $0.0 million for the three months ended September 30, 2024 and 2023. Our effective tax rate was 0.0% during the three months ended September 30, 2024 and 2023. Our effective tax rate for the three months ended September 30, 2024 was due primarily to the valuation allowance recorded against substantially all of our deferred tax assets. Due to the valuation allowance, we do not record the income tax expense or benefit related to substantially all of our current year operation results.

Net Loss from Discontinued Operations

The $9.1 million change in net loss from discontinued operations for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 is due to the $9.8 million loss on the deconsolidation of S&W Australia recognized on July 24, 2024, offset by a $0.7 million decrease attributable to S&W Australia operations, largely due to only capturing activity from July 1, 2024 through July 24, 2024 for the three months ended September 30, 2024. Refer to Note 3 - Discontinued Operations in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

Results of Business Segments

Prior to the voluntary administration of S&W Australia, we had three operating and reportable segments that corresponded with our operating model, management structure, and internal reporting reviewed by our Chief Operating Decision Maker, who is our President and Chief Executive Officer. Effective with the loss of control of S&W Australia on July 24, 2024, this was reduced to two operating and reportable segments. Our Chief Operating Decision Maker currently allocates resources and assesses performance based on these two segments, with a key performance metric utilized being gross profit. Our two operating segments, each its own reportable segment, are Americas and International. Note, as a result of the voluntary administration of S&W Australia, our Chief Operating Decision Maker no longer allocates resources and assesses performance for the AUSDOM segment and for the International segment related to S&W Australia.

Americas: Consists of operations in the United States that results in sales across North and South America. Total revenue for the Americas segment represented 50% and 45% of our total consolidated revenue for the three months ended September 30, 2024 and 2023, respectively, and was largely made up of alfalfa and sorghum sales. Americas revenue decreased by $0.7 million due to reduced sorghum sales in Mexico, decreased Double Team sorghum sales in the United States and decreased conventional sorghum sales, offset by increased alfalfa sales in the United States and Mexico.

International: Consists of operations in the United States that results in sales to countries outside of North and South America. Revenue in the International segment is largely alfalfa products in addition to some sorghum and sunflower products. A large concentration of these sales went to the Middle East and North Africa region. Total revenue for the International segment represented 49% and 55% of the our total revenue for the three months ended September 30, 2024 and 2023, respectively, and was largely alfalfa product sales in addition to some sorghum and sunflower product sales. Total revenue decreased by $1.8 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due to fewer sales to the Middle East North Africa region due to the import ban in Saudi Arabia, amongst other reasons.

As presented in the table below, Other consists of intercompany activity with S&W Australia. This has historically been eliminated; however, as we are not consolidating this subsidiary, the activity is no longer eliminated.

Our total revenue broken out by reportable segment for the three months ended September 30, 2024 and 2023 was as follows:


	Three Months Ended September 30,
	2024				2023
Americas	$	4,132,935	50	%	$	4,854,052	45	%
International		4,089,006	49	%		5,903,295	55	%
Other		87,535	1	%		—	0	%
Total revenue	$	8,309,476	100	%	$	10,757,347	100	%

Our total revenue, gross profit and gross profit percentage broken out by reportable segment for the three months ended September 30, 2024 and 2023 were as follows:


For the three months ended September 30, 2024
Segment	Revenue		Gross Profit (Excluding Depreciation and Amortization)			Gross Profit %
Americas	$	4,132,935	$	728,263			17.6	%
International		4,089,006		797,183			19.5	%
Other		87,535		(189,078	)		-216.0	%
Total	$	8,309,476	$	1,336,368			16.1	%

For the three months ended September 30, 2023
Segment	Revenue		Gross Profit (Excluding Depreciation and Amortization)			Gross Profit %
Americas	$	4,854,052	$	952,325			19.6	%
International		5,903,295		1,773,768			30.0	%
Other		—		(943	)		—
Total	$	10,757,347	$	2,725,150			25.3	%

Gross profit and the gross profit percentage in each segment were down for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. For both segments, the reduction in gross profit is attributable to reduced sales in each segment for the three months ended September 30, 2024. For the International segment, the gross profit percentage is down for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to the import ban in Saudi Arabia reducing demand and resulted in lower selling prices.

