Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Sep. 15, 2016 | Dec. 31, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | S&W Seed Co | ||
Entity Central Index Key | 1,477,246 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 47,353,679 | ||
Entity Common Stock, Shares Outstanding | 17,168,952 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 6,904,500 | $ 3,535,458 |
Accounts receivable, net | 27,619,599 | 26,728,741 |
Inventories, net | 21,846,130 | 25,521,747 |
Prepaid expenses and other current assets | 1,218,280 | 797,199 |
Deferred tax asset | 0 | 286,508 |
TOTAL CURRENT ASSETS | 57,588,509 | 56,869,653 |
Property, plant and equipment, net | 13,121,699 | 11,476,936 |
Intangibles, net | 36,485,209 | 38,004,916 |
Goodwill | 10,292,265 | 9,630,279 |
Deferred tax asset | 7,279,923 | 4,060,156 |
Other assets | 2,237,380 | 2,301,127 |
TOTAL ASSETS | 127,004,985 | 122,343,067 |
CURRENT LIABILITIES | ||
Accounts payable | 14,303,877 | 13,722,900 |
Accounts payable - related parties | 396,027 | 1,128,630 |
Deferred revenue | 509,857 | 525,530 |
Accrued expenses and other current liabilities | 2,385,160 | 1,802,819 |
Foreign exchange contract liabilities | 59,116 | |
Lines of credit | 16,687,473 | 13,755,800 |
Current portion of long-term debt | 275,094 | 2,223,465 |
Current portion of convertible debt, net | 6,840,608 | 9,265,929 |
TOTAL CURRENT LIABILITIES | 41,398,096 | 42,484,189 |
Contingent consideration obligation | 2,268,416 | 2,078,000 |
Long-term debt, less current portion | 11,114,333 | 10,682,072 |
Convertible debt, net, less current portion | 0 | 8,777,041 |
Derivative warrant liabilities | 4,354,100 | 6,258,000 |
Other non-current liabilities | 108,596 | 188,160 |
TOTAL LIABILITIES | 59,243,541 | 70,467,462 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value; 50,000,000 shares authorized; 17,086,111 issued and 17,061,111 outstanding at June 30, 2016; 13,479,101 issued and 13,454,101 outstanding at June 30, 2015 | 17,086 | 13,479 |
Treasury stock, at cost, 25,000 shares at June 30, 2016 and June 30, 2015 | (134,196) | (134,196) |
Additional paid-in capital | 78,282,461 | 62,072,379 |
Accumulated deficit | (4,614,244) | (4,979,471) |
Accumulated other comprehensive loss | (5,789,663) | (5,096,586) |
TOTAL STOCKHOLDERS' EQUITY | 67,761,444 | 51,875,605 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 127,004,985 | $ 122,343,067 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Jun. 30, 2015 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 17,086,111 | 13,479,101 |
Common stock, shares outstanding | 17,061,111 | 13,454,101 |
Treasury stock, shares | 25,000 | 25,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||
Revenue | $ 96,044,254 | $ 81,208,903 |
Cost of revenue | 77,653,646 | 64,607,502 |
Gross profit | 18,390,608 | 16,601,401 |
Operating expenses | ||
Selling, general and administrative expenses | 10,397,863 | 9,620,807 |
Research and development expenses | 2,764,358 | 1,890,234 |
Depreciation and amortization | 3,185,126 | 2,179,638 |
Impairment charges | 0 | 500,198 |
Disposal of property, plant and equipment (gain) loss | (153) | 24,646 |
Total operating expenses | 16,347,194 | 14,215,523 |
Income from operations | 2,043,414 | 2,385,878 |
Other expense | ||
Foreign currency (gain) loss | (226,529) | 159,763 |
Change in derivative warrant liabilities | (1,903,900) | 1,396,000 |
Change in contingent consideration obligation | 55,092 | 74,000 |
Loss on equity method investment | 294,197 | 0 |
Gain on sale of marketable securities | (123,038) | 0 |
Interest expense - amortization of debt discount | 3,899,739 | 2,934,164 |
Interest expense - convertible debt and other | 2,086,005 | 1,831,057 |
Loss before income taxes | (2,038,152) | (4,009,106) |
Benefit from income taxes | (2,403,379) | (845,979) |
Net income (loss) | $ 365,227 | $ (3,163,127) |
Net income (loss) per common share: | ||
Basic | $ 0.02 | $ (0.25) |
Diluted | $ 0.02 | $ (0.25) |
Weighted average number of common shares outstanding: | ||
Basic | 14,936,311 | 12,785,450 |
Diluted | 14,936,311 | 12,785,450 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Consolidated Statements Of Comprehensive Loss | ||
Netincome (loss) | $ 365,227 | $ (3,163,127) |
Foreign currency transaction adjustment, net of income taxes | (693,077) | (3,427,819) |
Comprehensive loss | $ (327,850) | $ (6,590,946) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning balance, shares at Jun. 30, 2014 | 11,665,093 | (25,000) | ||||
Beginning balance, amount at Jun. 30, 2014 | $ 11,666 | $ (134,196) | $ 55,121,876 | $ (1,816,344) | $ (1,668,767) | $ 51,514,235 |
Stock-based compensation - options, restricted stock and RSU's | $ 0 | 0 | 896,882 | 0 | 0 | 896,882 |
Common stock issued for exercise of options, shares | 291,559 | |||||
Common stock issued for exercise of options, amount | $ 291 | 0 | 1,079,708 | 0 | 0 | 1,079,999 |
Net issuance to settle RSU's, shares | 36,454 | |||||
Net issuance to settle RSU's, amount | $ 36 | 0 | (79,878) | 0 | 0 | (79,842) |
Proceeds from sale of common stock, net of fees and expenses, shares | 1,294,000 | |||||
Proceeds from sale of common stock, net of fees and expenses, amount | $ 1,294 | 0 | 4,160,643 | 0 | 0 | 4,161,937 |
Common stock issued for additional minority interest investment in Bioceres, shares | 200,000 | |||||
Common stock issued for additional minority interest investment in Bioceres, amount | $ 200 | 0 | 927,800 | 0 | 0 | 928,000 |
Cancellation of restricted shares for withholding taxes, shares | (8,005) | |||||
Cancellation of restricted shares for withholding taxes, amount | $ (8) | 0 | (34,652) | 0 | 0 | (34,660) |
Other comprehensive income (loss) | 0 | 0 | 0 | 0 | (3,427,819) | (3,427,819) |
Net income (loss) | $ 0 | $ 0 | 0 | (3,163,127) | 0 | (3,163,127) |
Ending balance, shares at Jun. 30, 2015 | 13,479,101 | (25,000) | ||||
Ending balance, amount at Jun. 30, 2015 | $ 13,479 | $ (134,196) | 62,072,379 | (4,979,471) | (5,096,586) | 51,875,605 |
Stock-based compensation - options, restricted stock and RSU's | $ 0 | 0 | 1,190,126 | 0 | 0 | 1,190,126 |
Common stock issued for exercise of options, shares | 14,585 | |||||
Common stock issued for exercise of options, amount | $ 15 | 0 | 57,595 | 0 | 0 | 57,610 |
Net issuance to settle RSU's, shares | 60,933 | |||||
Net issuance to settle RSU's, amount | $ 61 | 0 | (109,258) | 0 | 0 | (109,197) |
Proceeds from sale of common stock, net of fees and expenses, shares | 3,306,404 | |||||
Proceeds from sale of common stock, net of fees and expenses, amount | $ 3,306 | 0 | 13,249,982 | 0 | 0 | 13,253,288 |
Common stock issued in acquisition, shares | 225,088 | |||||
Common stock issued in acquisition, amount | $ 225 | 0 | 949,775 | 0 | 0 | 950,000 |
Beneficial conversion feature | 0 | 0 | 871,862 | 0 | 0 | 871,862 |
Other comprehensive income (loss) | 0 | 0 | 0 | 0 | (693,077) | (693,077) |
Net income (loss) | $ 0 | $ 0 | 0 | 365,227 | 0 | 365,227 |
Ending balance, shares at Jun. 30, 2016 | 17,086,111 | (25,000) | ||||
Ending balance, amount at Jun. 30, 2016 | $ 17,086 | $ (134,196) | $ 78,282,461 | $ (4,614,244) | $ (5,789,663) | $ 67,761,444 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net (loss) income | $ 365,227 | $ (3,163,127) |
Adjustments to reconcile net (loss) income from operating activities to net cash provided by (used in) operating activities | ||
Stock-based compensation | 1,190,126 | 896,882 |
Change in allowance for doubtful accounts | 16,700 | 83,039 |
Impairment charges | 0 | 500,198 |
Depreciation and amortization | 3,185,126 | 2,179,638 |
Loss (gain) on disposal of property, plant and equipment | (153) | 24,646 |
Change in deferred tax asset | (2,721,746) | (1,402,397) |
Change in foreign exchange contracts | (56,264) | 64,593 |
Change in derivative warrant liabilities | (1,903,900) | 1,396,000 |
Change in contingent consideration obligation | 55,092 | 74,000 |
Amortization of debt discount | 3,899,739 | 2,934,164 |
Intercompany foreign exchange gain | (332,477) | 0 |
Gain on sale of marketable securities | (123,038) | 0 |
Loss on equity method investment | 294,197 | 0 |
Changes in: | ||
Accounts receivable | (1,007,637) | (4,391,780) |
Inventories | 3,561,808 | 21,308,005 |
Prepaid expenses and other current assets | (201,236) | (318,479) |
Other non-current assets | (101,368) | 341,985 |
Accounts payable | 767,328 | (11,158,693) |
Accounts payable - related parties | (718,432) | 143,781 |
Deferred revenue | (15,933) | 242,250 |
Accrued expenses and other current liabilities | 588,169 | 1,349,332 |
Other non-current liabilities | (26,346) | 8,313 |
Net cash provided by operating activities | 6,714,982 | 11,112,350 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Additions to property, plant and equipment | (2,612,794) | (1,595,813) |
Proceeds from disposal of property, plant and equipment | 53,150 | 7,100,000 |
Acquisition of business | (1,000,000) | (36,688,881) |
Investment in Bioceres | 0 | (4,982) |
Purchase of marketable securities | (316,000) | 0 |
Sale of marketable securities | 439,038 | 0 |
Equity method investment | (439,038) | 0 |
Net cash used in investing activities | (3,875,644) | (31,189,676) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net proceeds from sale of common stock | 13,253,288 | 4,161,937 |
Proceeds from exercise of common stock options | 57,610 | 1,079,999 |
Taxes paid related to net share settlements of stock-based compensation awards | (109,197) | (114,502) |
Borrowings and repayments on line of credit, net | 3,021,538 | (766,673) |
Proceeds from sale of convertible debt and warrants | 0 | 27,000,000 |
Borrowings of long-term debt | 573,447 | 509,702 |
Debt issuance costs | 0 | (1,931,105) |
Repayments of long-term debt | (2,124,584) | (2,488,567) |
Repayments of convertible debt | (14,104,728) | (5,045,519) |
Net cash provided by financing activities | 567,374 | 22,405,272 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (37,670) | 40,009 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 3,369,042 | 2,367,955 |
CASH AND CASH EQUIVALENTS, beginning of the period | 3,535,458 | 1,167,503 |
CASH AND CASH EQUIVALENTS, end of period | 6,904,500 | 3,535,458 |
Cash paid during the period for: | ||
Interest | 2,085,544 | 1,491,348 |
Income taxes | $ 452,933 | $ 210,112 |
NOTE 1 - BACKGROUND AND ORGANIZ
NOTE 1 - BACKGROUND AND ORGANIZATION | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 1 - BACKGROUND AND ORGANIZATION | NOTE 1 - BACKGROUND AND ORGANIZATION Organization S&W Seed Company, a Nevada corporation (the "Company"), began as S&W Seed Company, a general partnership in 1980 and was originally in the business of breeding, growing, processing and selling alfalfa seed. We then incorporated a corporation with the same name in Delaware in October 2009, which is the successor entity to Seed Holding, LLC, having purchased a majority interest in the general partnership between June 2008 and December 2009. Following the Company's initial public offering in May 2010, the Company purchased the remaining general partnership interests and became the sole owner of the general partnership's original business. Seed Holding, LLC remains a consolidated subsidiary of the Company. In December 2011, the Company reincorporated in Nevada as a result of a statutory short-form merger of the Delaware corporation into its wholly-owned subsidiary, S&W Seed Company, a Nevada corporation. On April 1, 2013, the Company, together with its wholly-owned subsidiary, S&W Seed Australia Pty Ltd, an Australia corporation ("S&W Australia"), consummated an acquisition of all of the issued and outstanding shares of Seed Genetics International Pty Ltd, an Australia corporation ("SGI"), from SGI's shareholders. Business Overview Since its establishment, the Company, including its predecessor entities, has been principally engaged in breeding, growing, processing and selling agricultural seeds, primarily alfalfa seed. The Company owns seed cleaning and processing facilities, which are located in Five Points, California and Nampa, Idaho. The Company's seed products are primarily grown under contract by farmers. The Company began its stevia initiative in fiscal year 2010 and is currently focused on breeding improved varieties of stevia and developing marketing and distribution programs for its stevia products. The Company has also been actively engaged in expansion initiatives through a combination of organic growth and strategic acquisitions, including in December 31, 2014, when the Company purchased certain alfalfa research and production facilities and conventional (non-GMO) alfalfa germplasm assets and assumed certain related liabilities ("the Pioneer Acquisition") of Pioneer Hi-Bred International, Inc. ("DuPont Pioneer"). Most recently, in May 2016, the Company acquired the assets and business of SV Genetics, a private Australian company specializing in the breeding and licensing of proprietary hybrid sorghum and sunflower seed germplasm, which represents the Company's initial effort to diversify its product portfolio beyond alfalfa seed and stevia. The Company's operations span the world's alfalfa seed production regions with operations in the San Joaquin and Imperial Valleys of California, five other U.S. states, Australia, and three provinces in Canada, and the Company sells its seed products in more than 30 countries around the globe. |
NOTE 2 - SUMMARY OF SIGNIFICANT
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Company maintains its accounting records on an accrual basis in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of Seed Holding, LLC and its other wholly-owned subsidiaries, S&W Australia, which owns 100% of SGI, and Stevia California, LLC. All significant intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in the financial statements. These include allowance for doubtful trade receivables, inventory valuation, asset impairments, provisions for income taxes, grower accruals (an estimate of amounts payable to farmers who grow seed for the Company), contingent consideration obligations, derivative liabilities, contingencies and litigation. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and certain intangible assets, goodwill as well as valuing stock-based compensation. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows. Certain Risks and Concentrations The Company's revenue is principally derived from the sale of alfalfa seed, the market for which is highly competitive. The Company depends on a core group of significant customers. Two customers accounted for 54% of its revenue for the year ended June 30, 2016 and two customers accounted for 49% of its revenue for the year ended June 30, 2015. One customer accounted for 35% of the Company's accounts receivable at June 30, 2016. Three customers accounted for 53% of the Company's accounts receivable at June 30, 2015. In addition, the Company sells a substantial portion of its products to international customers. Sales direct to international customers represented 55% and 59% of revenue during the years ended June 30, 2016 and 2015, respectively. The net book value of fixed assets located outside the United States was 17% and 11% of total assets at June 30, 2016 and June 30, 2015, respectively. Cash balances located outside of the United States may not be insured and totaled $1,923,290 and $1,039,326 at June 30, 2016 and June 30, 2015, respectively. The following table shows revenue from external sources by destination country: Years Ended June 30, 2016 2015 United States $ 42,816,013 45% $ 33,078,838 41% Saudi Arabia 31,546,833 33% 26,064,276 32% Mexico 4,529,131 5% 4,968,234 6% Sudan 4,267,752 4% 2,851,855 4% Argentina 2,586,360 3% 2,918,755 4% Peru 2,056,261 2% 887,855 1% Australia 1,397,275 1% 542,051 1% Algeria 1,143,630 1% 217,099 0% Libya 937,330 1% 3,002,480 4% Other 4,763,669 5% 6,677,460 7% Total $ 96,044,254 100% $ 81,208,903 100% International Operations The Company translates its foreign operations' assets and liabilities denominated in foreign currencies into U.S. dollars at the current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in the cumulative translation account, a component of accumulated other comprehensive income. Gains or losses from foreign currency transactions are included in the consolidated statement of operations. Revenue Recognition The Company derives its revenue primarily from sale of seed and other crops and milling services. Revenue from seed and other crop sales is recognized when risk and title to the product is transferred to the customer. No customer has a right of return. The Company recognizes revenue from milling services according to the terms of the sales agreements and when delivery has occurred, performance is complete and pricing is fixed or determinable at the time of sale. Additional conditions for recognition of revenue for all sales include the requirements that the collection of sales proceeds must be reasonably assured based on historical experience and current market conditions, the sales price is fixed and determinable and that there must be no further performance obligations under the sale. Cost of Revenue The Company records purchasing and receiving costs, inspection costs and warehousing costs in cost of revenue. When the Company is required to pay for outward freight and/or the costs incurred to deliver products to its customers, the costs are included in cost of revenue. Cash and Cash Equivalents For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At times, cash and cash equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation. Accounts Receivable The Company provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer's trade accounts receivable. The allowance for doubtful trade receivables was $177,295 and $155,595 at June 30, 2016 and June 30, 2015, respectively. Inventories Inventories consist of alfalfa seed and packaging materials. Inventories are stated at the lower of cost or market, and an inventory reserve permanently reduces the cost basis of inventory. Inventories are valued as follows: Actual cost is used to value raw materials such as packaging materials, as well as goods in process. Costs for substantially all finished goods, which include the cost of carryover crops from the previous year, are valued at actual cost. Actual cost for finished goods includes plant conditioning and packaging costs, direct labor and raw materials and manufacturing overhead costs based on normal capacity. The Company records abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges and allocates fixed production overhead to the costs of finished goods based on the normal capacity of the production facilities. The Company's subsidiary, SGI, does not fix the final price for seed payable to its growers until the completion of a given year's sales cycle pursuant to its standard contract production agreement. SGI records an estimated unit price; accordingly, inventory, cost of revenue and gross profits are based upon management's best estimate of the final purchase price to growers. Inventory is periodically reviewed to determine if it is marketable, obsolete or impaired. Inventory that is determined to be obsolete or impaired is written off to expense at the time the impairment is identified. Because the germination rate, and therefore the quality, of alfalfa seed improves over the first year of proper storage, inventory obsolescence for alfalfa seed is not a material concern. The Company sells its inventory to distributors, dealers and directly to growers. Components of inventory are: June 30, June 30, 2016 2015 Raw materials and supplies $ 241,268 $ 276,339 Work in progress and growing crops 3,120,485 5,415,402 Finished goods 18,484,377 19,830,006 $ 21,846,130 $ 25,521,747 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 7-28 years for buildings, 3-20 years for machinery and equipment, and 3-5 years for vehicles. Intangible Assets Intangible assets acquired in business acquisitions are reported at their initial fair value less accumulated amortization. Intangible assets are amortized using the straight-line method over the estimated useful life of the asset. Periods of 10-30 years for technology/IP/germplasm, 10-20 years for customer relationships and trade names and 2-20 for other intangible assets. The weighted average estimated useful lives are 24 years for technology/IP/germplasm, 18 years for customer relationships and trade names and 19 years for other intangible assets. Goodwill Goodwill originated from acquisitions of Imperial Valley Seeds, Inc. ("IVS") and SGI during the fiscal year 2013, the acquisition of the alfalfa business from DuPont Pioneer in fiscal year 2015 and the acquisition of assets of SV Genetics in May 2016. Goodwill is assessed at least annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management conducts a two-step quantitative goodwill impairment test. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires various judgmental assumptions including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on the Company's budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The Company changed its reporting structure in May 2016 which resulted in a change from its United States and Australian reporting units to one company-wide reporting unit. Due to the qualitative factor of the change in the Company's reporting units, the Company performed quantitative goodwill impairment tests of its United States and Australian reporting units immediately prior to the change and a quantitative goodwill impairment test of its company-wide reporting unit immediately after the change and determined goodwill was not impaired. Additionally, the Company performed a qualitative assessment of goodwill at June 30, 2016 and 2015 and determined it was more likely than not goodwill was not impaired. Equity Method Investments Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company's board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are not reflected within the Company's consolidated balance sheets and statements of operations; however, the Company's share of the earnings or losses of the investee company is reflected in the caption ``Loss on equity method investment'' in the consolidated statements of operations. The Company's carrying value in an equity method investee company is included in the Company's consolidated balance sheets. When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Loss on equity method investment totaled $294,197 for the year ended June 30, 2016. This represents the Company's 50% share of losses incurred by the joint corporation (S&W Semillas S.A.) in Argentina during the two periods. Cost Method Investments Investee companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, the Company's share of the earnings or losses of such investee companies is not included in the consolidated balance sheet or statement of operations. However, impairment charges are recognized in the consolidated statement of operations. If circumstances suggest that the value of the investee company has subsequently recovered, such recovery is not recorded. Research and Development Costs The Company is engaged in ongoing research and development ("R&D") of proprietary seed and stevia varieties. All R&D costs must be charged to expense as incurred. Accordingly, internal R&D costs are expensed as incurred. Third-party R&D costs are expensed when the contracted work has been performed or as milestone results have been achieved. The costs associated with equipment or facilities acquired or constructed for R&D activities that have alternative future uses are capitalized and depreciated on a straight-line basis over the estimated useful life of the asset. Income Taxes Deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities, as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. Impairment of Long-Lived Assets The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of long-lived assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. A triggering event during the quarter ended December 31, 2014 prompted a review of certain farmland-related costs. The carrying value of these assets was deemed in excess of fair value, and the Company recorded an impairment charge of $500,198 in the consolidated statement of operations during the quarter ended December 31, 2014. Derivative Financial Instruments Foreign Exchange Contracts The Company's subsidiary, SGI, is exposed to foreign currency exchange rate fluctuations in the normal course of its business, which the Company at times manages through the use of foreign currency forward contracts. The Company has entered into certain derivative financial instruments (specifically foreign currency forward contracts), and accounts for these instruments in accordance with ASC Topic 815, "Derivatives and Hedging", which establishes accounting and reporting standards requiring that derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. The Company's foreign currency contracts are not designated as hedging instruments under ASC 815; accordingly, changes in the fair value are recorded in current period earnings. Derivative Liabilities The Company reviews the terms of the common stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options and redemption options, which are required to be bifurcated and accounted for separately as derivative financial instruments. Fair Value of Financial Instruments The Company discloses assets and liabilities that are recognized and measured at fair value, presented in a three-tier fair value hierarchy, as follows: Level 1. Observable inputs such as quoted prices in active markets; Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The assets acquired and liabilities assumed in the DuPont Pioneer Acquisition were valued at fair value on a non-recurring basis as of December 31, 2014. The assets acquired and liabilities assumed in the SV Genetics Acquisition were valued at fair value on a non-recurring basis as of May 26, 2016. No assets or liabilities were valued at fair value on a non-recurring basis as of June 30, 2016 or June 30, 2015. The carrying value of cash and cash equivalents, accounts payable, short-term and all long-term borrowings other than the convertible debentures, as reflected in the consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments or interest rates commensurate with market rates. There have been no changes in operations and/or credit characteristics since the date of issuance that could impact the relationship between interest rate and market rates. At June 30, 2016, the fair value and carrying value of the convertible debentures was $7,829,671 and $6,840,608 respectively. At June 30, 2015, the fair value and carrying value of the convertible debentures was $21,828,653 and $18,042,970 respectively. The fair value was calculated using a discounted cash flow model and utilized a 10% discount rate that is commensurate with market rates given the remaining term, principal repayment schedule and outstanding balance. The convertible debentures are categorized as Level 3 in the fair value hierarchy. The Company used a discounted cash flows approach to measure the fair value using Level 3 inputs. Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows: Fair Value Measurements as of June 30, 2016 Using: Level 1 Level 2 Level 3 Foreign exchange contract asset $ - $ 49,808 $ - Contingent consideration obligations - - 2,268,416 Derivative warrant liabilities - - 4,354,100 Total $ - $ 49,808 $ 6,622,516 Fair Value Measurements as of June 30, 2015 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 59,116 $ - Contingent consideration obligation - - 2,078,000 Derivative warrant liabilities - - 6,258,000 Total $ - $ 59,116 $ 8,336,000 The Company issued contingent consideration obligations of $135,245 during the year ended June 30, 2016 and recognized a loss of $55,092 related to contingent consideration obligations in the consolidated statement of operations for the year ended June 30, 2016. The Company recognized a gain of $1,903,900 related to derivative warrant liabilities in the consolidated statement of operations during the year ended June 30, 2016. The Company issued contingent consideration obligations of $2,004,000 during the year ended June 30, 2015 and recognized a loss of $74,000 related to contingent consideration obligations in the consolidated statement of operations for the year ended June 30, 2015. The Company issued derivative warrant liabilities of $4,862,000 during the year ended June 30, 2015 and recognized a loss of $1,396,000 related to derivative warrant liabilities in the consolidated statement of operations during the year ended June 30, 2015. There were no transfers in or out of Level 3 during the years ended June 30, 2016 and 2015. Reclassifications Certain reclassifications have been made to prior period amounts to conform to classifications adopted in the current period. The reclassifications had no effect on net income (loss), cash flows or stockholders' equity. Recently Adopted and Issued Accounting Pronouncements Adopted In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes Issued In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued Accounting Standards Update No. 2016-02: Leases In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers: Deferral of the Effective Date Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements and related disclosures. |
NOTE 3 - BUSINESS COMBINATIONS
NOTE 3 - BUSINESS COMBINATIONS | 12 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
NOTE 3 – BUSINESS COMBINATIONS | NOTE 3 - BUSINESS COMBINATIONS DuPont Pioneer Acquisition On December 31, 2014, the Company purchased certain alfalfa research and production facilities and conventional (non-GMO) alfalfa germplasm assets (and assumed certain related liabilities) of DuPont Pioneer. The DuPont Pioneer Acquisition was consummated pursuant to the terms of an asset purchase and sale agreement. The purchase price under the Agreement was up to $42,000,000, consisting of $27,000,000 in cash (payable at closing), a three year secured promissory note (the "Pioneer Note") payable by the Company to DuPont Pioneer in the initial principal amount of $10,000,000 (issued at closing), and a potential earn-out payment (payable as an increase in the principal amount of the Note) of up to $5,000,000 based on S&W sales under distribution and production agreements as well as other Company sales of products containing the acquired germplasm in the three-year period following the closing. The Pioneer Note accrues interest at a rate of 3% per annum, and interest is payable in three annual installments, in arrears, commencing on December 31, 2015. Principal on the Pioneer Note is payable at maturity on December 31, 2017. The DuPont Pioneer Acquisition has been accounted for as a business combination, and the Company valued and recorded all assets acquired and liabilities assumed at their estimated fair values on the date of the DuPont Pioneer Acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date of December 31, 2014: December 31, 2014 Inventory $ 22,055,300 Property, plant and equipment 6,712,535 Distribution agreement 7,690,000 Production agreement 670,000 Grower relationships 76,000 Technology/IP - germplasm 13,340,000 Technology/IP - seed varieties 5,040,000 Goodwill 5,353,317 Current liabilities (12,248,506) Total acquisition cost allocated $ 48,688,646 The acquisition-date fair value of the consideration transferred consisted of the following: December 31, 2014 Cash $ 27,000,000 Promissory note 10,000,000 Contingent earn-out 2,004,000 Amount payable to seller 9,684,646 $ 48,688,646 The excess of the purchase price over the fair value of the net assets acquired, amounting to $5,353,317, was recorded as goodwill on the consolidated balance sheet. The primary item that generated goodwill was the premium paid by the Company for the ability to control the acquired business, technology and the assembled workforce of DuPont Pioneer. Goodwill is not amortized for financial reporting purposes, but is amortized for tax purposes. Management assigned fair values to the identifiable intangible assets through a combination of the relief from royalty method and the multi-period excess earnings method. The contingent consideration requires the Company to increase the principal amount of the Seller note by up to an additional $5,000,000 if the Company meets certain performance metrics during the three-year period following the acquisition. The fair value of the contingent consideration arrangement at the acquisition date was $2,004,000. The fair value of the contingent consideration was estimated using a probability-weighted cash flow model. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The key assumptions in applying the income approach were as follows: 24% present value discount factor and probability adjusted revenue assumptions based on the number of expected units produced. As of June 30, 2016, the estimated fair value of the contingent consideration is $2,133,092. The values and useful lives of the acquired DuPont Pioneer intangibles are as follows: Estimated Useful Life (Years) Estimated Fair Value Distribution agreement 20 $ 7,690,000 Production agreement 3 670,000 Grower relationships 10 76,000 Technology/IP - germplasm 30 13,340,000 Technology/IP - seed varieties 15 5,040,000 Total identifiable intangible assets $ 26,816,000 The Company incurred $863,048 of acquisition costs associated with the DuPont Pioneer Acquisition that have been recorded in selling, general and administrative expenses on the consolidated statement of operations during the year ended June 30, 2015. The newly acquired business generated revenue of approximately $40.4 million during the year ended June 30, 2016. In the transaction, DuPont Pioneer retained ownership of its GMO (genetically modified) alfalfa germplasm and related intellectual property assets, as well as the right to develop new GMO-traited alfalfa germplasm. The retained GMO germplasm assets incorporate certain GMO traits that are licensed to DuPont Pioneer from third parties (the "Third Party GMO Traits"). The Company was interested in acquiring the GMO assets at the time it acquired the conventional (non-GMO) alfalfa seed assets, and DuPont Pioneer was interested in selling those assets, but terms could not be agreed-upon, in part because of the need for agreements with the third parties from whom the Third Party GMO Traits are licensed. The agreements related to the DuPont Pioneer Acquisition provide that both the Company and DuPont Pioneer will work towards obtaining the necessary consents from and agreements with third parties such that the GMO assets can be transferred from DuPont Pioneer to the Company. If such consents and agreements are obtained before November 30, 2017, the Company has committed to buy, and DuPont Pioneer has committed to sell, the GMO assets at a price of $7,000,000 on or before December 29, 2017. SV Genetics Acquisition On May 26, 2016, the Company purchased the assets and business of SV Genetics Pty Ltd ("SV Genetics"), a private Australian company specializing in the breeding and licensing of proprietary hybrid sorghum and sunflower seed germplasm. The acquisition expanded and diversified its product offerings and provided access to new distribution channels. The SV Genetics Acquisition was consummated pursuant to the terms of an asset acquisition agreement (the "SV Genetics Acquisition Agreement"). As consideration for the SV Genetics Acquisition, S&W paid the following amounts at Closing: $1.0 million in cash and 225,088 shares of the Company's common stock. The fair value of the shares of the Company's common stock was determined based on the closing market price of the Company's common stock on the acquisition date and a 5% discount because of the lack of marketability that market participants would consider when estimating the fair value of the common stock issued. The SV Genetics Acquisition Agreement further provides for a potential earn-out payment of up to $3.3 million, payable in cash or the Company's common stock, in the sole discretion of the Company, based on the acquired business achieving 150% of a net income target of $4.2 million for the combined 2018 and 2019 fiscal years. Any earn-out payment, if paid in stock, will be based upon the trailing VWAP on the day immediately preceding the payment of the earn-out. The earn-out payment, if any, will be made in September 2019. The SV Genetics Acquisition has been accounted for as a business combination, and the Company valued and recorded all assets acquired and liabilities assumed at their estimated fair values on the date of the SV Genetics Acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date of May 26, 2016: May 26, 2016 Accounts receivable $ 37,888 Inventory 150,000 Liabilities assumed (16,901) Property, plant and equipment 45,273 Technology/IP - germplasm 479,000 Technology/IP - seed varieties 57,000 Customer relationships 462,000 Trade name 45,000 Non-compete agreements 30,000 Goodwill 796,064 Total acquisition cost allocated $ 2,085,324 The acquisition-date fair value of the consideration transferred consisted of the following: May 26, 2016 Cash $ 1,000,000 Restricted stock consideration 950,000 Contingent earn-out 135,324 $ 2,085,324 The excess of the purchase price over the fair value of the net assets acquired, amounting to $796,064, was recorded as goodwill on the consolidated balance sheet. The primary item that generated goodwill was the premium paid by the Company for the ability to control the acquired business and the technology / germplasm. Goodwill is not amortized for financial reporting purposes, but is amortized for tax purposes. Management assigned fair values to the identifiable intangible assets through a combination of the relief from royalty method, the multi-period excess earnings method, and the with-and-without method. The contingent consideration requires the Company to pay up to an additional $3.3 million, if the acquired business achieves 150% of a net income target of $4.2 million for the combined 2018 and 2019 fiscal years. The fair value of the contingent consideration arrangement at the acquisition date was $135,324. The fair value of the contingent consideration was estimated using a Monte Carlo simulation model. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The key assumptions in applying the Monte Carlo simulation were as follows: 40.0% present value discount factor and an underlying net income volatility of 87.9%. As of June 30, 2016, the estimated fair value of the contingent consideration remained at $135,324. The values and useful lives of the acquired SV Genetics intangibles are as follows: Estimated Useful Life (Years) Estimated Fair Value Technology/IP - germplasm 25 $ 479,000 Technology/IP - seed varieties 15 57,000 Customer relationships 10 462,000 Trade name 10 45,000 Non-compete agreements 5 30,000 Total identifiable intangible assets $ 1,073,000 The Company incurred $140,372 of acquisition costs associated with the SV Genetics Acquisition that have been recorded in selling, general and administrative expenses on the consolidated statement of operations during the year ended June 30, 2016. The newly acquired business generated revenue of $2,597 during the year ended June 30, 2016. The following unaudited pro forma financial information presents results as if the DuPont Pioneer Acquisition occurred on July 1, 2013 and the SV Genetics Acquisition occurred on July 1, 2014. Years Ended June 30, (Unaudited) 2016 2015 Revenue $ 96,333,863 $ 91,441,565 Net income (loss $ 374,074 $ (3,477,239) Net income (loss) per basic and diluted share $ 0.02 $ (0.25) The primary adjustments to pro forma net income for the year ended June 30, 2016 include: (i) the elimination of acquisition related charges of $140,372; (ii) amortization of acquired intangibles of $73,022; (iii) depreciation of acquired property, plant and equipment of $8,681; and (iv) adjustments to reflect the additional income tax benefit at a combined effective tax rate of 117.9%. The primary adjustments to pro forma net loss for the year ended June 30, 2015 include: (i) the reduction of DuPont Pioneer historical revenue to reflect the shift from end customer to wholesale pricing; (ii) the reduction of cost of revenue to remove DuPont Pioneer's historical sales incentives included in cost of sales; (iii) the elimination of acquisition and financing related charges of $1,290,927; (iv) amortization of acquired intangibles of $777,710; (v) depreciation of acquired property, plant and equipment of $231,354; (vi) additional interest expense on the convertible notes issued concurrent with the acquisition, including non-cash amortization of debt issuance costs and accretion of debt discount of $3,097,299; (vii) additional interest expense of $150,000 for the Pioneer Note included in total consideration for the DuPont Pioneer Acquisition; and (viii) adjustments to reflect the additional income tax expense assuming a combined effective tax rate of 21.1%. |
NOTE 4 - GOODWILL AND INTANGIBL
NOTE 4 - GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 4 - INTANGIBLE ASSETS | NOTE 4 - GOODWILL AND INTANGIBLE ASSETS The following table summarizes the activity of goodwill for the years ended June 30, 2016 and 2015, respectively. Balance at Foreign Currency Balance at July 1, 2015 Additions Translation June 30, 2016 Goodwill $ 9,630,279 $ 796,064 $ (134,078) $ 10,292,265 Balance at Foreign Currency Balance at July 1, 2014 Additions Translation June 30, 2015 Goodwill - United States $ 1,402,000 $ 5,353,317 $ - $ 6,755,317 Goodwill - Australia 3,537,462 - (662,500) 2,874,962 $ 4,939,462 $ 5,353,317 $ (662,500) $ 9,630,279 Intangible assets consist of the following: Foreign Balance at Currency Balance at July 1, 2015 Additions Amortization Translation June 30, 2016 Intellectual property $ 4,805,951 $ - $ (127,890) $ (225,308) $ 4,452,753 Trade name 1,377,840 45,000 (82,208) (11,846) 1,328,786 Technology/IP 924,107 - (248,025) - 676,082 Non-compete 301,354 30,000 (125,815) (6,540) 198,999 GI customer list 93,131 - (7,164) - 85,967 Grower relationships 2,183,485 - (120,481) (98,980) 1,964,024 Supply agreement 1,304,679 - (75,632) - 1,229,047 Customer relationships 968,619 462,000 (60,314) (10,934) 1,359,371 Distribution agreement 7,497,750 - (384,497) - 7,113,253 Production agreement 558,334 - (223,332) - 335,002 Technology/IP - germplasm 13,117,666 479,000 (446,857) - 13,149,809 Technology/IP - seed varieties 4,872,000 57,000 (336,884) - 4,592,116 $ 38,004,916 $ 1,073,000 $ (2,239,099) $ (353,608) $ 36,485,209 Foreign Balance at Currency Balance at July 1, 2014 Additions Amortization Translation June 30, 2015 Intellectual property $ 6,246,572 $ - $ (295,844) $ (1,144,777) $ 4,805,951 Trade name 1,521,864 - (83,830) (60,194) 1,377,840 Technology/IP 1,043,067 - (118,960) - 924,107 Non-compete 471,768 - (132,353) (38,061) 301,354 GI customer list 100,295 - (7,164) - 93,131 Grower relationships 2,744,164 76,000 (133,770) (502,909) 2,183,485 Supply agreement 1,380,311 - (75,632) - 1,304,679 Customer relationships 1,082,730 - (58,557) (55,554) 968,619 Distribution agreement - 7,690,000 (192,250) - 7,497,750 Production agreement - 670,000 (111,666) - 558,334 Technology/IP - germplasm - 13,340,000 (222,334) - 13,117,666 Technology/IP - seed varieties - 5,040,000 (168,000) - 4,872,000 $ 14,590,771 $ 26,816,000 $ (1,600,360) $ (1,801,495) $ 38,004,916 Amortization expense totaled $2,239,099 and $1,600,360 for the years ended June 30, 2016 and 2015, respectively. Estimated aggregate remaining amortization is as follows: 2017 2018 2019 2020 2021 Thereafter Amortization expense $ 2,304,451 $ 2,128,675 $ 1,964,285 $ 1,964,285 $ 1,963,885 $ 26,159,628 |
NOTE 5 - PROPERTY, PLANT AND EQ