Liquidity and Capital Resources

Our working capital and working capital requirements fluctuate from quarter to quarter depending on the phase of the growing and sales cycle that falls during a particular quarter. Our need for cash has historically been highest in the second and third fiscal quarters (October through March) because we pay our North American contracted growers progressively, starting in the second fiscal quarter. In fiscal 2024, we paid our North American growers approximately 50% of amounts due in the fall of 2023 and the balance was paid in the spring of 2024. This payment cycle to our growers was similar in fiscal 2023 and we expect it to be similar for fiscal 2025.

Historically, due to the concentration of sales to certain distributors, our month-to-month and quarter-to-quarter sales and associated cash receipts are highly dependent upon the timing of deliveries to and payments from these distributors, which varies significantly from year-to-year.

We continuously monitor and evaluate our credit policies with all our customers based on historical collection experience, current economic and market conditions and a review of the current status of the respective trade accounts receivable balance. Our principal working capital components include cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and our working capital lines of credit.

In addition to funding our business with cash from operations, we have historically relied upon occasional sales of our debt and equity securities and credit facilities from financial institutions.

S&W Australia, our Australia-based wholly owned subsidiary, adopted a voluntary plan of administration on July 24, 2024 based on its determination that S&W Australia is likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001. In Australia, voluntary administration is a process whereby an insolvent company is placed in the hands of one or more independent administrators whose role is to investigate the company’s affairs, to report to creditors and to recommend to creditors whether the company should enter into a deed of company arrangement, liquidation, or be returned to its board of directors. A voluntary administration involves an investigation of available options to provide a better return to creditors and, if possible, to save the business. As a result of the voluntary administration process, as of July 24, 2024 we no longer control S&W Australia for accounting purposes, and on October 11, 2024, creditors of S&W Australia approved a proposed Deed of Company Arrangement, pursuant to which, among other things, the outstanding shares of S&W Australia would be transferred to a third party. Our expectation was that S&W Australia would no longer be our subsidiary, or owned or controlled by us in any manner, at the conclusion of the voluntary administration process and therefore all of the related business conducted through S&W Australia would cease to be included within the scope of our business. Since we no longer control S&W Australia for accounting purposes, S&W Australia was deconsolidated from our financial statements prospectively as of July 24, 2024. We will not regain control of S&W Australia at the conclusion of the voluntary administration process, as detailed further in Note 15 - Subsequent Events in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

Capital Resources and Material Cash Requirements

We are not profitable and have had negative cash flow from operations for the last several years, excluding the fiscal 2023 gain recognized in relation to the Vision Bioenergy partnership. To help fund our operations, we have relied on debt and equity financings, and we will need to obtain additional funding to finance our operations in the future. Accordingly, we are actively evaluating financing and strategic alternatives, including debt and equity financings and potential sales of assets or certain lines of business.

We expect to meet our future cash requirements and obligations through a combination of existing cash and cash equivalents, cash flows from operations, and through debt financing, among other sources of capital. Our ability to fund our operating needs will depend on our ability to generate sufficient cash flows through sales of our products, our ability to find other sufficient financing options if we are unable to renew our existing debt facilities, the impacts of adverse geopolitical and macroeconomic events, and other factors, including those discussed under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC on November 1, 2024.

Below is a summary of material changes to our sources of capital during fiscal 2025 to date:

CIBC Loan Agreement

•

subject to the satisfaction of certain post-closing covenants, extended the maturity date from August 31, 2024 to October 31, 2024, or the Maturity Date;

•

added certain post-closing covenants which, should the Company not comply with the amended terms, shall constitute an immediate event of default under the Amended CIBC Loan Agreement;

•

added a fee of $15,000 payable by the Company to CIBC on the date of the Third Amendment;

•

added a fee of $10,000 payable by the Company to CIBC monthly beginning July 1, 2024, and payable only if the eligible inventory sublimit is greater than $5.0 million; and

•

extended the maturity date from October 31, 2024 to November 30, 2024, and, contingent upon the Company's delivery to CIBC of an amended letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, and for the benefit of CIBC, that expires on December 31, 2024 or after, which was delivered on November 8, 2024; and

•

provided for a fee of $25,000 payable by the Company to CIBC on the date of the Fourth Amendment.

Except as modified by the Third Amendment and Fourth Amendment, all terms and conditions of the Amended CIBC Loan Agreement remain in full force and effect.

All amounts outstanding under the Amended CIBC Loan Agreement, including, but not limited to, accrued and unpaid principal and interest due under the CIBC Credit Facility, will be due and payable in full on November 30, 2024 (as we delivered to CIBC by November 8, 2024 an amended letter of credit issued by JPMorgan Chase Bank, N.A. for the account of MFP, extending the letter of credit to December 31, 2024). As of September 16, 2024, and since then, the revolving loan outstanding under the Amended CIBC Loan Agreement (as amended by the Third Amendment) has exceeded the total revolving loan commitment thereunder, which constitutes an event of default under the Amended CIBC Loan Agreement. On September 18, 2024, we received a reservation of rights letter from CIBC asserting the existence of such event of default, increasing the interest rate applicable to the loans by 2% per annum (which is the default rate under the Amended CIBC Loan Agreement), and reserving CIBC’s right to immediately exercise any of CIBC’s other rights or

remedies under the Amended CIBC Loan Agreement as it deems appropriate. As of the date of this filing, CIBC has not accelerated the indebtedness under the Amended CIBC Loan Agreement.

MFP Loan Agreement

On July 16, 2024, we entered into a Fourth Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Amendment, amending the MFP Loan Agreement with MFP, to (i) extend the maturity date of the letter of credit to November 30, 2024 and (ii) extend the maturity date of the MFP Loan Agreement to May 31, 2025. Except as modified by the MFP Amendment, all terms and conditions of the MFP Loan Agreement remain in full force and effect.

On October 31, 2024, we entered into a Fifth Amendment to Subordinate Loan and Security Agreement with MFP, or the MFP Fifth Amendment, further amending the MFP Loan Agreement with MFP, to extend the maturity date of the letter of credit to December 31, 2024. Except as modified by the MFP Fifth Amendment, all terms and conditions of the MFP Loan Agreement remain in full force and effect.

AgAmerica Note

No amendments have occurred to the AgAmerica Agreement for the three months ended September 30, 2024 or subsequent to period end. Due to the delayed filing of the Annual Report on Form 10-K for the year ended June 30, 2024, we were not in compliance with the reporting requirements per the AgAmerica Loan Agreement; however, a waiver was received from AgAmerica for such non-compliance, executed on November 1, 2024.

Summary

The Amended CIBC Loan Agreement contains various operating and financial covenants. Adverse geopolitical and macroeconomic events and uncertain market conditions have increased the risk of our inability to comply with these covenants, which could result in acceleration of our repayment obligations and foreclosure on our pledged assets. In addition, our loan agreements, including S&W Australia's NAB Finance Agreement, contains cross-default provisions, such that certain defaults or breaches under any of our loan agreements may entitle lenders to invoke default remedies.

S&W Australia’s entry into voluntary administration on July 24, 2024 constituted an event of default and automatic acceleration of S&W Australia’s obligations under the NAB Finance Agreement. However, such acceleration is stayed while S&W Australia is under voluntary administration. The NAB Finance Agreement was guaranteed by us, up to a maximum of AUD $15.0 million (USD $10.4 million as of September 30, 2024), or the Parent Guarantee. Our obligations under the Parent Guarantee were not subject to a stay in connection with S&W Australia’s voluntary administration. On November 22, 2024, NAB released the Company from all liability under the Parent Guarantee, as detailed further in Note 15 - Subsequent Events in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q. S&W Australia’s entry into voluntary administration also constituted an event of default under our Amended CIBC Loan Agreement, as a result of a cross-default provision in the Amended CIBC Loan Agreement that is triggered by the event of default under the NAB Finance Agreement. On August 5, 2024, we received a waiver for the event of default from CIBC, which contained certain stipulations.