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT | NOTE 5 - PROPERTY, PLANT AND EQUIPMENT Components of property, plant and equipment were as follows: June 30, June 30, 2016 2015 Land and improvements $ 2,908,501 $ 2,247,379 Buildings and improvements 6,192,522 5,439,712 Machinery and equipment 4,781,586 3,520,168 Vehicles 1,080,354 940,627 Construction in progress 778,528 1,113,137 Total property, plant and equipment 15,741,491 13,261,023 Less: accumulated depreciation (2,619,792) (1,784,087) Property, plant and equipment, net $ 13,121,699 $ 11,476,936 Depreciation expense totaled $946,027 and $579,278 for the years ended June 30, 2016 and 2015, respectively. |
NOTE 6 - DEBT
NOTE 6 - DEBT | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 6 - DEBT | NOTE 6 - DEBT Total debt outstanding, excluding convertible debt addressed in Note 7, are presented on the consolidated balance sheet as follows: June 30, 2016 June 30, 2015 Working capital lines of credit KeyBank $ 12,308,828 $ - Wells Fargo - 10,000,000 National Australia Bank Limited 4,378,645 3,755,800 Total working capital lines of credit 16,687,473 13,755,800 Current portion of long-term debt Term loan - Ally - 8,994 Keith facility (building loan) - National Australia Bank Limited 37,205 - Keith facility (machinery & equipment loan) - National Australia Bank Limited 137,889 154,657 Unsecured subordinate promissory note - related party 100,000 100,000 Promissory note - SGI selling shareholders - 2,000,000 Debt discount - SGI - (40,186) Total current portion 275,094 2,223,465 Long-term debt, less current portion Term loan - Ally - 15,590 Keith facility (building loan) - National Australia Bank Limited 446,454 466,482 Keith facility (machinery & equipment loan) - National Australia Bank Limited 567,879 - Unsecured subordinate promissory note - related party 100,000 200,000 Promissory note - Dupont Pioneer 10,000,000 10,000,000 Total long-term portion 11,114,333 10,682,072 Total debt $ 11,389,427 $ 12,905,537 From 2011 until September 22, 2015, the Company had one or more revolving credit facility agreements with Wells Fargo Bank, National Association ("Wells Fargo"). From February 21, 2014 through September 22, 2015, the Company had two working capital facilities with Wells Fargo (collectively, the "Wells Facilities"), both of which terminated as of September 22, 2015. The Wells Facilities included (i) a domestic revolving facility of up to $4,000,000 for working capital purposes, and (ii) an export-import revolving facility of up to $10,000,000 for financing export-related accounts receivable and inventory (the "Ex-Im Revolver"). The Wells Facilities were secured by a first priority lien on accounts receivable and other rights to payment, general intangibles, inventory and equipment, subject to the priority rights of the senior secured debentures issued by the Company in December 2014 and Pioneer Hi-Bred International, Inc. The Wells Facilities were further secured by a lien on, and a pledge of, 65% of the stock of the Company's wholly-owned subsidiary, S&W Australia Pty Ltd. The Wells Facilities were subject to customary representations and warranties, affirmative and negative covenants and customary events of default. The interest rate on the Wells Facilities was either (i) at a fluctuating rate per annum determined by Wells Fargo to be 2.75% above the daily one-month LIBOR Rate in effect from time to time (increased from 2.25%), or (ii) at a fixed rate per annum determined to be 2.75% (increased from 2.25%) above LIBOR in effect on the first day of the applicable fixed rate term. On September 22, 2015, the Company paid all outstanding principal and accrued interest owing under the Wells Facilities. On September 22, 2015, the Company and KeyBank National Association ("KeyBank") entered into a credit and securities agreement and related agreements with respect to a $20,000,000 aggregate principal amount revolving credit facility (the "KeyBank Credit Facility"). In addition to paying off the Wells Facility, the proceeds from advances under the KeyBank Credit Facility are to be used for ongoing working capital requirements and to provide for general corporate purposes. All amounts of unpaid principal and interest due under the KeyBank Credit Facility must be paid in full on or before September 21, 2017. The KeyBank Credit Facility generally establishes a borrowing base of up to 85% of eligible accounts receivable (90% if insured), plus up to 65% of eligible inventory, subject to lender reserves. Loans may be based on a Base Rate or Eurodollar Rate (which is increased by an applicable margin of 2% per annum), generally at the Company's option. In the event of a default, at the option of KeyBank, the interest rate on all obligations owing will increase by 3% per annum over the rate otherwise applicable. The Company shall maintain one or more lockbox or cash collateral accounts at KeyBank, in KeyBank's name, which shall provide for the collection and remittance of all proceeds from sales of Company product (which is collateral for the KeyBank Credit Facility) on a daily basis. Subject to certain exceptions, the KeyBank Credit Facility is secured by a first priority perfected security interest in all the Company's now owned and after acquired tangible and intangible assets as well as the assets of the Company's domestic subsidiaries, which have guaranteed the Company's obligations under the KeyBank Credit Facility. The KeyBank Credit Facility is further secured by a lien on, and a pledge of, 65% of the stock of S&W Australia Pty Ltd., the Company's wholly-owned subsidiary. With respect to its security interest and/or lien, KeyBank has entered into an intercreditor and subordination agreement with Hudson Bay Fund LP (as agent for the holders of the senior secured debentures issued by the Company in December 2014) and DuPont Pioneer. The KeyBank Credit Agreement contains customary representations and warranties, affirmative and negative covenants and customary events of default. The Company was in compliance with all covenants at June 30, 2016. The outstanding balance on the KeyBank Credit Facility was $12,308,828 at June 30, 2016. On October 1, 2012, the Company issued a five-year subordinated promissory note to IVS in the principal amount of $500,000 (the "IVS Note"), with a maturity date of October 1, 2017. The IVS Note accrues interest at a rate equal to one-month LIBOR at closing plus 2%, which equals 2.2%. Interest is payable in five annual installments, in arrears, on October 1 of each year. Amortizing payments of the principal of $100,000 will also be made on each October 1, with any remaining outstanding principal and accrued interest payable on the maturity date of the IVS Note. The outstanding balance on the IVS Note was $200,000 at June 30, 2016. On April 1, 2013, the Company issued a three-year subordinated promissory note to the selling shareholders of SGI in the principal amount of USD $2,482,317 (the "SGI Note"), with a maturity date of April 1, 2016 (the "SGI Maturity Date"). The SGI note was non-interest bearing. Since the note was non-interest bearing, the Company recorded a debt discount of $156,880 at the time of issuance for the estimated net present value of the obligation and accretes the net present value of the SGI Note obligation up to the face value of the SGI Note obligation using the effective interest method as a component of interest expense. Accretion of the debt discount totaled $40,185 and $52,570 for the years ended June 30, 2016 and 2015, respectively. The SGI Note was paid down to $150,000 on March 31, 2016 and the remaining balance was paid in full on April 1, 2016. On December 31, 2014, the Company issued a three-year secured promissory note to DuPont Pioneer in the initial principal amount of $10,000,000 (the "Pioneer Note"), with a maturity date of December 31, 2017. The Pioneer Note accrues interest at 3% per annum. Interest is payable in three annual installments, in arrears, commencing on December 31, 2015. SGI finances the purchase of most of its seed inventory from growers pursuant to a seasonal credit facility with NAB. The current facility, referred to as the 2016 NAB Facilities, was amended as of March 30, 2016 and expires on March 30, 2018. As of June 30, 2016, AUD $7,483,062 (USD $5,568,072) was outstanding under the 2016 NAB Facilities. The 2016 NAB Facilities, as currently in effect, comprises two distinct facility lines: (i) an overdraft facility (the "Overdraft Facility"), having a credit limit of AUD $980,000 (USD $729,208 at June 30, 2016) and a trade refinance facility (the "Trade Refinance Facility"), having a credit limit of AUD $12,000,000 (USD $8,929,080 at June 30, 2016). The Trade Refinance Facility permits SGI to borrow funds for periods of up to 180 days, at SGI's discretion, provided that the term is consistent with its trading terms. Interest for each drawdown is set at the time of the drawdown as follows: (i) for Australian dollar drawings, based on the Australian Trade Refinance Rate plus 1.5% per annum and (ii) for foreign currency drawings, based on the British Bankers' Association Interest Settlement Rate for the relevant foreign currency for the relevant period, or if such rate is not available, the rate reasonably determined by NAB to be the appropriate equivalent rate, plus 1.5% per annum. As of June 30, 2016, the Trade Refinance Facility accrued interest on Australian dollar drawings at approximately 4.97% calculated daily. The Trade Refinance Facility is secured by a lien on all the present and future rights, property and undertakings of SGI, the mortgage on SGI's Keith, South Australia property and the Company's corporate guarantee (up to a maximum of AUD $15,000,000). The Overdraft Facility permits SGI to borrow funds on a revolving line of credit up to the credit limit. Interest accrues daily and is calculated by applying the daily interest rate to the balance owing at the end of the day and is payable monthly in arrears. As of June 30, 2016, the Overdraft Facility accrued interest at approximately 6.87% calculated daily. For both the Overdraft Facility and the Trade Refinance Facility, interest is payable each month in arrears. In the event of a default, as defined in the NAB Facility Agreement, the principal balance due under the facilities will thereafter bear interest at an increased rate per annum above the interest rate that would otherwise have been in effect from time to time under the terms of each facility ( i.e. Both facilities constituting the 2016 NAB Facilities are secured by a fixed and floating lien over all the present and future rights, property and undertakings of SGI and are guaranteed by the Company as noted above. The 2016 NAB Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate SGI's outstanding obligations, all as set forth in the NAB facility agreements. SGI was in compliance with all NAB debt covenants at June 30, 2016. In January 2015, NAB and SGI entered into a new business markets - flexible rate loan (the "Keith Building Loan") in the amount of AUD $650,000 (USD $483,659 at June 30, 2016). The limit has subsequently been increased to AUD $800,000 (USD $595,272) in April 2016, and a machinery and equipment facility (the "Keith Machinery and Equipment Facility") of up to AUD $1,200,000 (USD $892,908 at June 30, 2016). In February 2016 the "Keith Machinery and Equipment Facility" was restructured to include 3 equipment loans; (1) AUD $873,201 (USD $649,740 at June 30, 2016) at an interest rate of 4.99%, expiring in March 2021. (2) AUS $50,926 (USD $37,894 at June 30, 2016) at an interest rate of 5.04%, expiring in February 2021. (3) AUS $24,371 (USD $18,134 at June 30, 2016) at an interest rate of 4.98%, expiring in March 2021. The balance of AUD $421,851 (USD $313,895 at June 30, 2016) is still available for future use under the Keith Credit Facilities. The Keith Building Loan and the Keith Machinery and Equipment Facility, collectively referred to as the Keith Credit Facilities, have a combined maximum credit amount of AUD $2,000,000 (USD $1,488,180 at June 30, 2016). The Keith Credit Facilities are being used for the construction of a new building on SGI's Keith, South Australia property and for the machinery and equipment to be purchased for use in the operations of the new building. The Keith Building Loan matures on November 30, 2024. The interest rate on the Keith Building Loan varies from pricing period to pricing period (each such period approximately 30 days), based on the weighted average of a specified basket of interest rates (6.045% as of June 30, 2016). Interest is payable each month in arrears. The Keith Machinery and Equipment Facility permits SGI to draw down additional amounts up to the maximum of AUD $271,851 (USD $202,282 at June 30, 2016) for periods of up to 180 days, in SGI's discretion, provided the term is consistent with SGI's trading terms. The Keith Machinery and Equipment Facility bears interest, payable in arrears, based on the Australian Trade Refinance Rate quoted by NAB at the time of the drawdown, plus 2.9%. The Keith Credit Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate SGI's outstanding obligations, all as set forth in the facility agreement. They are secured by a lien on all the present and future rights, property and undertakings of SGI, the Company's corporate guarantee and a mortgage on SGI's Keith, South Australia property. At June 30, 2016, the principal balance on the Keith Building Loan was AUD $650,000 (USD $483,659). The annual maturities of short-term and long-term debt, excluding convertible debt addressed in Note 7, are as follows: Fiscal Year Amount 2017 $ 275,094 2018 10,300,740 2019 230,466 2020 238,247 2021 188,620 Thereafter 156,260 Total $ 11,389,427 |
NOTE 7 - SENIOR CONVERTIBLE NOT
NOTE 7 - SENIOR CONVERTIBLE NOTES AND WARRANTS | 12 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
NOTE 7 - SENIOR CONVERTIBLE NOTES AND WARRANTS | NOTE 7 - SENIOR CONVERTIBLE NOTES AND WARRANTS On December 31, 2014, the Company consummated the sale of senior secured convertible debentures (the "Debentures") and common stock purchase warrants (the "Warrants") to various institutional investors ("Investors") pursuant to the terms of a securities purchase agreement among the Company and the Investors. At closing, the Company received $27,000,000 in gross proceeds. Offering expenses of $1,931,105 attributed to the Debentures were recorded as deferred financing fees and recorded as a debt discount and offering expenses of $424,113 attributed to the Warrants were expensed during the year ended June 30, 2015. The net proceeds were paid directly to DuPont Pioneer in partial consideration for the purchase of certain DuPont Pioneer assets, the closing for which also took place on December 31, 2014. See Note 3 for further discussion of the DuPont Pioneer Acquisition. Debentures At the date of issuance, the Debentures were due and payable on November 30, 2017, unless earlier converted or redeemed. The Debentures bear interest on the aggregate unconverted and then outstanding principal amount at 8% per annum, payable in arrears monthly beginning February 2, 2015. Commencing on the occurrence of any Event of Default (as defined in the Debentures) that results in the eventual acceleration of the Debentures, the interest rate will increase to 18% per annum. The monthly interest is payable in cash, or in any combination of cash or shares of the Company's common stock at the Company's option, provided certain "equity conditions" defined in the Debentures are satisfied. Beginning on July 1, 2015, the Company was required to make monthly payments of principal as well, payable in cash or any combination of cash or shares of its common stock at the Company's option, provided all of the applicable equity conditions are satisfied. The Debentures contain certain rights of acceleration and deferral at the holder's option in the event a principal payment is to be made in stock and contains certain limited acceleration rights of the Company, provided certain conditions are satisfied. As required under the terms of the Debentures, following the sale of 759 acres of farmland property in the Imperial Valley of California in March 2015, which resulted in sale proceeds of $7,100,000, the Company redeemed $5,000,000 in principal amount of the Debentures. The reduction in principal was applied on the back end of the term, moving the final scheduled payment from November 30, 2017 to June 1, 2017. During the quarter ended March 31, 2016, the Company accelerated three redemption payments totaling $2,830,049. Taking into account the accelerated redemption payments, the final payment on the Debentures will be March 1, 2017. Total convertible debt outstanding, excluding debt addressed in Note 6, is presented on the consolidated balance sheet as follows: June 30, 2016 June 30, 2015 Current portion of convertible debt, net Senior secured convertible notes payable $ 7,849,754 $ 11,274,678 Debt discount (1,009,146) (2,008,749) Total current portion 6,840,608 9,265,929 Convertible debt, net, less current portion Senior secured convertible notes payable - 10,679,804 Debt discount - (1,902,763) Total long-term portion - 8,777,041 Total convertible debt, net $ 6,840,608 $ 18,042,970 As of June 30, 2016, the scheduled principal payments on the Debentures are as follows: Fiscal Year Amount 2017 $ 7,849,754 Thereafter - Total $ 7,849,754 The Debentures were initially convertible, at the holder's option, into the Company's common stock at a conversion price of $5.00. Pursuant to the terms of the Debentures, the conversion price was reset to $4.63 on September 30, 2015. As of June 30, 2016, the remaining outstanding Debentures were potentially convertible into 1,695,411 shares. No further adjustments of the conversion price are provided for, except in the case of stock splits and similar recapitalization events. The Company has a one-time optional forced conversion right, exercisable if specified conditions are satisfied. The Debentures are the Company's senior secured obligations, subject only to certain secured obligations of KeyBank and DuPont Pioneer (limited to a purchase money security interest in the purchased assets). The rights of KeyBank, DuPont Pioneer and the holders of the Debentures are set forth in an intercreditor and subordination agreement that was initially entered into in connection with the closing of the issuance of the Debentures. Warrants The Warrants entitle the holders to purchase, in the aggregate, 2,699,999 shares of the Company's common stock. The Warrants are exercisable through their expiration on June 30, 2020, unless earlier redeemed. The Warrants were initially exercisable at an exercise price equal to $5.00. On September 30, 2015, pursuant to the terms of the Warrants, the exercise price was reset to $4.63. In addition, if the Company issues or is deemed to have issued securities at a price lower than the then applicable exercise price during the three-year period ending December 31, 2017, the exercise price of the Warrants will adjust based on a weighted average anti-dilution formula ("down-round protection"). On November 24, 2015, the Company closed on a private placement transaction in which 1,180,722 common shares were sold at $4.15 per share. Pursuant to the down-round protection terms of the Warrants, the exercise price was adjusted to $4.59 on November 24, 2015. On February 29, 2016, the Company completed a rights offering and accompanying noteholders' participation rights offering in which an aggregate of 2,125,682 shares of common stock were sold at $4.15 per share, triggering an adjustment of the exercise price of the Warrants to $4.53. The Warrants may be exercised for cash, provided that, if there is no effective registration statement available registering the exercise of the Warrants, the Warrants may be exercised on a cashless basis. At any time that (i) all equity conditions set forth in the Warrants have been satisfied, and (ii) the closing sales price of the common stock equals or exceeds $12.00 for 15 consecutive trading days (subject to adjustment for stock splits, reverse stock splits and other similar recapitalization events), the Company may redeem all or any part of the Warrants then outstanding for cash in an amount equal to $0.25 per Warrant. Accounting for the Conversion Option and Warrants Due to the down-round price protection included in the terms of the Warrants, the Warrants are treated as a derivative liability in the consolidated balance sheet, measured at fair value and marked to market each reporting period until the earlier of the Warrants being fully exercised or December 31, 2017, when the down-round protection expires. The initial fair value of the Warrants on December 31, 2014 was $4,862,000. At June 30, 2016 and 2015, the fair value of the Warrants was estimated at $4,354,100 and $6,258,000, respectively. The Warrants were valued at June 30, 2016 using the Monte Carlo simulation model, under the following assumptions: (i) remaining expected life of 4.0 years, (ii) volatility of 49.9%, (iii) risk-free interest rate of 0.86% and (iv) dividend rate of zero. The Warrants were valued at June 30, 2015 using the Monte Carlo simulation model, under the following assumptions: (i) remaining expected life of 5.0 years, (ii) volatility of 52.8%, (iii) risk-free interest rate of 1.63% and (iv) dividend rate of zero. Of the $27,000,000 in principal amount of Debentures sold in December 2014, $22,138,000 of the initial proceeds was allocated to the Debentures. The required redemption contingent upon the real estate sale was determined to be an embedded derivative not clearly and closely related to the borrowing. As such, it was bifurcated and treated as a derivative liability, recorded initially at its fair value of $150,000, leaving an allocation to the host debt of $21,988,000. The difference between the initial amount allocated to the borrowing and the face value of the Debentures is being amortized over the term of the Debentures using the effective interest method. Debt issuance costs totaling $1,931,105 are also being amortized over the term of the Debentures using the effective interest method. In addition, the reduction in the conversion price of the Debentures as of September 30, 2015 resulted in a beneficial conversion feature of $871,862, which was recognized as additional debt discount and an increase to additional paid-in capital. Accounting for the Redemption The redemption of $5,000,000 in principal amount of the Debentures was accounted for as a partial extinguishment of the borrowing, as well as the settlement of the derivative recognized initially. The redemption resulted in a loss of $1,183,687, which was included in the interest expense - amortization of debt discount line item on the consolidated statement of operations for the three months ended March 31, 2015. |