Our future liquidity and capital requirements will be influenced by numerous factors, including:

•

the maturity and repayment of our debt;

•

the extent and sustainability of future operating income;

•

the level and timing of future sales and expenditures;

•

timing for when we are able to recognize revenue;

•

working capital required to support our growth;

•

our ability to timely pay our growers;

•

investment capital for plant and equipment;

•

investment in our sales and marketing programs;

•

investment capital for potential acquisitions;

•

our ability to renew and/or refinance our debt on acceptable terms;

•

our ability to raise equity financing, in order to secure refinancing as well as support our operations, among other things;

•

competition;

•

market developments; and

•

developments related to adverse geopolitical and macroeconomic events, including bank failures, inflation and supply chain disruptions.

We cannot assure you that we will be successful in renewing or refinancing our existing debt, raising additional capital, securing future waivers and/or amendments from CIBC or our other lenders, or securing new financing. If we are unsuccessful in doing so, we may need to reduce the scope of our operations, repay amounts owing to our lenders, finance our cash needs through a combination of equity and debt financings, enter into collaborations, strategic alliances and licensing arrangements, sell certain assets or divest certain operations.

If we are required or desire to raise additional capital in the future, whether as a condition to loan refinancing or separately, such additional financing may not be available on favorable terms, or available at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest would be diluted and the terms of these securities could include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, may be secured by all or a portion of our assets, and may be on terms less favorable than our existing loans. If we fail to obtain additional capital as and when required, such failure could have a material impact on our business, results of operations and financial condition.

As a result of the ongoing military conflict between Russia and Ukraine, the armed conflict in Sudan, the conflict in the Middle East, the import ban on alfalfa seed in Saudi Arabia, and other geopolitical and macroeconomic factors beyond our control, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. On March 10, 2023, the Federal Deposit Insurance Corporation took control and was appointed receiver of Silicon Valley Bank. While we did not have deposits at Silicon Valley Bank, if other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition. It is possible that further deterioration in credit and financial markets and confidence in economic conditions will occur. If equity and credit markets deteriorate, it may affect our ability to raise equity capital, borrow on our existing facilities, access our existing cash, or make any additional necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. In addition, our ability to comply with the terms of our loan agreements can be compromised and could result in an event of default. If an event of default were to occur, our lenders could accelerate our repayment obligations or enforce their other rights under our agreements with them. Any such default may also require us to seek additional or alternative financing, which may not be available on commercially reasonable terms or at all.

Summary of Cash Flows

The following table shows a summary of our cash flows for the three months ended September 30, 2024 and 2023 from our continuing operations:


	Three Months Ended September 30,
	2024			2023
Cash flows from operating activities	$	784,662		$	2,062,514
Cash flows from investing activities		(112,341	)		(41,689	)
Cash flows from financing activities		(478,587	)		(4,509,423	)
Effect of exchange rate changes on cash		117			3,768
Net increase (decrease) in cash and cash equivalents		193,851			(2,484,830	)
Cash and cash equivalents, beginning of period		286,508			3,389,699
Cash and cash equivalents, end of period	$	480,359		$	904,869

Operating Activities

For the three months ended September 30, 2024, operating activities provided $0.8 million in cash. Of this, the net loss excluding non-cash items as detailed on the statement of cash flows used $3.8 million in cash and changes in operating assets and liabilities as detailed on the statement of cash flows provided $4.6 million in cash. The increase in cash from changes in operating assets and liabilities was primarily driven by a $6.1 million increase in accounts payable, a $2.1 million increase in accrued expenses and other current liabilities, a $1.2 million increase in deferred revenue from prepayments for our fiscal 2025 United States domestic business, a $0.8 million decrease in prepaid expenses and other current assets, and a $0.5 million increase in payables from unconsolidated subsidiary due to the deconsolidation of S&W Australia, offset by a $4.2 million increase in inventory and a $1.9 million increase in accounts receivable.