NOTE 8 - INCOME TAXES
NOTE 8 - INCOME TAXES | 12 Months Ended |
Jun. 30, 2016 | |
Note 8 - Income Taxes | |
NOTE 8 - INCOME TAXES | NOTE 8 – INCOME TAXES Loss before income taxes consists of the following: Years Ended June 30, 2016 2015 United States $ (2,847,980) $ (5,442,948) Foreign 809,828 1,433,842 Loss before income taxes $ (2,038,152) $ (4,009,106) Significant components of the provision (benefit) for income taxes from continuing operations are as follows: Years Ended June 30, 2016 2015 Current: Federal $ 108,075 $ 42,453 State (1,953) 14,528 Foreign 208,491 519,910 Total current provision 314,613 576,891 Deferred: Federal (2,753,271) (1,146,961) State (33,942) (192,907) Foreign 69,221 (83,002) Total deferred provision (benefit) (2,717,992) (1,422,870) (Benefit) provision for income taxes $ (2,403,379) $ (845,979) The difference between income tax benefits and income taxes computed using the U.S. federal income tax rate are as follows: Years Ended June 30, 2016 2015 Tax expense (benefit) at statutory tax rate $ (692,971) $ (1,363,097) State taxes (benefit), net of federal tax (benefit) (22,697) (115,851) Stock compensation 146,271 104,090 Mark to market on financial instruments (647,326) 474,640 Warrant financing costs - 145,479 Other permanent differences 53,880 29,161 Federal and state research credits - current year (97,881) (59,233) Foreign currency loss on intercompany note (1,095,906) - Foreign rate differential (37,617) (58,756) Other (9,132) (2,412) $ (2,403,379) $ (845,979) The Company recognizes federal and state current tax liabilities or assets based on its estimate of taxes payable to or refundable by tax authorities in the current fiscal year. The Company also recognizes federal and state deferred tax liabilities or assets based on the Company's estimate of future tax effects attributable to temporary differences and carry forwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. The Company considers projected future taxable income and planning strategies in making this assessment. Based on the projections for the taxable income and planning strategies, the Company has determined that it is more likely than not that the deferred tax assets will be realized. Accordingly, no valuation allowance has been recorded as of June 30, 2016 or 2015. Significant components of the Company's deferred tax assets are shown below. June 30, 2016 2015 Deferred tax assets: Net operating loss carry forwards $ 6,744,515 $ 4,124,109 Stock compensation 373,738 275,027 Tax credit carry forwards 238,405 140,524 Other, net 446,892 475,120 Total deferred tax assets 7,803,550 5,014,780 Deferred tax liabilities Intangible assets (49,499) (70,911) Fixed assets (484,493) (660,609) Total deferred tax liabilities (533,992) (731,520) Net deferred tax assets $ 7,269,558 $ 4,283,260 As of June 30, 2016, the Company had federal and state net operating loss carry forwards of approximately $18,260,027 and $7,256,901, respectively, which will begin to expire June 30, 2031, unless previously utilized. The Company has federal research credits of $221,846 which will expire June 30, 2031, unless previously utilized. The Company also has foreign tax credits of $167,839 which will begin to expire June 30, 2023, unless previously utilized. The Company has state research credits of $25,089 that do not expire. As of June 30, 2016, the Company has not provided for U.S. federal and state income taxes and foreign withholding taxes on approximately $3,640,000 of undistributed earnings of its foreign subsidiary as these earnings are considered indefinitely reinvested outside of the United States. Determination of the amount of any potential unrecognized deferred income tax liability is not practicable due to the complexities of the hypothetical calculation. If management decides to repatriate such foreign earnings in future periods, the Company may incur incremental U.S. federal and state income taxes as well as foreign withholding taxes. However, the Company's intent is to keep these funds indefinitely reinvested outside the U.S. and its current plans do not demonstrate a need to repatriate them to fund our U.S. operations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes that it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcome of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company believes that it has appropriate support for the income tax positions taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter. The Company is open for audit for all years since the entity became a corporation. The Company's policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. The Company has not accrued interest and penalties associated with uncertain tax positions as of June 30, 2016 and 2015. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. |
NOTE 9 - WARRANTS
NOTE 9 - WARRANTS | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 9 - WARRANTS | NOTE 9 - WARRANTS The following table summarizes the total warrants outstanding at June 30, 2016: Exercise Price Expiration Outstanding as Outstanding as Issue Date Per Share Date of June 30, 2015 New Issuances Expired of June 30, 2016 Underwriter warrants May 2012 $ 6.88 Feb 2017 50,000 - - 50,000 Warrants Dec 2014 $ 4.53 Jun 2020 2,699,999 - - 2,699,999 2,749,999 - - 2,749,999 The following table summarizes the total warrants outstanding at June 30, 2015: Exercise Price Outstanding Outstanding Per Share / Expiration as of June 30, as of June 30, Issue Date Unit Date 2014 New Issuances Expired 2015 Class B warrants May 2010 $ 11.00 May 2015 1,421,000 - (1,421,000) - Underwriter warrants - units May 2010 $ 13.20 May 2015 119,000 - (119,000) - Underwriter warrants May 2012 $ 6.88 Feb 2017 50,000 - - 50,000 Warrants Dec 2014 $ 5.00 Jun 2020 - 2,699,999 - 2,699,999 1,590,000 2,699,999 (1,540,000) 2,749,999 The warrants issued in December 2014 are subject to down-round price protection. See Note 7 for further discussion. |
NOTE 10 - FOREIGN CURRENCY CONT
NOTE 10 - FOREIGN CURRENCY CONTRACTS | 12 Months Ended |
Jun. 30, 2016 | |
Note 10 - Foreign Currency Contracts | |
NOTE 10 - FOREIGN CURRENCY CONTRACTS | NOTE 10 - FOREIGN CURRENCY CONTRACTS The Company's subsidiary, SGI, is exposed to foreign currency exchange rate fluctuations in the normal course of its business, which the Company manages through the use of foreign currency forward contracts. These foreign currency contracts are not designated as hedging instruments; accordingly, changes in the fair value are recorded in current period earnings. These foreign currency contracts had a notional value of $8,630,000 at June 30, 2016 and their maturities range from July 2016 to December 2016. The Company records an asset or liability on the consolidated balance sheet for the fair value of the foreign currency forward contracts. The foreign currency contract assets totaled $49,808 at June 30, 2016 compared to foreign currency contract liabilities of $59,116 at June 30, 2015. The Company recorded a loss on foreign exchange contracts of $271,754 and a loss of $469,738, which is reflected in cost of revenue for the years ended June 30, 2016 and 2015, respectively. |
NOTE 11 - COMMITMENTS AND CONTI
NOTE 11 - COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 11 - COMMITMENTS AND CONTINGENCIES | NOTE 11 - COMMITMENTS AND CONTINGENCIES Commitments In the DuPont Pioneer Acquisition, DuPont Pioneer retained ownership of its GMO (genetically modified) alfalfa germplasm and related intellectual property assets, as well as the right to develop new GMO-traited alfalfa germplasm. The retained GMO germplasm assets incorporate certain GMO traits that are licensed to DuPont Pioneer from third parties (the "Third Party GMO Traits"). Pursuant to the terms of the Asset Purchase and Sale Agreement for the DuPont Pioneer Acquisition, if required third party consents are received prior to November 30, 2017 and subject to the satisfaction of certain other conditions specified in the Asset Purchase and Sale Agreement, either the Company or DuPont Pioneer has the right to enter into (and require the other party to enter into) on December 29, 2017 (or such earlier date as the parties agree) a proposed form of asset purchase and sale agreement, as the same may be updated in accordance with the terms of the Asset Purchase and Sale Agreement, pursuant to which Company would acquire additional GMO germplasm varieties and other related assets from DuPont Pioneer for a purchase price of $7,000,000. Leases The Company has entered into various non-cancelable operating lease agreements. Rent expense under operating leases was $567,553 and $257,928 for the years ended June 30, 2016 and 2015, respectively. The following table sets forth the Company's estimates of future lease payment obligations as of June 30, 2016: 2017 2018 2019 2020 2021 2022 and beyond Total (a) Operating lease obligations $ 577,631 $ 398,032 $ 250,882 $ 290,097 $ 288,131 $ 823,515 $ 2,628,288 (a) The following table sets forth the composition of total rental expense for all operating leases except those with terms of a month or less that were not renewed. Years Ended June 30, 2016 2015 Minimum rentals $ 567,553 $ 257,928 Less: Sublease rentals (228,290) - $ 339,263 $ 257,928 Contingencies Based on information currently available, management is not aware of any matters that would have a material adverse effect on the Company's financial condition, results of operations or cash flows. |
NOTE 12 - RELATED PARTY TRANSAC
NOTE 12 - RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 12 - RELATED PARTY TRANSACTIONS | NOTE 12 - RELATED PARTY TRANSACTIONS Glen D. Bornt, a member of the Company's Board of Directors, is the founder and President of Imperial Valley Milling Co. ("IVM"). He is its majority shareholder and a member of its Board of Directors. Fred Fabre, the Company's Vice President of Sales and Marketing, is a minority shareholder of IVM. IVM had a 15-year supply agreement with IVS, and this agreement was assigned by IVS to the Company when it purchased the assets of IVS in October 2012. IVM contracts with alfalfa seed growers in California's Imperial Valley and sells its growers' seed to the Company pursuant to a supply agreement. Under the terms of the supply agreement, IVM's entire certified and uncertified alfalfa seed production must be offered and sold to the Company, and the Company has the exclusive option to purchase all or any portion of IVM's seed production. The Company paid $11,091,920 to IVM during the year ended June 30, 2016. Amounts due to IVM totaled $396,027 and $834,158 at June 30, 2016 and June 30, 2015, respectively. |
NOTE 13 - EQUITY-BASED COMPENSA
NOTE 13 - EQUITY-BASED COMPENSATION | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 13 - EQUITY-BASED COMPENSATION | NOTE 13 - EQUITY-BASED COMPENSATION 2009 Equity Incentive Plan In October 2009 and January 2010, the Company's Board of Directors and stockholders, respectively, approved the 2009 Equity Incentive Plan (as amended and/or restated from time to time, the "2009 Plan"). The plan authorized the grant and issuance of options, restricted shares and other equity compensation to the Company's directors, employees, officers and consultants, and those of the Company's subsidiaries and parent, if any. In October 2012 and December 2012, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 1,250,000 shares. In September 2013 and December 2013, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 1,700,000 shares. In September 2015 and December 2015, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 2,450,000 shares. The term of incentive stock options granted under the 2009 Plan may not exceed ten years, or five years for incentive stock options granted to an optionee owning more than 10% of the Company's voting stock. The exercise price of options granted under the 2009 Plan must be equal to or greater than the fair market value of the shares of the common stock on the date the option is granted. An incentive stock option granted to an optionee owning more than 10% of voting stock must have an exercise price equal to or greater than 110% of the fair market value of the common stock on the date the option is granted. The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Stock options issued to non-employees are accounted for at their estimated fair value. The fair value of options granted to non-employees is re-measured as they vest. The Company amortizes stock-based compensation expense on a straight-line basis over the requisite service period. Beginning with the quarter ended December 31, 2014, the Company began utilizing 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. The fair value of grants issued prior to the quarter ended December 31, 2014 were estimated using a lattice model. Weighted average assumptions used in the Black-Scholes-Merton model are: June 30, June 30, 2016 2015 Risk free rate 1.5% - 1.6% 1.4% - 1.5% Dividend yield 0% 0% Volatility 50.4% - 50.8% 50.8% Average forfeiture assumptions 6.1% 1.9% On December 8, 2012, the Company granted 175,000 stock options to its directors, officers, and employees at an exercise price of $7.20, which was the closing price for the Company's common stock on the date of grant. These options vest in equal quarterly installments over one- and three-year periods, commencing on January 1, 2013, and expire five years from the date of grant. During the year ended June 30, 2014, the Company granted 270,000 stock options to its officers and employees at exercise prices ranging from $5.94 to $8.29, which was the closing price for the Company's common stock on the respective dates of grant. These options vest in equal quarterly installments over periods ranging from six months to three years and expire five years from the date of grant. During the year ended June 30, 2015, the Company granted 227,197 stock options to its directors, officers and employees at exercise prices ranging from $3.61 to $6.25. These options vest in equal quarterly installments over periods ranging from one to three years and expiration dates range from five to ten years from the date of grant. During the year ended June 30, 2016, the Company granted 203,500 stock options to its directors and officers at exercise prices ranging from $4.25 to $4.76. These options vest in quarterly installments over periods ranging from one to three years and expire ten years from the date of grant. A summary of stock option activity for the years ended June 30, 2016 and 2015 is presented below: Weighted- Weighted - Average Average Remaining Aggregate Number Exercise Price Contractual Intrinsic Outstanding Per Share Life (Years) Value Outstanding at June 30, 2014 1,087,000 $ 5.17 2.5 $ 1,562,712 Granted 227,197 3.89 9.5 - Exercised (400,000) 4.00 - - Canceled/forfeited/expired (12,500) 7.75 - - Outstanding at June 30, 2015 901,697 5.33 4.1 392,850 Granted 203,500 4.56 9.7 - Exercised (14,582) 3.95 - - Canceled/forfeited/expired (69,197) 6.08 - - Outstanding at June 30, 2016 1,021,418 5.14 4.2 142,381 Options vested and exercisable at June 30, 2016 773,387 5.33 3.0 100,494 Options vested and expected to vest as of June 30, 2016 1,019,225 $ 5.14 4.2 $ 141,514 The weighted average grant date fair value of options granted and outstanding at June 30, 2016 was $1.23. At June 30, 2016, the Company had $340,550 of unrecognized stock compensation expense, net of estimated forfeitures, related to the options under the 2009 Plan, which will be recognized over the weighted average remaining service period of 1.57 years. The Company settles employee stock option exercises with newly issued shares of common stock. On March 16, 2013, the Company issued 280,000 restricted stock units to certain members of the executive management team. The restricted stock units have varying vesting periods whereby 34,000 restricted stock units vested on July 1, 2013 and the remaining 246,000 restricted stock units vest quarterly in equal installments over a four and one-half year period, commencing on July 1, 2013. The fair value of the award was $2,984,800 and was based on the closing stock price on the date of grant. On July 15, 2015, the Company issued 88,333 restricted stock units to certain members of the executive management team. The restricted stock units have varying vesting periods whereby 13,250 restricted stock units vest on October 1, 2015 and the remaining 75,083 restricted stock units vest quarterly in equal installments over a three-year period, commencing on July 1, 2015. The fair value of the award was $420,465 and was based on the closing stock price on the date of grant. On December 11, 2015, the Company issued 28,059 restricted stock units to certain members of the executive management team and other employees. The restricted stock units have varying vesting periods whereby 500 restricted stock units vest on December 11, 2015, 4,259 restricted stock units vest in quarterly installments over a one-year period, and the remaining 23,300 restricted stock units vest annually in equal installments over a three-year period. The fair value of the award was $119,251 and was based on the closing stock price on the date of grant. On March 18, 2016, the Company issued 3,000 restricted stock units. The restricted stock units have varying vesting periods whereby 1,000 restricted stock units vested on March 18, 2016; and the remaining 2,000 restricted stock units vest annually in equal installments over a three-year period. The fair value of the award was $12,180 and was based on the closing stock price on the date of grant. The Company recorded $772,543 and $576,951 of stock-based compensation expense associated with grants of restricted stock units made under the 2009 Plan during the years ended June 30, 2016 and 2015, respectively. A summary of activity related to non-vested restricted stock units is presented below: Year Ended June 30, 2016 Weighted - Number of Weighted - Average Nonvested Average Remaining Restricted Grant Date Contractual Share Units Fair Value Life (Years) Beginning nonvested restricted units outstanding 136,672 $ 10.66 2.3 Granted 119,392 4.62 - Vested (85,185) 8.52 - Forfeited - - - Ending nonvested restricted units outstanding 170,879 $ 7.51 1.5 At June 30, 2016, the Company had $1,081,839 of unrecognized stock compensation expense related to the restricted stock units, which will be recognized over the weighted average remaining service period of 1.5 years. At June 30, 2016, there were 740,139 shares available under the 2009 Plan for future grants and awards. Stock-based compensation expense recorded for stock options, restricted stock grants and restricted stock units for the years ended June 30, 2016 and 2015, totaled $1,190,126 and $896,882, respectively. |
NOTE 14 - NON-CASH INVESTING AN
NOTE 14 - NON-CASH INVESTING AND FINANCING ACTIVITIES FOR STATEMENTS OF CASH FLOWS | 12 Months Ended |
Jun. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
NOTE 14 - NON-CASH INVESTING AND FINANCING ACTIVITIES FOR STATEMENTS OF CASH FLOWS | NOTE 14 - NON-CASH INVESTING AND FINANCING ACTIVITIES FOR STATEMENTS OF CASH FLOWS The below table represents supplemental information to the Company's consolidated statements of cash flows for non-cash activities during the years ended June 30, 2016 and 2015, respectively. Years Ended June 30, 2016 2015 Increase in non-cash net assets of subsidiary due to foreign currency translation loss, net of income tax $ (693,077) $ (3,427,819) Fair value of assets acquired 2,102,225 60,937,152 Cash paid for the acquisition (1,000,000) (27,000,000) Promissory note issued - (10,000,000) Restricted stock consideration (950,000) - Contingent consideration issued (135,324) (2,004,000) Amount payable to seller - (9,684,646) Liabilities assumed $ 16,901 $ 12,248,506 |
NOTE 15 - SUBSEQUENT EVENTS
NOTE 15 - SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2016 | |
Note 15 - Subsequent Events | |
Note 15 - SUBSEQUENT EVENTS | NOTE 15 - SUBSEQUENT EVENTS In August 2016, certain holders of the convertible debentures converted $425,346 of principal and interest, into 91,872 shares of common stock in accordance with the conversion terms of the Debentures. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Principles of Consolidation | Basis of Presentation and Principles of Consolidation The Company maintains its accounting records on an accrual basis in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of Seed Holding, LLC and its other wholly-owned subsidiaries, S&W Australia, which owns 100% of SGI, and Stevia California, LLC. All significant intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in the financial statements. These include allowance for doubtful trade receivables, inventory valuation, asset impairments, provisions for income taxes, grower accruals (an estimate of amounts payable to farmers who grow seed for the Company), contingent consideration, derivative liabilities, contingencies and litigation. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and certain intangible assets, goodwill as well as valuing stock-based compensation. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows. |
Certain Risks and Concentrations | Certain Risks and Concentrations The Company's revenue is principally derived from the sale of alfalfa seed, the market for which is highly competitive. The Company depends on a core group of significant customers. Two customers accounted for 54% of its revenue for the year ended June 30, 2016 and two customers accounted for 49% of its revenue for the year ended June 30, 2015. One customer accounted for 35% of the Company's accounts receivable at June 30, 2016. Three customers accounted for 53% of the Company's accounts receivable at June 30, 2015. In addition, the Company sells a substantial portion of its products to international customers. Sales direct to international customers represented 55% and 59% of revenue during the years ended June 30, 2016 and 2015, respectively. The net book value of fixed assets located outside the United States was 17% and 11% of total assets at June 30, 2016 and June 30, 2015, respectively. Cash balances located outside of the United States may not be insured and totaled $1,923,290 and $1,039,326 at June 30, 2016 and June 30, 2015, respectively. The following table shows revenue from external sources by destination country: Years Ended June 30, 2016 2015 United States $ 42,816,013 45% $ 33,078,838 41% Saudi Arabia 31,546,833 33% 26,064,276 32% Mexico 4,529,131 5% 4,968,234 6% Sudan 4,267,752 4% 2,851,855 4% Argentina 2,586,360 3% 2,918,755 4% Peru 2,056,261 2% 887,855 1% Australia 1,397,275 1% 542,051 1% Algeria 1,143,630 2% 217,099 0% Libya 937,330 1% 3,002,480 4% Other 4,763,669 5% 6,677,460 7% Total $ 96,044,254 100% $ 81,208,903 100% |
International Operations | International Operations The Company translates its foreign operations' asset and liabilities denominated in foreign currencies into U.S. dollars at the current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in the cumulative translation account, a component of accumulated other comprehensive income. Gains or losses from foreign currency transactions are included in the consolidated statement of operations. |
Revenue Recognition | Revenue Recognition The Company derives its revenue primarily from sale of seed and other crops and milling services. Revenue from seed and other crop sales is recognized when risk and title to the product is transferred to the customer. No customer has a right of return. The Company recognizes revenue from milling services according to the terms of the sales agreements and when delivery has occurred, performance is complete, and pricing is fixed or determinable at the time of sale. Additional conditions for recognition of revenue for all sales include the requirements that the collection of sales proceeds must be reasonably assured based on historical experience and current market conditions, the sales price is fixed and determinable and that there must be no further performance obligations under the sale. |
Cost of Revenue | Cost of Revenue The Company records purchasing and receiving costs, inspection costs and warehousing costs in cost of revenue. When the Company is required to pay for outward freight and/or the costs incurred to deliver products to its customers, the costs are included in cost of revenue. |
Cash and Equivalents | Cash and Cash Equivalents For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At times, cash and cash equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation . |
Accounts Receivable | Accounts Receivable The Company provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer's trade accounts receivable. The allowance for doubtful trade receivables was $177,295 and $155,595 at June 30, 2016 and June 30, 2015, respectively. |
Inventories | Inventories Inventories consist of alfalfa seed and packaging materials. Inventories are stated at the lower of cost or market, and an inventory reserve permanently reduces the cost basis of inventory. Inventories are valued as follows: Actual cost is used to value raw materials such as packaging materials, as well as goods in process. Costs for substantially all finished goods, which include the cost of carryover crops from the previous year, are valued at actual cost. Actual cost for finished goods includes plant conditioning and packaging costs, direct labor and raw materials and manufacturing overhead costs based on normal capacity. The Company records abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges and allocates fixed production overhead to the costs of finished goods based on the normal capacity of the production facilities. The Company's subsidiary, SGI, does not fix the final price for seed payable to its growers until the completion of a given year's sales cycle pursuant to its standard contract production agreement. SGI records an estimated unit price; accordingly, inventory, cost of revenue and gross profits are based upon management's best estimate of the final purchase price to growers. Inventory is periodically reviewed to determine if it is marketable, obsolete or impaired. Inventory that is determined to be obsolete or impaired is written off to expense at the time the impairment is identified. Because the germination rate, and therefore the quality, of alfalfa seed improves over the first year of proper storage, inventory obsolescence for alfalfa seed is not a material concern. The Company sells its inventory to distributors, dealers and directly to growers. Components of inventory are: June 30, June 30, 2016 2015 Raw materials and supplies $ 241,268 $ 276,339 Work in progress and growing crops 3,120,485 5,415,402 Finished goods 18,484,377 19,830,006 $ 21,846,130 $ 25,521,747 |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset - periods of 7-28 years for buildings, 3-20 years for machinery and equipment, and 3-5 years for vehicles. |
Intangible Assets | Intangible Assets Intangible assets acquired in business acquisitions are reported at their initial fair value less accumulated amortization. Intangible assets are amortized using the straight-line method over the estimated useful life of the asset. Periods of 10-30 years for technology/IP/germplasm, 10-20 years for customer relationships and trade names and 2-20 for other intangible assets. The weighted average estimated useful lives are 24 years for technology/IP/germplasm, 18 years for customer relationships and trade names and 19 years for other intangible assets. |
Goodwill | Goodwill Goodwill originated from acquisitions of Imperial Valley Seeds, Inc. ("IVS") and SGI during the fiscal year 2013, the acquisition of the alfalfa business from DuPont Pioneer in fiscal year 2015 and the acquisition of assets of SV Genetics in May 2016. Goodwill is assessed at least annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management conducts a two-step quantitative goodwill impairment test. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires various judgmental assumptions including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on the Company's budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The Company changed its reporting structure in May 2016 which resulted in a change from its United States and Australian reporting units to one company-wide reporting unit. Due to the qualitative factor of the change in the Company's reporting units, the Company performed quantitative goodwill impairment tests of its United States and Australian reporting units immediately prior to the change and a quantitative goodwill impairment test of its company-wide reporting unit immediately after the change and determined goodwill was not impaired. Additionally, the Company performed a qualitative assessment of goodwill at June 30, 2016 and 2015 and determined it was more likely than not goodwill was not impaired. |
Equity Method Investments | Equity Method Investments Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company's board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under the equity method of accounting, an investee company's accounts are not reflected within the Company's consolidated balance sheets and statements of operations; however, the Company's share of the earnings or losses of the investee company is reflected in the caption ``Loss on equity method investment'' in the consolidated statements of operations. The Company's carrying value in an equity method investee company is included in the Company's consolidated balance sheets. When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Loss on equity method investment totaled $294,197 for the year ended June 30, 2016. This represents the Company's 50% share of losses incurred by the joint corporation (S&W Semillas S.A.) in Argentina during the two periods. |
Cost Method Investments | Cost Method Investments Investee companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, the Company's share of the earnings or losses of such Investee companies is not included in the consolidated balance sheet or statement of operations. However, impairment charges are recognized in the consolidated statement of operations. If circumstances suggest that the value of the Investee company has subsequently recovered, such recovery is not recorded. |
Research and Development Costs | Research and Development Costs The Company is engaged in ongoing research and development ("R&D") of proprietary seed and stevia varieties. All R&D costs must be charged to expense as incurred. Accordingly, internal R&D costs are expensed as incurred. Third-party R&D costs are expensed when the contracted work has been performed or as milestone results have been achieved. The costs associated with equipment or facilities acquired or constructed for R&D activities that have alternative future uses are capitalized and depreciated on a straight-line basis over the estimated useful life of the asset. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are determined based on differences between the financial statement and tax bases 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. |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of long-lived assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. A triggering event during the quarter ended December 31, 2014 prompted a review of certain farmland-related costs. The carrying value of these assets was deemed in excess of fair value, and the Company recorded an impairment charge of $500,198 in the consolidated statement of operations during the quarter ended December 31, 2014. |
Foreign Exchange Contracts | Derivative Financial Instruments Foreign Exchange Contracts The Company's subsidiary, SGI, is exposed to foreign currency exchange rate fluctuations in the normal course of its business, which the Company at times manages through the use of foreign currency forward contracts. The Company has entered into certain derivative financial instruments (specifically foreign currency forward contracts), and accounts for these instruments in accordance with ASC Topic 815, "Derivatives and Hedging", which establishes accounting and reporting standards requiring that derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. The Company's foreign currency contracts are not designated as hedging instruments under ASC 815; accordingly, changes in the fair value are recorded in current period earnings. |
Derivative Liabilities | Derivative Financial Instruments Derivative Liabilities The Company reviews the terms of the common stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options and redemption options, which are required to be bifurcated and accounted for separately as derivative financial instruments. |
Fair Values of Financial Instruments | Fair Value of Financial Instruments The Company discloses assets and liabilities that are recognized and measured at fair value, presented in a three-tier fair value hierarchy, as follows: Level 1. Observable inputs such as quoted prices in active markets; Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The assets acquired and liabilities assumed in the DuPont Pioneer Acquisition were valued at fair value on a non-recurring basis as of December 31, 2014. The assets acquired and liabilities assumed in the SV Genetics Acquisition were valued at fair value on a non-recurring basis as of May 26, 2016. No assets or liabilities were valued at fair value on a non-recurring basis as of June 30, 2016 or June 30, 2015. The carrying value of cash and cash equivalents, accounts payable, short-term and all long-term borrowings other than the convertible debentures, as reflected in the consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments or interest rates commensurate with market rates. There have been no changes in operations and/or credit characteristics since the date of issuance that could impact the relationship between interest rate and market rates. At June 30, 2016, the fair value and carrying value of the convertible debentures was $7,829,671 and $6,840,608 respectively. At June 30, 2015, the fair value and carrying value of the convertible debentures was $21,828,653 and $18,042,970 respectively. The fair value was calculated using a discounted cash flow model and utilized a 10% discount rate that is commensurate with market rates given the remaining term, principal repayment schedule and outstanding balance. The convertible debentures are categorized as Level 3 in the fair value hierarchy. The Company used a discounted cash flows approach to measure the fair value using Level 3 inputs. Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows: Fair Value Measurements as of June 30, 2016 Using: Level 1 Level 2 Level 3 Foreign exchange contract asset $ - $ 49,808 $ - Contingent consideration obligations - - 2,268,416 Derivative warrant liabilities - - 4,354,100 Total $ - $ 49,808 $ 6,622,516 Fair Value Measurements as of June 30, 2015 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 59,116 $ - Contingent consideration obligation - - 2,078,000 Derivative warrant liabilities - - 6,258,000 Total $ - $ 59,116 $ 8,336,000 The Company issued contingent consideration obligations of $135,245 during the year ended June 30, 2016 and recognized a loss of $55,092 related to contingent consideration obligations in the consolidated statement of operations for the year ended June 30, 2016. The Company recognized a gain of $1,903,900 related to derivative warrant liabilities in the consolidated statement of operations during the year ended June 30, 2016. The Company issued contingent consideration obligations of $2,004,000 during the year ended June 30, 2015 and recognized a loss of $74,000 related to contingent consideration obligations in the consolidated statement of operations for the year ended June 30, 2015. The Company issued derivative warrant liabilities of $4,862,000 during the year ended June 30, 2015 and recognized a loss of $1,396,000 related to derivative warrant liabilities in the consolidated statement of operations during the year ended June 30, 2015. There were no transfers in or out of Level 3 during the years ended June 30, 2016 and 2015. |
Reclassifications | Reclassifications Certain reclassifications have been made to prior period amounts to conform to classifications adopted in the current period. The reclassifications had no effect on net income (loss), cash flows or stockholders' equity. |
Recently Adopted and Issued Accounting Pronouncements | Recently Adopted and Issued Accounting Pronouncements Adopted In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes Issued In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued Accounting Standards Update No. 2016-02: Leases In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers: Deferral of the Effective Date Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements and related disclosures. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Certain Risks and Concentrations) (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Summary Of Significant Accounting Policies Certain Risks And Concentrations Tables | |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The following table shows revenue from external sources by destination country: Years Ended June 30, 2016 2015 United States $ 42,816,013 45% $ 33,078,838 41% Saudi Arabia 31,546,833 33% 26,064,276 32% Mexico 4,529,131 5% 4,968,234 6% Sudan 4,267,752 4% 2,851,855 4% Argentina 2,586,360 3% 2,918,755 4% Peru 2,056,261 2% 887,855 1% Australia 1,397,275 1% 542,051 1% Algeria 1,143,630 1% 217,099 0% Libya 937,330 1% 3,002,480 4% Other 4,763,669 5% 6,677,460 7% Total $ 96,044,254 100% $ 81,208,903 100% |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Inventories) (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Summary Of Significant Accounting Policies Inventories Tables | |
Inventories (Tables) | Components of inventory are: June 30, June 30, 2016 2015 Raw materials and supplies $ 241,268 $ 276,339 Work in progress and growing crops 3,120,485 5,415,402 Finished goods 18,484,377 19,830,006 $ 21,846,130 $ 25,521,747 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Fair Value Measurement) (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Summary Of Significant Accounting Policies Fair Value Measurement Tables | |
Fair Value of Financial Instrumements (Tables) | Assets and liabilities that are recognized and measured at fair value on a recurring basis are categorized as follows: Fair Value Measurements as of June 30, 2016 Using: Level 1 Level 2 Level 3 Foreign exchange contract asset $ - $ 49,808 $ - Contingent consideration obligations - - 2,268,416 Derivative warrant liabilities - - 4,354,100 Total $ - $ 49,808 $ 6,622,516 Fair Value Measurements as of June 30, 2015 Using: Level 1 Level 2 Level 3 Foreign exchange contract liability $ - $ 59,116 $ - Contingent consideration obligation - - 2,078,000 Derivative warrant liabilities - - 6,258,000 Total $ - $ 59,116 $ 8,336,000 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Business Acquisition, Pro Forma Information | The following unaudited pro forma financial information presents results as if the DuPont Pioneer Acquisition occurred on July 1, 2013 and the SV Genetics Acquisition occurred on July 1, 2014. Years Ended June 30, (Unaudited) 2016 2015 Revenue $ 96,333,863 $ 91,441,565 Net income (loss $ 374,074 $ (3,477,239) Net income (loss) per basic and diluted share $ 0.02 $ (0.25) |
Dupont Pioneer Acquisition | |
Schedule of Purchase Price Allocation | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date of December 31, 2014: December 31, 2014 Inventory $ 22,055,300 Property, plant and equipment 6,712,535 Distribution agreement 7,690,000 Production agreement 670,000 Grower relationships 76,000 Technology/IP - germplasm 13,340,000 Technology/IP - seed varieties 5,040,000 Goodwill 5,353,317 Current liabilities (12,248,506) Total acquisition cost allocated $ 48,688,646 |
Purchase price components of business combination | The acquisition-date fair value of the consideration transferred consisted of the following: December 31, 2014 Cash $ 27,000,000 Promissory note 10,000,000 Contingent earn-out 2,004,000 Amount payable to seller 9,684,646 $ 48,688,646 |
Useful lives of acquired intangibles in business combination | The values and useful lives of the acquired DuPont Pioneer intangibles are as follows: Estimated Useful Life (Years) Estimated Fair Value Distribution agreement 20 $ 7,690,000 Production agreement 3 670,000 Grower relationships 10 76,000 Technology/IP - germplasm 30 13,340,000 Technology/IP - seed varieties 15 5,040,000 Total identifiable intangible assets $ 26,816,000 |
SV Genetics Acquisition | |
Schedule of Purchase Price Allocation | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date of May 26, 2016: May 26, 2016 Accounts receivable $ 37,888 Inventory 150,000 Liabilities assumed (16,901) Property, plant and equipment 45,273 Technology/IP - germplasm 479,000 Technology/IP - seed varieties 57,000 Customer relationships 462,000 Trade name 45,000 Non-compete agreements 30,000 Goodwill 796,064 Total acquisition cost allocated $ 2,085,324 |
Purchase price components of business combination | The acquisition-date fair value of the consideration transferred consisted of the following: May 26, 2016 Cash $ 1,000,000 Restricted stock consideration 950,000 Contingent earn-out 135,324 $ 2,085,324 |
Useful lives of acquired intangibles in business combination | The values and useful lives of the acquired SV Genetics intangibles are as follows: Estimated Useful Life (Years) Estimated Fair Value Technology/IP - germplasm 25 $ 479,000 Technology/IP - seed varieties 15 57,000 Customer relationships 10 462,000 Trade name 10 45,000 Non-compete agreements 5 30,000 Total identifiable intangible assets $ 1,073,000 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Intangible Assets Tables | |
Goodwill | The following table summarizes the activity of goodwill for the years ended June 30, 2016 and 2015, respectively. Balance at Foreign Currency Balance at July 1, 2015 Additions Translation June 30, 2016 Goodwill $ 9,630,279 $ 796,064 $ (134,078) $ 10,292,265 Balance at Foreign Currency Balance at July 1, 2014 Additions Translation June 30, 2015 Goodwill - United States $ 1,402,000 $ 5,353,317 $ - $ 6,755,317 Goodwill - Australia 3,537,462 - (662,500) 2,874,962 $ 4,939,462 $ 5,353,317 $ (662,500) $ 9,630,279 |
Carrying values of intangible assets | Intangible assets consist of the following: Foreign Balance at Currency Balance at July 1, 2015 Additions Amortization Translation June 30, 2016 Intellectual property $ 4,805,951 $ - $ (127,890) $ (225,308) $ 4,452,753 Trade name 1,377,840 45,000 (82,208) (11,846) 1,328,786 Technology/IP 924,107 - (248,025) - 676,082 Non-compete 301,354 30,000 (125,815) (6,540) 198,999 GI customer list 93,131 - (7,164) - 85,967 Grower relationships 2,183,485 - (120,481) (98,980) 1,964,024 Supply agreement 1,304,679 - (75,632) - 1,229,047 Customer relationships 968,619 462,000 (60,314) (10,934) 1,359,371 Distribution agreement 7,497,750 - (384,497) - 7,113,253 Production agreement 558,334 - (223,332) - 335,002 Technology/IP - germplasm 13,117,666 479,000 (446,857) - 13,149,809 Technology/IP - seed varieties 4,872,000 57,000 (336,884) - 4,592,116 $ 38,004,916 $ 1,073,000 $ (2,239,099) $ (353,608) $ 36,485,209 Foreign Balance at Currency Balance at July 1, 2014 Additions Amortization Translation June 30, 2015 Intellectual property $ 6,246,572 $ - $ (295,844) $ (1,144,777) $ 4,805,951 Trade name 1,521,864 - (83,830) (60,194) 1,377,840 Technology/IP 1,043,067 - (118,960) - 924,107 Non-compete 471,768 - (132,353) (38,061) 301,354 GI customer list 100,295 - (7,164) - 93,131 Grower relationships 2,744,164 76,000 (133,770) (502,909) 2,183,485 Supply agreement 1,380,311 - (75,632) - 1,304,679 Customer relationships 1,082,730 - (58,557) (55,554) 968,619 Distribution agreement - 7,690,000 (192,250) - 7,497,750 Production agreement - 670,000 (111,666) - 558,334 Technology/IP - germplasm - 13,340,000 (222,334) - 13,117,666 Technology/IP - seed varieties - 5,040,000 (168,000) - 4,872,000 $ 14,590,771 $ 26,816,000 $ (1,600,360) $ (1,801,495) $ 38,004,916 |