For the three months ended September 30, 2023, operating activities provided $2.1 million in cash. Of this, the net loss excluding non-cash items as detailed on the statement of cash flows used $2.3 million in cash and changes in operating assets and liabilities as detailed on the statement of cash flows provided $4.3 million in cash. The increase in cash from changes in operating assets and liabilities was primarily driven by a $5.2 million increase in accounts payable and a $1.7 million increase in accrued expenses and other current liabilities offset by a $1.6 million increase in accounts receivable, a $0.5 million increase in prepaid expenses and other current assets, and a $0.5 million increase in inventories.

Investing Activities

Investing activities during the three months ended September 30, 2024 used $0.1 million in cash, which resulted from $0.1 million in additions to property, plant and equipment for our United States facilities.

Investing activities during the three months ended September 30, 2023 used $0.0 million in cash, which resulted from $0.1 million in additions to property, plant and equipment for our United States and Australian facilities offset by $0.1 million in proceeds from the disposal of property, plant and equipment from our United States and Australian facilities.

Financing Activities

Financing activities during the three months ended September 30, 2024, used $0.5 million in cash, consisting of $0.3 million in net borrowings and repayments on the working capital lines of credit, $0.1 million in debt issuance costs and $0.1 million in repayments of long term debt.

Financing activities during the three months ended September 30, 2023, used $4.5 million in cash, consisting of $4.3 million in net borrowings and repayments on the working capital lines of credit and $0.2 million in net proceeds from sale of common stock.

Inflation Risk

Inflationary pressures on labor and commodity price increases directly impacted our condensed consolidated results of operations during the three months ended September 30, 2024 and we expect this to continue throughout the remainder of fiscal year 2025. We attempt to manage any inflationary costs through selective price increases and changes in product mix, but rapidly changing inflationary pressures from global commodity prices and logistics could impact our costs of goods before pricing adjustments can be implemented. Delays in implementing such price increases, competitive pressures, and other factors may limit our ability to recover such cost increases in the future. Inherent volatility experienced in certain commodity markets could have a significant effect on our results of operations and may have an adverse effect on us in the future. The extent of any impact will depend on our ability to manage such volatility through the product mix that we sell and selective price increases.

Critical Accounting Estimates

In preparing our financial statements, we must select and apply various accounting policies in accordance with GAAP. Our most significant policies are discussed in Note 2 - Summary of Significant Accounting Policies, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q. In order to apply our accounting policies, we often need to make estimates, judgments and assumptions that we believe are reasonable, based upon the information available to us. In making such estimates, we rely on historical experience, market and other conditions, and on assumptions that we believe to be reasonable. However, the estimation process is by its nature uncertain given that estimates depend on events over which we may not have control. If market and other conditions change from those that we anticipate, our results of operations, financial condition and changes in financial condition may be materially affected. In addition, if our assumptions change, we may need to revise our estimates, or to take other corrective actions, either of which may also have a material effect on our results of operations, financial condition or changes in financial condition. Members of our senior management have discussed the development and selection of our critical accounting estimates, and our disclosure regarding them, with the audit committee of our Board, and do so on a regular basis.

Other than the bank guarantee below, there have been no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the SEC on November 1, 2024.

Bank Guarantee

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company and, therefore, we are not required to provide information typically disclosed under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a‑15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, and as a result of the material weaknesses described below, our Principal Executive Officer and Principal Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures were not effective at a reasonable assurance level.

Notwithstanding such material weaknesses in internal control over financial reporting, our Principal Executive Officer and Principal Financial and Accounting Officer have concluded that our Condensed Consolidated Financial Statements included in this report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles, or GAAP.

Material Weaknesses in Internal Control Over Financial Reporting

During the year ended June 30, 2024, in connection with the preparation of our annual financial statements as of and for the year ended June 30, 2024, we identified a material weakness in our internal control over financial reporting. The material weakness in internal control over financial reporting related to having inadequate controls to appropriately analyze all relevant information required for complete and accurate presentation and disclosure under GAAP, or the First Material Weakness.

During the current period, the Company identified an additional material weakness. The Company lacked an effectively designed system of internal control to ensure appropriate recognition and measurement of non-routine transactions under GAAP, or the Second Material Weakness.

Status of Remediation of Material Weakness

To remediate the First Material Weakness, during the three months ended September 30, 2024, we undertook efforts to improve our controls over financial reporting with respect to the analysis of all relevant information required for complete and accurate presentation and disclosure under GAAP. Management is updating its internal control procedures to include, among other things, quarterly monitoring of any changes within the Company and its impact on financial reporting. While we believe that these efforts will improve our internal control over financial reporting, the implementation of our remediation is ongoing and we will not consider the material weakness remediated until our controls are operational for a sufficient period of time and tested, enabling management to conclude that the controls are operating effectively. Therefore, the First Material Weakness has not been remediated as of September 30, 2024.

As it pertains to the Second Material Weakness, management is implementing certain changes in our internal controls as of the filing of this report to address the material weakness to include, among other things, quarterly monitoring of non-routine transactions, including detailed reviews with all applicable parties, and its impact on our financial reporting to ensure appropriate recognition and measurement under GAAP to address the material weakness. However, no assurance can be given that these changes will remediate the material weakness until such time that the controls have operated for a sufficient period of time and their operating effectiveness has been tested.

While the foregoing measures are intended to effectively remediate the material weaknesses described in this Item 4, it is possible that additional remediation steps will be necessary. As such, as we continue to evaluate and implement our plan to remediate the material weaknesses, our management may decide to take additional measures to address the material weaknesses or modify the remediation steps described above. Until the material weaknesses are remediated, we plan to continue to perform additional analyses and other procedures to help ensure that our Condensed Consolidated Financial Statements are prepared in accordance with GAAP.

Changes in Internal Control over Financial Reporting

Except for the remediation measures described above, there have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the period of our evaluation that have significantly affected, or are reasonably likely to significantly affect, our internal control over financial reporting.

Part II

OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are involved in lawsuits, claims, investigations and proceedings, including pending opposition proceedings involving patents that arise in the ordinary course of business.

On July 24, 2024, S&W Australia adopted a voluntary plan of administration based on its determination that S&W Australia is likely to become “insolvent” within the meaning of section 436A(1) of Australia’s Corporations Act 2001. In Australia, voluntary administration is a process whereby an insolvent company is placed in the hands of one or more independent administrators whose role is to investigate the company’s affairs, to report to creditors and to recommend to creditors whether the company should enter into a deed of company arrangement, liquidation, or be returned to its board of directors. Voluntary administration involves an investigation of available options to provide a better return to creditors and, if possible, to save the business.

There are no other matters pending that we expect to have a material adverse impact on our business, results of operations, financial condition or cash flows.

Item 1A. Risk Factors.

We are a smaller reporting company, and, as such, we are not required to provide the information under this Item of Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On November 21, 2024, we received a notice from the Listing Qualifications Staff of The Nasdaq Stock Market, or Nasdaq, advising us that our failure to timely file our Quarterly Report on Form 10-Q for the three months ended September 30, 2024, or the Form 10-Q, with the Securities and Exchange Commission, or the SEC, is in contravention of Nasdaq Listing Rule 5250(c)(1), or the Filing Requirement, and could serve as a basis for the delisting of our securities from Nasdaq. We have 60 days from the date of the notice to submit a plan to regain compliance with the Filing Requirement for consideration by Nasdaq. We believe that the filing of this Form 10-Q allows us to regain compliance with the Filing Requirement.