Finite-lived intangible assets - future amortization expense | Estimated aggregate remaining amortization is as follows: 2017 2018 2019 2020 2021 Thereafter Amortization expense $ 2,304,451 $ 2,128,675 $ 1,964,285 $ 1,964,285 $ 1,963,885 $ 26,159,628 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Property Plant And Equipment Tables | |
Components of Property, Plant and Equipment | Components of property, plant and equipment were as follows: June 30, June 30, 2016 2015 Land and improvements $ 2,908,501 $ 2,247,379 Buildings and improvements 6,192,522 5,439,712 Machinery and equipment 4,781,586 3,520,168 Vehicles 1,080,354 940,627 Construction in progress 778,528 1,113,137 Total property, plant and equipment 15,741,491 13,261,023 Less: accumulated depreciation (2,619,792) (1,784,087) Property, plant and equipment, net $ 13,121,699 $ 11,476,936 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Debt Tables | |
Debt Components | Total debt outstanding, excluding convertible debt addressed in Note 7, are presented on the consolidated balance sheet as follows: June 30, 2016 June 30, 2015 Working capital lines of credit KeyBank $ 12,308,828 $ - Wells Fargo - 10,000,000 National Australia Bank Limited 4,378,645 3,755,800 Total working capital lines of credit 16,687,473 13,755,800 Current portion of long-term debt Term loan - Ally - 8,994 Keith facility (building loan) - National Australia Bank Limited 37,205 - Keith facility (machinery & equipment loan) - National Australia Bank Limited 137,889 154,657 Unsecured subordinate promissory note - related party 100,000 100,000 Promissory note - SGI selling shareholders - 2,000,000 Debt discount - SGI - (40,186) Total current portion 275,094 2,223,465 Long-term debt, less current portion Term loan - Ally - 15,590 Keith facility (building loan) - National Australia Bank Limited 446,454 466,482 Keith facility (machinery & equipment loan) - National Australia Bank Limited 567,879 - Unsecured subordinate promissory note - related party 100,000 200,000 Promissory note - Dupont Pioneer 10,000,000 10,000,000 Total long-term portion 11,114,333 10,682,072 Total debt $ 11,389,427 $ 12,905,537 |
Schedule of Annual Maturities | The annual maturities of short-term and long-term debt, excluding convertible debt addressed in Note 7, are as follows: Fiscal Year Amount 2017 $ 275,094 2018 10,300,740 2019 230,466 2020 238,247 2021 188,620 Thereafter 156,260 Total $ 11,389,427 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Convertible Notes Tables | |
Schedule of Convertible Notes | Total convertible debt outstanding, excluding debt addressed in Note 6, is presented on the consolidated balance sheet as follows: June 30, 2016 June 30, 2015 Current portion of convertible debt, net Senior secured convertible notes payable $ 7,849,754 $ 11,274,678 Debt discount (1,009,146) (2,008,749) Total current portion 6,840,608 9,265,929 Convertible debt, net, less current portion Senior secured convertible notes payable - 10,679,804 Debt discount - (1,902,763) Total long-term portion - 8,777,041 Total convertible debt, net $ 6,840,608 $ 18,042,970 As of June 30, 2016, the scheduled principal payments on the Debentures are as follows: Fiscal Year Amount 2017 $ 7,849,754 Thereafter - Total $ 7,849,754 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Income Taxes Tables | |
Schedule of income before income tax, domestic and foreign | Loss before income taxes consists of the following: Years Ended June 30, 2016 2015 United States $ (2,847,980) $ (5,442,948) Foreign 809,828 1,433,842 Loss before income taxes $ (2,038,152) $ (4,009,106) |
Components of tax provision (benefit) | Significant components of the provision (benefit) for income taxes from continuing operations are as follows: Years Ended June 30, 2016 2015 Current: Federal $ 108,075 $ 42,453 State (1,953) 14,528 Foreign 208,491 519,910 Total current provision 314,613 576,891 Deferred: Federal (2,753,271) (1,146,961) State (33,942) (192,907) Foreign 69,221 (83,002) Total deferred provision (benefit) (2,717,992) (1,422,870) (Benefit) provision for income taxes $ (2,403,379) $ (845,979) |
Reconciliation of U.S. statutory income tax rate to company's effective tax rate | The difference between income tax benefits and income taxes computed using the U.S. federal income tax rate are as follows: Years Ended June 30, 2016 2015 Tax expense (benefit) at statutory tax rate $ (692,971) $ (1,363,097) State taxes (benefit), net of federal tax (benefit) (22,697) (115,851) Stock compensation 146,271 104,090 Mark to market on financial instruments (647,326) 474,640 Warrant financing costs - 145,479 Other permanent differences 53,880 29,161 Federal and state research credits - current year (97,881) (59,233) Foreign currency loss on intercompany note (1,095,906) - Foreign rate differential (37,617) (58,756) Other (9,132) (2,412) $ (2,403,379) $ (845,979) |
Schedule of tax effects of temporary differences that give rise to deferred tax assets and liabilities | Significant components of the Company's deferred tax assets are shown below. June 30, 2016 2015 Deferred tax assets: Net operating loss carry forwards $ 6,744,515 $ 4,124,109 Stock compensation 373,738 275,027 Tax credit carry forwards 238,405 140,524 Other, net 446,892 475,120 Total deferred tax assets 7,803,550 5,014,780 Deferred tax liabilities Intangible assets (49,499) (70,911) Fixed assets (484,493) (660,609) Total deferred tax liabilities (533,992) (731,520) Net deferred tax assets $ 7,269,558 $ 4,283,260 |
Stockholders' Equity (Warrants
Stockholders' Equity (Warrants Outstanding) (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Stockholders Equity Warrants Outstanding Tables | |
Warrants Outstanding (Tables) | The following table summarizes the total warrants outstanding at June 30, 2016: Exercise Price Expiration Outstanding as Outstanding as Issue Date Per Share Date of June 30, 2015 New Issuances Expired of June 30, 2016 Underwriter warrants May 2012 $ 6.88 Feb 2017 50,000 - - 50,000 Warrants Dec 2014 $ 4.53 Jun 2020 2,699,999 - - 2,699,999 2,749,999 - - 2,749,999 The following table summarizes the total warrants outstanding at June 30, 2015: Exercise Price Outstanding Outstanding Per Share / Expiration as of June 30, as of June 30, Issue Date Unit Date 2014 New Issuances Expired 2015 Class B warrants May 2010 $ 11.00 May 2015 1,421,000 - (1,421,000) - Underwriter warrants - units May 2010 $ 13.20 May 2015 119,000 - (119,000) - Underwriter warrants May 2012 $ 6.88 Feb 2017 50,000 - - 50,000 Warrants Dec 2014 $ 5.00 Jun 2020 - 2,699,999 - 2,699,999 1,590,000 2,699,999 (1,540,000) 2,749,999 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Commitments And Contingencies Tables | |
Schedule of Future Minimum Rental Payments for Operating Leases | The following table sets forth the Company's estimates of future lease payment obligations as of June 30, 2016: 2017 2018 2019 2020 2021 2022 and beyond Total (a) Operating lease obligations $ 577,631 $ 398,032 $ 250,882 $ 290,097 $ 288,131 $ 823,515 $ 2,628,288 (a) Minimum payments have not been reduced by minimum subleases rentals of $2,078,395 due in the future under noncancelable subleases. |
Schedule of Rent Expense | The following table sets forth the composition of total rental expense for all operating leases except those with terms of a month or less that were not renewed. Years Ended June 30, 2016 2015 Minimum rentals $ 567,553 $ 257,928 Less: Sublease rentals (228,290) - $ 339,263 $ 257,928 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Stock Options | |
Summary of Share-Based Compensation Arrangements By Share-Based Payment Award (Tables) | A summary of stock option activity for the years ended June 30, 2016 and 2015 is presented below: Weighted- Weighted - Average Average Remaining Aggregate Number Exercise Price Contractual Intrinsic Outstanding Per Share Life (Years) Value Outstanding at June 30, 2014 1,087,000 $ 5.17 2.5 $ 1,562,712 Granted 227,197 3.89 9.5 - Exercised (400,000) 4.00 - - Canceled/forfeited/expired (12,500) 7.75 - - Outstanding at June 30, 2015 901,697 5.33 4.1 392,850 Granted 203,500 4.56 9.7 - Exercised (14,582) 3.95 - - Canceled/forfeited/expired (69,197) 6.08 - - Outstanding at June 30, 2016 1,021,418 5.14 4.2 142,381 Options vested and exercisable at June 30, 2016 773,387 5.33 3.0 100,494 Options vested and expected to vest as of June 30, 2016 1,019,225 $ 5.14 4.2 $ 141,514 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Weighted average assumptions used in the Black-Scholes-Merton model are: June 30, June 30, 2016 2015 Risk free rate 1.5% - 1.6% 1.4% - 1.5% Dividend yield 0% 0% Volatility 50.4% - 50.8% 50.8% Average forfeiture assumptions 6.1% 1.9% |
Nonvested RSU's | |
Summary of Share-Based Compensation Arrangements By Share-Based Payment Award (Tables) | A summary of activity related to non-vested restricted stock units is presented below: Year Ended June 30, 2016 Weighted - Number of Weighted - Average Nonvested Average Remaining Restricted Grant Date Contractual Share Units Fair Value Life (Years) Beginning nonvested restricted units outstanding 136,672 $ 10.66 2.3 Granted 119,392 4.62 - Vested (85,185) 8.52 - Forfeited - - - Ending nonvested restricted units outstanding 170,879 $ 7.51 1.5 |
Non-Cash Investing and Financin
Non-Cash Investing and Financing Activities for Statements of Cash Flows (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Non-cash Investing And Financing Activities For Statements Of Cash Flows Tables | |
Schedule of Cash Flow, Supplemental Disclosures | The below table represents supplemental information to the Company's consolidated statements of cash flows for non-cash activities during the years ended June 30, 2016 and 2015, respectively. Years Ended June 30, 2016 2015 Increase in non-cash net assets of subsidiary due to foreign currency translation loss, net of income tax $ (693,077) $ (3,427,819) Fair value of assets acquired 2,102,225 60,937,152 Cash paid for the acquisition (1,000,000) (27,000,000) Promissory note issued - (10,000,000) Restricted stock consideration (950,000) - Contingent consideration issued (135,324) (2,004,000) Amount payable to seller - (9,684,646) Liabilities assumed $ 16,901 $ 12,248,506 |
Background and Organization (Na
Background and Organization (Narrative) (Details) | Jun. 30, 2016 |
Background And Organization Narrative Details | |
Number of Countries in which S&W Operates | 30 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Concentrations Narrative) (Details) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Summary Of Significant Accounting Policies Concentrations Narrative Details | ||
Sales revenue, major customer, percentage | 54.00% | 49.00% |
Accounts receivable from major customers, percentage of total | 35.00% | 53.00% |
International sales revenue, percentage | 55% | 59% |
Cash balances located outside of the United States | Cash balances located outside of the United States may not be insured and totaled $1,923,290 and $1,039,326 at June 30, 2016 and June 30, 2015, respectively. |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Revenue Recognition Narrative) (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Summary Of Significant Accounting Policies Revenue Recognition Narrative Details | |
Number of customers with right of return | 0 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Revenues from External Customers By Country Of Domicile) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues from external customers | $ 96,044,254 | $ 81,208,903 |
Revenue from external customers by country, percentage | 100.00% | 100.00% |
Disclosure on Geographic Areas, Fixed Assets | The net book value of fixed assets located outside the United States was 17% and 11% of total assets at June 30, 2016 and June 30, 2015, respectively. | |
United States | ||
Revenues from external customers | $ 42,816,013 | $ 33,078,838 |
Revenue from external customers by country, percentage | 45.00% | 41.00% |
Saudi Arabia | ||
Revenues from external customers | $ 31,546,833 | $ 26,064,276 |
Revenue from external customers by country, percentage | 33.00% | 32.00% |
Mexico | ||
Revenues from external customers | $ 4,529,131 | $ 4,968,234 |
Revenue from external customers by country, percentage | 5.00% | 6.00% |
Sudan | ||
Revenues from external customers | $ 4,267,752 | $ 2,851,855 |
Revenue from external customers by country, percentage | 4.00% | 4.00% |
Agrentina | ||
Revenues from external customers | $ 2,586,360 | $ 2,918,755 |
Revenue from external customers by country, percentage | 3.00% | 4.00% |
Peru | ||
Revenues from external customers | $ 2,056,261 | $ 887,855 |
Revenue from external customers by country, percentage | 2.00% | 1.00% |
Australia | ||
Revenues from external customers | $ 1,397,275 | $ 542,051 |
Revenue from external customers by country, percentage | 1.00% | 1.00% |
Algeria | ||
Revenues from external customers | $ 1,143,630 | $ 217,099 |
Revenue from external customers by country, percentage | 1.00% | 0.00% |
Libya | ||
Revenues from external customers | $ 937,330 | $ 3,002,480 |
Revenue from external customers by country, percentage | 1.00% | 4.00% |
Other | ||
Revenues from external customers | $ 4,763,669 | $ 6,677,460 |
Revenue from external customers by country, percentage | 5.00% | 7.00% |
Summary of Significant Accoun41
Summary of Significant Accounting Policies (Accounts Receivable Narrative) (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Summary Of Significant Accounting Policies Accounts Receivable Narrative Details | ||
Allowance for doubtful trade receivables | $ 177,295 | $ 155,595 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies (Inventories by Component) (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Summary Of Significant Accounting Policies Inventories By Component Details | ||
Raw materials and supplies | $ 241,268 | $ 276,339 |
Work in progress and growing crops | 3,120,485 | 5,415,402 |
Finished goods | 18,484,377 | 19,830,006 |
Inventories | $ 21,846,130 | $ 25,521,747 |
Summary of Significant Accoun43
Summary of Significant Accounting Policies (Property, Plant and Equipment Useful Life Narrative) (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Building | Minimum | |
Estimated Useful Lives | 7 years |
Building | Maximum | |
Estimated Useful Lives | 28 years |
Equipment | Minimum | |
Estimated Useful Lives | 3 years |
Equipment | Maximum | |
Estimated Useful Lives | 20 years |
Vehicles | Minimum | |
Estimated Useful Lives | 3 years |
Vehicles | Maximum | |
Estimated Useful Lives | 5 years |
Summary of Significant Accoun44
Summary of Significant Accounting Policies (Intangible Assets Useful Life Narrative) (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Technology/IP | Minimum | |
Useful life | 10 years |
Technology/IP | Maximum | |
Useful life | 30 years |
Technology/IP | Weighted Average | |
Useful life | 24 years |
Customer Relationships | Minimum | |
Useful life | 2 years |
Customer Relationships | Maximum | |
Useful life | 20 years |
Customer Relationships | Weighted Average | |
Useful life | 18 years |
Other Intangibles | Minimum | |
Useful life | 2 years |
Other Intangibles | Maximum | |
Useful life | 20 years |
Other Intangibles | Weighted Average | |
Useful life | 19 years |
Summary of Significant Accoun45
Summary of Significant Accounting Policies (Impairment of Long-Lived Assets Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Summary Of Significant Accounting Policies Impairment Of Long-lived Assets Narrative Details | ||
Impairment of Long-lived Assets | $ 0 | $ 500,198 |
Summary of Significant Accoun46
Summary of Significant Accounting Policies (Fair Value of Financial Instruments) (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Foreign exchange contract asset | $ 49,808 | |
Contingent consideration obligation | 2,268,416 | $ 2,078,000 |
Derivative warrant liabilities | 4,354,100 | 6,258,000 |
(Level 1) | ||
Foreign exchange contract asset | 0 | |
Total | 0 | |
Foreign exchange contract liability | 0 | |
Contingent consideration obligation | 0 | 0 |
Derivative warrant liabilities | 0 | 0 |
Total | 0 | 0 |
(Level 2) | ||
Foreign exchange contract asset | 49,808 | |
Total | 49,808 | |
Foreign exchange contract liability | 59,116 | |
Contingent consideration obligation | 0 | 0 |
Derivative warrant liabilities | 0 | 0 |
Total | 0 | 59,116 |
(Level 3) | ||
Foreign exchange contract asset | 0 | |
Total | 0 | |
Foreign exchange contract liability | 0 | |
Contingent consideration obligation | 2,268,416 | 2,078,000 |
Derivative warrant liabilities | 4,354,100 | 6,258,000 |
Total | $ 6,622,516 | $ 8,336,000 |
Business Combinations (Purchase
Business Combinations (Purchase Price Components Narrative) (Details) - USD ($) | 1 Months Ended | |
May 31, 2016 | Dec. 31, 2014 | |
Business Combinations Purchase Price Components Narrative Details | ||
Acquisition costs | $ 140,372 | $ 831,737 |
Business Acquisition, Description of Acquired Entity | On May 26, 2016, the Company purchased the assets and business of SV Genetics Pty Ltd ("SV Genetics"), a private Australian company specializing in the breeding and licensing of proprietary hybrid sorghum and sunflower seed germplasm. The acquisition expanded and diversified its product offerings and provided access to new distribution channels. The SV Genetics Acquisition was consummated pursuant to the terms of an asset acquisition agreement (the "SV Genetics Acquisition Agreement"). As consideration for the SV Genetics Acquisition, S&W paid the following amounts at Closing: $1.0 million in cash and 225,088 shares of the Company's common stock. The fair value of the shares of the Company's common stock was determined based on the closing market price of the Company's common stock on the acquisition date and a 5% discount because of the lack of marketability that market participants would consider when estimating the fair value of the common stock issued. The SV Genetics Acquisition Agreement further provides for a potential earn-out payment of up to $3.3 million, payable in cash or the Company's common stock, in the sole discretion of the Company, based on the acquired business achieving 150% of a net income target of $4.2 million for the combined 2018 and 2019 fiscal years. Any earn-out payment, if paid in stock, will be based upon the trailing VWAP on the day immediately preceding the payment of the earn-out. The earn-out payment, if any, will be made in September 2019. The SV Genetics Acquisition has been accounted for as a business combination, and the Company valued and recorded all assets acquired and liabilities assumed at their estimated fair values on the date of the SV Genetics Acquisition. The excess of the purchase price over the fair value of the net assets acquired, amounting to $796,064, was recorded as goodwill on the consolidated balance sheet. The primary item that generated goodwill was the premium paid by the Company for the ability to control the acquired business and the technology / germplasm. Goodwill is not amortized for financial reporting purposes, but is amortized for tax purposes. Management assigned fair values to the identifiable intangible assets through a combination of the relief from royalty method, the multi-period excess earnings method, and the with-and-without method. The contingent consideration requires the Company to pay up to an additional $3.3 million, if the acquired business achieves 150% of a net income target of $4.2 million for the combined 2018 and 2019 fiscal years. The fair value of the contingent consideration arrangement at the acquisition date was $135,324. The fair value of the contingent consideration was estimated using a Monte Carlo simulation model. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The key assumptions in applying the Monte Carlo simulation were as follows: 40.0% present value discount factor and an underlying net income volatility of 87.9%. As of June 30, 2016, the estimated fair value of the contingent consideration remained at $135,324. The Company incurred $140,372 of acquisition costs associated with the SV Genetics Acquisition that have been recorded in selling, general and administrative expenses on the consolidated statement of operations during the year ended June 30, 2016. The newly acquired business generated revenue of $2,597 during the year ended June 30, 2016. | On December 31, 2014, the Company purchased certain alfalfa research and production facilities and conventional (non-GMO) alfalfa germplasm assets (and assumed certain related liabilities) of DuPont Pioneer. The DuPont Pioneer Acquisition was consummated pursuant to the terms of an asset purchase and sale agreement. The purchase price under the Agreement was up to $42,000,000, consisting of $27,000,000 in cash (payable at closing), a three year secured promissory note (the "Pioneer Note") payable by the Company to DuPont Pioneer in the initial principal amount of $10,000,000 (issued at closing), and a potential earn-out payment (payable as an increase in the principal amount of the Note) of up to $5,000,000 based on S&W sales under distribution and production agreements as well as other Company sales of products containing the acquired germplasm in the three-year period following the closing. The Pioneer Note accrues interest at a rate of 3% per annum, and interest is payable in three annual installments, in arrears, commencing on December 31, 2015. Principal on the Pioneer Note is payable at maturity on December 31, 2017. The DuPont Pioneer Acquisition has been accounted for as a business combination, and the Company valued and recorded all assets acquired and liabilities assumed at their estimated fair values on the date of the DuPont Pioneer Acquisition. The excess of the purchase price over the fair value of the net assets acquired, amounting to $5,353,317, was recorded as goodwill on the consolidated balance sheet. The primary item that generated goodwill was the premium paid by the Company for the ability to control the acquired business, technology and the assembled workforce of DuPont Pioneer. Goodwill is not amortized for financial reporting purposes, but is amortized for tax purposes. Management assigned fair values to the identifiable intangible assets through a combination of the relief from royalty method and the multi-period excess earnings method. The contingent consideration requires the Company to increase the principal amount of the Seller note by up to an additional $5,000,000 if the Company meets certain performance metrics during the three-year period following the acquisition. The fair value of the contingent consideration arrangement at the acquisition date was $2,004,000. The fair value of the contingent consideration was estimated using a probability-weighted cash flow model. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The key assumptions in applying the income approach were as follows: 24% present value discount factor and probability adjusted revenue assumptions based on the number of expected units produced. As of June 30, 2016, the estimated fair value of the contingent consideration is $2,133,092. The Company incurred $863,048 of acquisition costs associated with the DuPont Pioneer Acquisition that have been recorded in selling, general and administrative expenses on the consolidated statement of operations during the year ended June 30, 2015. The newly acquired business generated revenue of approximately $40.4 million during the year ended June 30, 2016. In the transaction, DuPont Pioneer retained ownership of its GMO (genetically modified) alfalfa germplasm and related intellectual property assets, as well as the right to develop new GMO-traited alfalfa germplasm. The retained GMO germplasm assets incorporate certain GMO traits that are licensed to DuPont Pioneer from third parties (the "Third Party GMO Traits"). The Company was interested in acquiring the GMO assets at the time it acquired the conventional (non-GMO) alfalfa seed assets, and DuPont Pioneer was interested in selling those assets, but terms could not be agreed-upon, in part because of the need for agreements with the third parties from whom the Third Party GMO Traits are licensed. The agreements related to the DuPont Pioneer Acquisition provide that both the Company and DuPont Pioneer will work towards obtaining the necessary consents from and agreements with third parties such that the GMO assets can be transferred from DuPont Pioneer to the Company. If such consents and agreements are obtained before November 30, 2017, the Company has committed to buy, and DuPont Pioneer has committed to sell, the GMO assets at a price of $7,000,000 on or before December 29, 2017. |
Business Combinations (Purcha48
Business Combinations (Purchase Price Allocation) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
May 31, 2016 | Dec. 31, 2014 | Jun. 30, 2016 | Jun. 30, 2015 | |
Purchase Price Allocation | ||||
Accounts receivable | $ 37,888 | |||
Inventory | 150,000 | $ 22,055,300 | ||
Property, Plant and Equipment | 45,273 | 6,712,535 | ||
Distribution agreement | 7,690,000 | |||
Production agreement | 670,000 | |||
Grower relationships | 76,000 | |||
Technology/IP - germplasm | 479,000 | 13,340,000 | ||
Technology/IP - seed varieties | 57,000 | 5,040,000 | ||
Customer relationships | 462,000 | |||
Trade name | 45,000 | |||
Non-compete agreements | 30,000 | |||
Goodwill | 796,064 | 5,353,317 | ||
Current liabilities | (16,901) | (12,248,506) | ||
Total acquisition cost allocated | 2,085,324 | 48,688,646 | ||
Purchase price components | ||||
Cash | 1,000,000 | 27,000,000 | $ 1,000,000 | $ 36,688,881 |
Promissory note | 10,000,000 | |||
Fair value of contingent consideration | 2,004,000 | |||
Amount payable to seller | $ 9,684,646 | $ 0 | $ (9,684,646) | |
Restricted stock considerations to acquire business | 950,000 | |||
Contingent earn-out to acquire business | $ 135,324 |
Business Combinations (Acquired
Business Combinations (Acquired Intangibles (Value and Useful Lives) (Details) | 12 Months Ended |
Jun. 30, 2016USD ($) | |
Dupont Pioneer Acquisition | Distribution Agreement | |
Estimated Useful Life (years) | 20 years |
Fair value of asset | $ 7,690,000 |
Dupont Pioneer Acquisition | Production agreement | |
Estimated Useful Life (years) | 3 years |
Fair value of asset | $ 670,000 |
Dupont Pioneer Acquisition | Grower relationships | |
Estimated Useful Life (years) | 10 years |
Fair value of asset | $ 76,000 |
Dupont Pioneer Acquisition | Technology/IP – germplasm | |
Estimated Useful Life (years) | 30 years |
Fair value of asset | $ 13,340,000 |
Dupont Pioneer Acquisition | Technology/IP seed varieties | |
Estimated Useful Life (years) | 15 years |
Fair value of asset | $ 5,040,000 |
Dupont Pioneer Acquisition | Total identifiable intangible assets | |
Fair value of asset | $ 26,816,000 |
SV Genetics Acquisition | Technology/IP – germplasm | |
Estimated Useful Life (years) | 25 years |
Fair value of asset | $ 479,000 |
SV Genetics Acquisition | Technology/IP seed varieties | |
Estimated Useful Life (years) | 15 years |
Fair value of asset | $ 57,000 |
SV Genetics Acquisition | Total identifiable intangible assets | |
Fair value of asset | $ 1,073,000 |
SV Genetics Acquisition | Customer relationships | |
Estimated Useful Life (years) | 10 years |
Fair value of asset | $ 462,000 |
SV Genetics Acquisition | Trade name | |
Estimated Useful Life (years) | 10 years |
Fair value of asset | $ 45,000 |
SV Genetics Acquisition | Non-compete agreements | |
Estimated Useful Life (years) | 5 years |
Fair value of asset | $ 30,000 |
Business Combinations (Pro Form
Business Combinations (Pro Forma Financial Information with Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Business Combinations Pro Forma Financial Information With Narrative Details | ||
Revenue | $ 96,333,863 | $ 91,441,565 |
Net income (loss) | $ 374,074 | $ (3,477,239) |
Pro forma income (loss) per share, basic and diluted | $ 0.02 | $ (0.25) |
Business Acquisition, Pro Forma Information, Description | The primary adjustments to pro forma net income for the year ended June 30, 2016 include: (i) the elimination of acquisition related charges of $140,372; (ii) amortization of acquired intangibles of $73,022; (iii) depreciation of acquired property, plant and equipment of $8,681; and (iv) adjustments to reflect the additional income tax benefit at a combined effective tax rate of 117.9%. The primary adjustments to pro forma net loss for the year ended June 30, 2015 include: (i) the reduction of DuPont Pioneer historical revenue to reflect the shift from end customer to wholesale pricing; (ii) the reduction of cost of revenue to remove DuPont Pioneer's historical sales incentives included in cost of sales; (iii) the elimination of acquisition and financing related charges of $1,290,927; (iv) amortization of acquired intangibles of $777,710; (v) depreciation of acquired property, plant and equipment of $231,354; (vi) additional interest expense on the convertible notes issued concurrent with the acquisition, including non-cash amortization of debt issuance costs and accretion of debt discount of $3,097,299; (vii) additional interest expense of $150,000 for the Pioneer Note included in total consideration for the DuPont Pioneer Acquisition; and (viii) adjustments to reflect the additional income tax expense assuming a combined effective tax rate of 21.1%. |
Changes in Carrying Amount of G
Changes in Carrying Amount of Goodwill by Location (Detail) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Goodwill, Beginning Balance | $ 9,630,279 | $ 4,939,462 |
Goodwill additions | 796,064 | 5,353,317 |
Foreign Currency Translation | (134,078) | (662,500) |
Goodwill, Ending Balance | 10,292,265 | 9,630,279 |
United States | ||
Goodwill, Beginning Balance | 6,755,317 | 1,402,000 |
Goodwill additions | 5,353,317 | |
Foreign Currency Translation | 0 | |
Goodwill, Ending Balance | 6,755,317 | |
Australia | ||
Goodwill, Beginning Balance | $ 2,874,962 | 3,537,462 |
Goodwill additions | 0 | |
Foreign Currency Translation | (662,500) | |
Goodwill, Ending Balance | $ 2,874,962 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Intangible asset | $ 36,485,209 | $ 38,004,916 | $ 14,590,771 |
Intangible addition | 1,073,000 | 26,816,000 | |
Intangible amortization expense | (2,239,099) | (1,600,360) | |
Foreign currency translation | (353,608) | (1,801,495) | |
Intellectual Property | |||
Intangible asset | 4,452,753 | 4,805,951 | 6,246,572 |
Intangible addition | 0 | 0 | |
Intangible amortization expense | (127,890) | (295,844) | |
Foreign currency translation | (225,308) | (1,144,777) | |
Trade name | |||
Intangible asset | 1,328,786 | 1,377,840 | 1,521,864 |
Intangible addition | 45,000 | 0 | |
Intangible amortization expense | (82,208) | (83,830) | |
Foreign currency translation | (11,846) | (60,194) | |
TechnologyIP | |||
Intangible asset | 676,082 | 924,107 | 1,043,067 |
Intangible addition | 0 | ||
Intangible amortization expense | (248,025) | ||
Foreign currency translation | 0 | ||
Technology/IP | |||
Intangible addition | 0 | ||
Intangible amortization expense | (118,960) | ||
Foreign currency translation | 0 | ||
Non-compete | |||
Intangible asset | 198,999 | 301,354 | 471,768 |
Intangible addition | 30,000 | 0 | |
Intangible amortization expense | (125,815) | (132,353) | |
Foreign currency translation | (6,540) | (38,061) | |
GI Customer list | |||
Intangible asset | 85,967 | 93,131 | 100,295 |
Intangible addition | 0 | 0 | |
Intangible amortization expense | (7,164) | (7,164) | |
Foreign currency translation | 0 | 0 | |
Grower Relationships | |||
Intangible asset | 1,964,024 | 2,183,485 | 2,744,164 |
Intangible addition | 0 | 76,000 | |
Intangible amortization expense | (120,481) | (133,770) | |
Foreign currency translation | (98,980) | (502,909) | |
Supply Agreement | |||
Intangible asset | 1,229,047 | 1,304,679 | 1,380,311 |
Intangible addition | 0 | 0 | |
Intangible amortization expense | (75,632) | (75,632) | |
Foreign currency translation | 0 | 0 | |
Customer Relationships | |||
Intangible asset | 1,359,371 | 968,619 | 1,082,730 |
Intangible addition | 462,000 | 0 | |
Intangible amortization expense | (60,314) | (58,557) | |
Foreign currency translation | (10,934) | (55,554) | |
Distribution agreement | |||
Intangible asset | 7,113,253 | 7,497,750 | |
Intangible addition | 0 | ||
Intangible amortization expense | (384,497) | ||
Foreign currency translation | 0 | ||
Distribution Agreement | |||
Intangible asset | 0 | ||
Intangible addition | 7,690,000 | ||
Intangible amortization expense | (192,250) | ||
Foreign currency translation | 0 | ||
Production agreement | |||
Intangible asset | 335,002 | 558,334 | 0 |
Intangible addition | 0 | 670,000 | |
Intangible amortization expense | (223,332) | (111,666) | |
Foreign currency translation | 0 | 0 | |
Technology/IP germplasm | |||
Intangible asset | 13,149,809 | 13,117,666 | 0 |
Intangible addition | 479,000 | 13,340,000 | |
Intangible amortization expense | (446,857) | (222,334) | |
Foreign currency translation | 0 | 0 | |
Technology/IP seed varieties | |||
Intangible asset | 4,592,116 | 4,872,000 | $ 0 |
Intangible addition | 57,000 | 5,040,000 | |
Intangible amortization expense | (336,884) | (168,000) | |
Foreign currency translation | $ 0 | $ 0 |
Intangible Assets (Future Amort
Intangible Assets (Future Amortization) (Details) | Jun. 30, 2016USD ($) |
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract] | |
2,017 | $ 2,304,451 |
2,018 | 2,128,675 |
2,019 | 1,964,285 |
2,020 | 1,964,285 |
2,021 | 1,963,885 |
Thereafter | $ 26,159,628 |
Intangible Assets (Amortization
Intangible Assets (Amortization Expense Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Intangible Assets Amortization Expense Narrative Details | ||
Amortization expense | $ 2,239,099 | $ 1,600,360 |
Property, Plant and Equipment55
Property, Plant and Equipment (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Balance Sheet Related Disclosures [Abstract] | ||
Land and improvements | $ 2,908,501 | $ 2,247,379 |
Buildings and improvements | 6,192,522 | 5,439,712 |
Machinery and equipment | 4,781,586 | 3,520,168 |
Vehicles | 1,080,354 | 940,627 |
Construction in progress | 778,528 | 1,113,137 |
Property and equipment, gross | 15,741,491 | 13,261,023 |
Less: Accumulated depreciation | (2,619,792) | (1,784,087) |
Property, plant and equipment, net | $ 13,121,699 | $ 11,476,936 |
Property, Plant and Equipment56
Property, Plant and Equipment (Depreciation Expense Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Property Plant And Equipment Depreciation Expense Narrative Details | ||
Depreciation expense | $ 946,027 | $ 579,278 |
Debt (Details)
Debt (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Working capital lines of credit | ||
Key Bank | $ 12,308,828 | $ 0 |
Wells Fargo | 0 | 10,000,000 |
National Australia Bank Limited | 4,378,645 | 3,755,800 |
Total working capital line of credit | 16,687,473 | 13,755,800 |
Current portion of long-term debt | ||
Term loan - Ally | 0 | 8,994 |
Keith facility (building loan) - National Australia Bank Limited | 37,205 | 0 |
Keith facility (machinery & equipment loan) - National Australia Bank Limited | 137,889 | 154,657 |
Unsecured subordinate promissory note - related party | 100,000 | 100,000 |
Promissory note – SGI selling shareholders | 0 | 2,000,000 |
Debt discount - SGI | 0 | (40,186) |
Total current portion | 275,094 | 2,223,465 |
Long-term debt, less current portion | ||
Term loan - Ally | 0 | 15,590 |
Keith facility (building loan) - National Australia Bank Limited | 446,454 | 466,482 |
Keith facility (machinery & equipment loan) - National Australia Bank Limited | 567,879 | 0 |
Unsecured subordinate promissory note - related party | 100,000 | 200,000 |
Promissory note - DuPont Pioneer | 10,000,000 | 10,000,000 |
Total long-term portion | 11,114,333 | 10,682,072 |
Total debt | 11,389,427 | $ 12,905,537 |
Fiscal Year | ||
2,017 | 275,094 | |
2,018 | 10,300,740 | |
2,019 | 230,466 | |
2,020 | 238,427 | |
2,021 | 188,620 | |
Thereafter | 156,260 | |
Total | $ 11,389,427 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2014 | Apr. 28, 2013 | Oct. 31, 2012 | Apr. 30, 2011 | Jun. 30, 2016 | |
Credit Agreement | |||||
Line of Credit Facility, Description | From 2011 until September 22, 2015, the Company had one or more revolving credit facility agreements with Wells Fargo Bank, National Association ("Wells Fargo"). | ||||
New Facilities | |||||
Line of Credit Facility, Description | From February 21, 2014 through September 22, 2015, the Company had two working capital facilities with Wells Fargo (collectively, the "Wells Facilities"), both of which terminated as of September 22, 2015. The Wells Facilities included (i) a domestic revolving facility of up to $4,000,000 for working capital purposes, and (ii) an export-import revolving facility of up to $10,000,000 for financing export-related accounts receivable and inventory (the "Ex-Im Revolver"). The Wells Facilities were secured by a first priority lien on accounts receivable and other rights to payment, general intangibles, inventory and equipment, subject to the priority rights of the senior secured debentures issued by the Company in December 2014 and Pioneer Hi-Bred International, Inc. The Wells Facilities were further secured by a lien on, and a pledge of, 65% of the stock of the Company's wholly-owned subsidiary, S&W Australia Pty Ltd. The Wells Facilities were subject to customary representations and warranties, affirmative and negative covenants and customary events of default. The interest rate on the Wells Facilities was either (i) at a fluctuating rate per annum determined by Wells Fargo to be 2.75% above the daily one-month LIBOR Rate in effect from time to time (increased from 2.25%), or (ii) at a fixed rate per annum determined to be 2.75% (increased from 2.25%) above LIBOR in effect on the first day of the applicable fixed rate term. On September 22, 2015, the Company paid all outstanding principal and accrued interest owing under the Wells Facilities. | ||||
KeyBank | |||||
Line of Credit Facility, Description | On September 22, 2015, the Company and KeyBank National Association ("KeyBank") entered into a credit and securities agreement and related agreements with respect to a $20,000,000 aggregate principal amount revolving credit facility (the "KeyBank Credit Facility"). In addition to paying off the Wells Facility, the proceeds from advances under the KeyBank Credit Facility are to be used for ongoing working capital requirements and to provide for general corporate purposes. All amounts of unpaid principal and interest due under the KeyBank Credit Facility must be paid in full on or before September 21, 2017. The KeyBank Credit Facility generally establishes a borrowing base of up to 85% of eligible accounts receivable (90% if insured), plus up to 65% of eligible inventory, subject to lender reserves. Loans may be based on a Base Rate or Eurodollar Rate (which is increased by an applicable margin of 2% per annum), generally at the Company's option. In the event of a default, at the option of KeyBank, the interest rate on all obligations owing will increase by 3% per annum over the rate otherwise applicable. The Company shall maintain one or more lockbox or cash collateral accounts at KeyBank, in KeyBank's name, which shall provide for the collection and remittance of all proceeds from sales of Company product (which is collateral for the KeyBank Credit Facility) on a daily basis. Subject to certain exceptions, the KeyBank Credit Facility is secured by a first priority perfected security interest in all the Company's now owned and after acquired tangible and intangible assets as well as the assets of the Company's domestic subsidiaries, which have guaranteed the Company's obligations under the KeyBank Credit Facility. The KeyBank Credit Facility is further secured by a lien on, and a pledge of, 65% of the stock of S&W Australia Pty Ltd., the Company's wholly-owned subsidiary. With respect to its security interest and/or lien, KeyBank has entered into an intercreditor and subordination agreement with Hudson Bay Fund LP (as agent for the holders of the senior secured debentures issued by the Company in December 2014) and DuPont Pioneer. The KeyBank Credit Agreement contains customary representations and warranties, affirmative and negative covenants and customary events of default. The Company was in compliance with all covenants at June 30, 2016. The outstanding balance on the KeyBank Credit Facility was $12,308,828 at June 30, 2016. | ||||
IVS Note | |||||
Line of Credit Facility, Description | On October 1, 2012, the Company issued a five-year subordinated promissory note to IVS in the principal amount of $500,000 (the "IVS Note"), with a maturity date of October 1, 2017. The IVS Note accrues interest at a rate equal to one-month LIBOR at closing plus 2%, which equals 2.2%. Interest is payable in five annual installments, in arrears, on October 1 of each year. Amortizing payments of the principal of $100,000 will also be made on each October 1, with any remaining outstanding principal and accrued interest payable on the maturity date of the IVS Note. The outstanding balance on the IVS Note was $200,000 at June 30, 2016. | ||||
SGI Note | |||||
Line of Credit Facility, Description | On April 1, 2013, the Company issued a three-year subordinated promissory note to the selling shareholders of SGI in the principal amount of USD $2,482,317 (the "SGI Note"), with a maturity date of April 1, 2016 (the "SGI Maturity Date"). The SGI note was non-interest bearing. Since the note was non-interest bearing, the Company recorded a debt discount of $156,880 at the time of issuance for the estimated net present value of the obligation and accretes the net present value of the SGI Note obligation up to the face value of the SGI Note obligation using the effective interest method as a component of interest expense. Accretion of the debt discount totaled $40,185 and $52,570 for the years ended June 30, 2016 and 2015, respectively. The SGI Note was paid down to $150,000 on March 31, 2016 and the remaining balance was paid in full on April 1, 2016. | ||||
Pioneer Note | |||||
Line of Credit Facility, Description | On December 31, 2014, the Company issued a three-year secured promissory note to DuPont Pioneer in the initial principal amount of $10,000,000 (the "Pioneer Note"), with a maturity date of December 31, 2017. The Pioneer Note accrues interest at 3% per annum. Interest is payable in three annual installments, in arrears, commencing on December 31, 2015. | ||||
NAB Facility | |||||