Item 6. Exhibits.


Exhibit No.		Description

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

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

3.3(3)		Registrant's Third Amended and Restated Bylaws.

4.1		Reference is made to Exhibits 3.1, 3.2 and 3.3.

4.2(4)		Form of Common Stock Certificate.

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

4.4(6)		Common Stock Purchase Warrant issued to MFP Partners, L.P. on September 22, 2022.

4.5(7)		Common Stock Purchase Warrant issued to MFP Partners, L.P. on October 28, 2022.

4.6(8)		Common Stock Purchase Warrant issued to MFP Partners, L.P. on December 22, 2022.

4.7(9)		Common Stock Purchase Warrant issued to MFP Partners, L.P. on March 22, 2023.

10.1(10)		Third Amendment to Amended and Restated Loan and Security Agreement, dated July 3, 2024, by and among S&W Seed Company and CIBC Bank USA.

10.2(11)		Fourth Amendment to Loan and Security Agreement, dated July 16, 2024, by and among S&W Seed Company and MFP Partners, L.P.

10.3(12)		Waiver, dated July 31, 2024, by and among S&W Seed Company and CIBC Bank USA.

10.4(13)		Waiver, dated November 1, 2024, by and among S&W Seed Company and AgAmerica.

10.5(14)		Fourth Amendment to Amended and Restated Loan and Security Agreement, dated October 31, 2024, by and among S&W Seed Company and CIBC Bank USA.

10.6(15)		Fifth Amendment to Loan and Security Agreement, dated October 31, 2024, by and among S&W Seed Company and MFP Partners, L.P.

31.1		Certification of Chief Executive Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

(1)

Incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q, filed on February 11, 2021 (File No. 001-34719).

(2)

Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on February 23, 2022 (File No. 001-34719).

(3)

Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on June 26, 2023 (File No. 001-34719).

(4)

Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-3, filed on August 4, 2017 (File No. 333-219726).

(5)

Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on February 23, 2022 (File No. 001-34719).

(6)

Incorporated by reference to Exhibit 4.4 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 14, 2022 (File No. 001-34719).

(7)

Incorporated by reference to Exhibit 4.5 to the Registrant’s Quarterly Report on Form 10-Q, filed on February 13, 2023 (File No. 001-34719).

(8)

Incorporated by reference to Exhibit 4.6 to the Registrant’s Quarterly Report on Form 10-Q, filed on February 13, 2023 (File No. 001-34719).

(9)

Incorporated by reference to Exhibit 4.7 to the Registrant's Quarterly Report on Form 10-Q, filed on May 11, 2023 (File No. 001-34719).

(10)

Incorporated by reference to Exhibit 10.47 to the Registrant's Annual Report on Form 10-K, filed on November 1, 2024 (File No. 001-34719).

(11)

Incorporated by reference to Exhibit 10.48 to the Registrant's Annual Report on Form 10-K, filed on November 1, 2024 (File No. 001-34719).

(12)

Incorporated by reference to Exhibit 10.49 to the Registrant's Annual Report on Form 10-K, filed on November 1, 2024 (File No. 001-34719).

(13)

Incorporated by reference to Exhibit 10.50 to the Registrant's Annual Report on Form 10-K, filed on November 1, 2024 (File No. 001-34719).

(14)

Incorporated by reference to Exhibit 10.51 to the Registrant's Annual Report on Form 10-K, filed on November 1, 2024 (File No. 001-34719).

(15)

Incorporated by reference to Exhibit 10.52 to the Registrant's Annual Report on Form 10-K, filed on November 1, 2024 (File No. 001-34719).

* This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

SIGNATURES

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


	S&W SEED COMPANY

Date: November 26, 2024	By:	/s/Vanessa Baughman
		Vanessa Baughman
		Chief Financial Officer (On behalf of the registrant in her capacity as Principal Financial and Accounting Officer)