Line of Credit Facility, Description | SGI finances the purchase of most of its seed inventory from growers pursuant to a seasonal credit facility with NAB. The current facility, referred to as the 2016 NAB Facilities, was amended as of March 30, 2016 and expires on March 30, 2018. As of June 30, 2016, AUD $7,483,062 (USD $5,568,072) was outstanding under the 2016 NAB Facilities. The 2016 NAB Facilities, as currently in effect, comprises two distinct facility lines: (i) an overdraft facility (the "Overdraft Facility"), having a credit limit of AUD $980,000 (USD $729,208 at June 30, 2016) and a trade refinance facility (the "Trade Refinance Facility"), having a credit limit of AUD $12,000,000 (USD $8,929,080 at June 30, 2016). The Trade Refinance Facility permits SGI to borrow funds for periods of up to 180 days, at SGI's discretion, provided that the term is consistent with its trading terms. Interest for each drawdown is set at the time of the drawdown as follows: (i) for Australian dollar drawings, based on the Australian Trade Refinance Rate plus 1.5% per annum and (ii) for foreign currency drawings, based on the British Bankers' Association Interest Settlement Rate for the relevant foreign currency for the relevant period, or if such rate is not available, the rate reasonably determined by NAB to be the appropriate equivalent rate, plus 1.5% per annum. As of June 30, 2016, the Trade Refinance Facility accrued interest on Australian dollar drawings at approximately 4.97% calculated daily. The Trade Refinance Facility is secured by a lien on all the present and future rights, property and undertakings of SGI, the mortgage on SGI's Keith, South Australia property and the Company's corporate guarantee (up to a maximum of AUD $15,000,000). The Overdraft Facility permits SGI to borrow funds on a revolving line of credit up to the credit limit. Interest accrues daily and is calculated by applying the daily interest rate to the balance owing at the end of the day and is payable monthly in arrears. As of June 30, 2016, the Overdraft Facility accrued interest at approximately 6.87% calculated daily. For both the Overdraft Facility and the Trade Refinance Facility, interest is payable each month in arrears. In the event of a default, as defined in the NAB Facility Agreement, the principal balance due under the facilities will thereafter bear interest at an increased rate per annum above the interest rate that would otherwise have been in effect from time to time under the terms of each facility ( i.e. Both facilities constituting the 2016 NAB Facilities are secured by a fixed and floating lien over all the present and future rights, property and undertakings of SGI and are guaranteed by the Company as noted above. The 2016 NAB Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate SGI's outstanding obligations, all as set forth in the NAB facility agreements. SGI was in compliance with all NAB debt covenants at June 30, 2016. In January 2015, NAB and SGI entered into a new business markets - flexible rate loan (the "Keith Building Loan") in the amount of AUD $650,000 (USD $483,659 at June 30, 2016). The limit has subsequently been increased to AUD $800,000 (USD $595,272) in April 2016, and a machinery and equipment facility (the "Keith Machinery and Equipment Facility") of up to AUD $1,200,000 (USD $892,908 at June 30, 2016). In February 2016 the "Keith Machinery and Equipment Facility" was restructured to include 3 equipment loans; (1) AUD $873,201 (USD $649,740 at June 30, 2016) at an interest rate of 4.99%, expiring in March 2021. (2) AUS $50,926 (USD $37,894 at June 30, 2016) at an interest rate of 5.04%, expiring in February 2021. (3) AUS $24,371 (USD $18,134 at June 30, 2016) at an interest rate of 4.98%, expiring in March 2021. The balance of AUD $421,851 (USD $313,895 at June 30, 2016) is still available for future use under the Keith Credit Facilities. The Keith Building Loan and the Keith Machinery and Equipment Facility, collectively referred to as the Keith Credit Facilities, have a combined maximum credit amount of AUD $2,000,000 (USD $1,488,180 at June 30, 2016). The Keith Credit Facilities are being used for the construction of a new building on SGI's Keith, South Australia property and for the machinery and equipment to be purchased for use in the operations of the new building. The Keith Building Loan matures on November 30, 2024. The interest rate on the Keith Building Loan varies from pricing period to pricing period (each such period approximately 30 days), based on the weighted average of a specified basket of interest rates (6.045% as of June 30, 2016). Interest is payable each month in arrears. The Keith Machinery and Equipment Facility permits SGI to draw down additional amounts up to the maximum of AUD $271,851 (USD $202,282 at June 30, 2016) for periods of up to 180 days, in SGI's discretion, provided the term is consistent with SGI's trading terms. The Keith Machinery and Equipment Facility bears interest, payable in arrears, based on the Australian Trade Refinance Rate quoted by NAB at the time of the drawdown, plus 2.9%. The Keith Credit Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate SGI's outstanding obligations, all as set forth in the facility agreement. They are secured by a lien on all the present and future rights, property and undertakings of SGI, the Company's corporate guarantee and a mortgage on SGI's Keith, South Australia property. At June 30, 2016, the principal balance on the Keith Building Loan was AUD $650,000 (USD $483,659). |
Senior Convertible Notes and Wa
Senior Convertible Notes and Warrants (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Current portion of convertible debt, net | ||
Senior secured convertible notes payable | $ 11,274,678 | |
Debt discount | (2,008,749) | |
Total current portion | $ 6,840,608 | 9,265,929 |
Convertible debt, net, less current portion | ||
Senior secured convertible notes payable | 10,679,804 | |
Debt discount | (1,902,763) | |
Total long-term portion | 0 | 8,777,041 |
Total convertible debt, net | $ 18,042,970 | |
Fiscal Year | ||
2,017 | 275,094 | |
Thereafter | 156,260 | |
Total | 11,389,427 | |
Senior Convertible Notes | ||
Current portion of convertible debt, net | ||
Senior secured convertible notes payable | 7,849,754 | |
Debt discount | (1,009,146) | |
Total current portion | 6,840,608 | |
Convertible debt, net, less current portion | ||
Senior secured convertible notes payable | 0 | |
Debt discount | 0 | |
Total long-term portion | 0 | |
Total convertible debt, net | 6,840,608 | |
Fiscal Year | ||
2,017 | 7,849,754 | |
Thereafter | 0 | |
Total | $ 7,849,754 |
Senior Convertible Notes and 60
Senior Convertible Notes and Warrants (Narrative) (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Senior Convertible Notes And Warrants Narrative Details | |
Long-term Debt, Description | On December 31, 2014, the Company consummated the sale of senior secured convertible debentures (the "Debentures") and common stock purchase warrants (the "Warrants") to various institutional investors ("Investors") pursuant to the terms of a securities purchase agreement among the Company and the Investors. At closing, the Company received $27,000,000 in gross proceeds. Offering expenses of $1,931,105 attributed to the Debentures were recorded as deferred financing fees and recorded as a debt discount and offering expenses of $424,113 attributed to the Warrants were expensed during the year ended June 30, 2015. The net proceeds were paid directly to DuPont Pioneer in partial consideration for the purchase of certain DuPont Pioneer assets, the closing for which also took place on December 31, 2014. See Note 3 for further discussion of the DuPont Pioneer Acquisition. Debentures At the date of issuance, the Debentures were due and payable on November 30, 2017, unless earlier converted or redeemed. The Debentures bear interest on the aggregate unconverted and then outstanding principal amount at 8% per annum, payable in arrears monthly beginning February 2, 2015. Commencing on the occurrence of any Event of Default (as defined in the Debentures) that results in the eventual acceleration of the Debentures, the interest rate will increase to 18% per annum. The monthly interest is payable in cash, or in any combination of cash or shares of the Company's common stock at the Company's option, provided certain "equity conditions" defined in the Debentures are satisfied. Beginning on July 1, 2015, the Company was required to make monthly payments of principal as well, payable in cash or any combination of cash or shares of its common stock at the Company's option, provided all of the applicable equity conditions are satisfied. The Debentures contain certain rights of acceleration and deferral at the holder's option in the event a principal payment is to be made in stock and contains certain limited acceleration rights of the Company, provided certain conditions are satisfied. As required under the terms of the Debentures, following the sale of 759 acres of farmland property in the Imperial Valley of California in March 2015, which resulted in sale proceeds of $7,100,000, the Company redeemed $5,000,000 in principal amount of the Debentures. The reduction in principal was applied on the back end of the term, moving the final scheduled payment from November 30, 2017 to June 1, 2017. During the quarter ended March 31, 2016, the Company accelerated three redemption payments totaling $2,830,049. Taking into account the accelerated redemption payments, the final payment on the Debentures will be March 1, 2017. The Debentures were initially convertible, at the holder's option, into the Company's common stock at a conversion price of $5.00. Pursuant to the terms of the Debentures, the conversion price was reset to $4.63 on September 30, 2015. As of June 30, 2016, the remaining outstanding Debentures were potentially convertible into 1,695,411 shares. No further adjustments of the conversion price are provided for, except in the case of stock splits and similar recapitalization events. The Company has a one-time optional forced conversion right, exercisable if specified conditions are satisfied. The Debentures are the Company's senior secured obligations, subject only to certain secured obligations of KeyBank and DuPont Pioneer (limited to a purchase money security interest in the purchased assets). The rights of KeyBank, DuPont Pioneer and the holders of the Debentures are set forth in an intercreditor and subordination agreement that was initially entered into in connection with the closing of the issuance of the Debentures. Warrants The Warrants entitle the holders to purchase, in the aggregate, 2,699,999 shares of the Company's common stock. The Warrants are exercisable through their expiration on June 30, 2020, unless earlier redeemed. The Warrants were initially exercisable at an exercise price equal to $5.00. On September 30, 2015, pursuant to the terms of the Warrants, the exercise price was reset to $4.63. In addition, if the Company issues or is deemed to have issued securities at a price lower than the then applicable exercise price during the three-year period ending December 31, 2017, the exercise price of the Warrants will adjust based on a weighted average anti-dilution formula ("down-round protection"). On November 24, 2015, the Company closed on a private placement transaction in which 1,180,722 common shares were sold at $4.15 per share. Pursuant to the down-round protection terms of the Warrants, the exercise price was adjusted to $4.59 on November 24, 2015. On February 29, 2016, the Company completed a rights offering and accompanying noteholders' participation rights offering in which an aggregate of 2,125,682 shares of common stock were sold at $4.15 per share, triggering an adjustment of the exercise price of the Warrants to $4.53. The Warrants may be exercised for cash, provided that, if there is no effective registration statement available registering the exercise of the Warrants, the Warrants may be exercised on a cashless basis. At any time that (i) all equity conditions set forth in the Warrants have been satisfied, and (ii) the closing sales price of the common stock equals or exceeds $12.00 for 15 consecutive trading days (subject to adjustment for stock splits, reverse stock splits and other similar recapitalization events), the Company may redeem all or any part of the Warrants then outstanding for cash in an amount equal to $0.25 per Warrant. Accounting for the Conversion Option and Warrants Due to the down-round price protection included in the terms of the Warrants, the Warrants are treated as a derivative liability in the consolidated balance sheet, measured at fair value and marked to market each reporting period until the earlier of the Warrants being fully exercised or December 31, 2017, when the down-round protection expires. The initial fair value of the Warrants on December 31, 2014 was $4,862,000. At June 30, 2016 and 2015, the fair value of the Warrants was estimated at $4,354,100 and $6,258,000, respectively. The Warrants were valued at June 30, 2016 using the Monte Carlo simulation model, under the following assumptions: (i) remaining expected life of 4.0 years, (ii) volatility of 49.9%, (iii) risk-free interest rate of 0.86% and (iv) dividend rate of zero. The Warrants were valued at June 30, 2015 using the Monte Carlo simulation model, under the following assumptions: (i) remaining expected life of 5.0 years, (ii) volatility of 52.8%, (iii) risk-free interest rate of 1.63% and (iv) dividend rate of zero. Of the $27,000,000 in principal amount of Debentures sold in December 2014, $22,138,000 of the initial proceeds was allocated to the Debentures. The required redemption contingent upon the real estate sale was determined to be an embedded derivative not clearly and closely related to the borrowing. As such, it was bifurcated and treated as a derivative liability, recorded initially at its fair value of $150,000, leaving an allocation to the host debt of $21,988,000. The difference between the initial amount allocated to the borrowing and the face value of the Debentures is being amortized over the term of the Debentures using the effective interest method. Debt issuance costs totaling $1,931,105 are also being amortized over the term of the Debentures using the effective interest method. In addition, the reduction in the conversion price of the Debentures as of September 30, 2015 resulted in a beneficial conversion feature of $871,862, which was recognized as additional debt discount and an increase to additional paid-in capital. Accounting for the Redemption The redemption of $5,000,000 in principal amount of the Debentures was accounted for as a partial extinguishment of the borrowing, as well as the settlement of the derivative recognized initially. The redemption resulted in a loss of $1,183,687, which was included in the interest expense - amortization of debt discount line item on the consolidated statement of operations for the three months ended March 31, 2015. |
Income Taxes (Loss Before Incom
Income Taxes (Loss Before Income Taxes - US and Foreign) (Detail) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Taxes Loss Before Income Taxes - Us And Foreign Detail | ||
United States | $ (2,847,980) | $ (5,442,948) |
Foreign | 809,828 | 1,433,842 |
Loss before income taxes | $ (2,038,152) | $ (4,009,106) |
Income Taxes (Income Tax Provis
Income Taxes (Income Tax Provision) (Detail) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Current: | ||
Federal | $ 108,075 | $ 42,453 |
State | (1,953) | 14,528 |
Foreign | 208,491 | 519,910 |
Total current income tax provision | 314,613 | 576,891 |
Deferred: | ||
Federal | (2,753,271) | (1,146,961) |
State | (33,942) | (192,907) |
Foreign | 69,221 | (83,002) |
Total deferred tax provision (benefit) | (2,717,992) | (1,422,870) |
(Benefit) provision for income taxes | $ (2,403,379) | $ (845,979) |
Income Taxes (Reconciliation of
Income Taxes (Reconciliation of Taxes Provided to Federal Statutory Rate) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Taxes Reconciliation Of Taxes Provided To Federal Statutory Rate Details | ||
Tax expense (benefit) at statutory rate | $ (692,971) | $ (1,363,097) |
State taxes (benefit) net of federal tax (benefit) | (22,697) | (115,851) |
Stock compensation | 146,271 | 104,090 |
Mark to market on financial instruments | (647,326) | 474,640 |
Warrant financing costs | 0 | 145,479 |
Other permanent differences | 53,880 | 29,161 |
Federal and state research credits - current year | (97,881) | (59,233) |
Foreign currency loss on intercompany note | (1,095,906) | 0 |
Foreign rate differential | (37,617) | (58,756) |
Other | (9,132) | (2,412) |
Income tax expense (benefit) | $ (2,403,379) | $ (845,979) |
Inome Taxes (Deferred Tax Asset
Inome Taxes (Deferred Tax Assets) (Detail) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 6,744,515 | $ 4,124,109 |
Stock compensation | 373,738 | 275,027 |
Tax credit carryforwards | 238,405 | 140,524 |
Other, net | 446,892 | 475,120 |
Total deferred tax assets | 7,803,550 | 5,014,780 |
Deferred tax assets, net of valuation allowance | 7,803,550 | 5,014,780 |
Deferred tax liabilities | ||
Intangible assets | (49,499) | (70,911) |
Fixed assets | (484,493) | (660,609) |
Total deferred tax liabilities | (533,992) | (731,520) |
Net deferred tax assets | $ 7,269,558 | $ 4,283,260 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) | 12 Months Ended |
Jun. 30, 2016USD ($) | |
Accrued penalties and interest | $ 0 |
Federal | |
Operating Loss Carryforwards | $ 18,260,027 |
Operating loss carryforwards, expiration dates | Jun. 30, 2031 |
Research Tax Credit Carryforwards | $ 221,846 |
Research Tax Credit Carryforwards, Expiration Dates | Jun. 30, 2031 |
Undistributed Earnings of Foreign Subsidiaries | $ 3,640,000 |
State | |
Operating Loss Carryforwards | $ 7,256,901 |
Operating loss carryforwards, expiration dates | Jun. 30, 2031 |
Research Tax Credit Carryforwards | $ 25,089 |
Warrants Outstanding (Details)
Warrants Outstanding (Details) - $ / shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Warrants outstanding, beginning | 2,749,999 | 1,590,000 |
Warrant issuances | 0 | 2,699,999 |
Warrants expired | 0 | (1,540,000) |
Warrants outstanding. ending | 2,749,999 | 2,749,999 |
Class B warrants | ||
Warrant issue date | 2010-05 | |
Warrants outstanding, beginning | 0 | 1,421,000 |
Exercise price per share | $ 11 | |
Warrant expiration date | 2015-05 | |
Warrant issuances | 0 | |
Warrants expired | (1,421,000) | |
Warrants outstanding. ending | 0 | |
Underwriter warrants - units | ||
Warrant issue date | 2010-05 | |
Warrants outstanding, beginning | 0 | 119,000 |
Exercise price per share | $ 13.20 | |
Warrant expiration date | 2015-05 | |
Warrant issuances | 0 | |
Warrants expired | (119,000) | |
Warrants outstanding. ending | 0 | |
Underwriter warrants | ||
Warrant issue date | 2012-05 | 2012-05 |
Warrants outstanding, beginning | 50,000 | 50,000 |
Exercise price per share | $ 6.88 | $ 6.88 |
Warrant expiration date | 2017-02 | 2017-02 |
Warrant issuances | 0 | 0 |
Warrants expired | 0 | 0 |
Warrants outstanding. ending | 50,000 | 50,000 |
Warrants | ||
Warrant issue date | 2014-12 | 2014-12 |
Warrants outstanding, beginning | 2,699,999 | 0 |
Exercise price per share | $ 4.53 | $ 5 |
Warrant expiration date | 2020-06 | 2020-06 |
Warrant issuances | 0 | 2,699,999 |
Warrants expired | 0 | 0 |
Warrants outstanding. ending | 2,699,999 | 2,699,999 |
Foreign Currency Contract (Narr
Foreign Currency Contract (Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Foreign Currency Contract Narrative Details | ||
Foreign Currency Transactions, Description | The Company's subsidiary, SGI, is exposed to foreign currency exchange rate fluctuations in the normal course of its business, which the Company manages through the use of foreign currency forward contracts. These foreign currency contracts are not designated as hedging instruments; accordingly, changes in the fair value are recorded in current period earnings. These foreign currency contracts had a notional value of $8,630,000 at June 30, 2016 and their maturities range from July 2016 to December 2016. The Company records an asset or liability on the consolidated balance sheet for the fair value of the foreign currency forward contracts. | |
Foreign exchange contract asset | $ 49,808 | |
Foreign exchange contract liability | $ 59,116 | |
Loss on foreign exchange contracts | $ 271,754 | $ 469,738 |
Commitments and Contingencies68
Commitments and Contingencies (Operating Leases) (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | ||
Year ending June 30: | |||
2,017 | $ 577,631 | ||
2,018 | 398,032 | ||
2,019 | 250,882 | ||
2,020 | 290,097 | ||
2,021 | 288,131 | ||
2022 and beyond | 823,515 | ||
Total | [1] | 2,628,288 | |
Operating Leases, Rent Expense, Minimum Rentals | 567,553 | $ 257,928 | |
Operating Leases, Rent Expense, Sublease Rentals | (228,290) | 0 | |
Operating Leases, Rent Expense, Net | $ 339,263 | $ 257,928 | |
[1] | Minimum payments have not been reduced by minimum subleases rentals of $2,078,395 due in the future under noncancelable subleases. |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Accounts Payable, Related Parties, Current | $ 396,027 | $ 1,128,630 |
IVM | ||
Related Party Transaction, Description of Transaction | Glen D. Bornt, a member of the Company's Board of Directors, is the founder and President of Imperial Valley Milling Co. ("IVM"). He is its majority shareholder and a member of its Board of Directors. Fred Fabre, the Company's Vice President of Sales and Marketing, is a minority shareholder of IVM. IVM had a 15-year supply agreement with IVS, and this agreement was assigned by IVS to the Company when it purchased the assets of IVS in October 2012. IVM contracts with alfalfa seed growers in California's Imperial Valley and sells its growers' seed to the Company pursuant to a supply agreement. Under the terms of the supply agreement, IVM's entire certified and uncertified alfalfa seed production must be offered and sold to the Company, and the Company has the exclusive option to purchase all or any portion of IVM's seed production. The Company paid $11,091,920 to IVM during the year ended June 30, 2016. Amounts due to IVM totaled $396,027 and $834,158 at June 30, 2016 and June 30, 2015, respectively. | |
Related Party Transaction, Purchases from Related Party | $ 11,091,920 | |
Accounts Payable, Related Parties, Current | $ 396,027 | $ 834,158 |
Equity-Based Compensation (2009
Equity-Based Compensation (2009 Equity Incentive Plan Narrative) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2016 | Dec. 31, 2015 | Jul. 31, 2015 | Mar. 31, 2013 | Dec. 31, 2012 | May 31, 2012 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock option exercise price | $ 4.56 | $ 3.89 | ||||||
Share-based compensation | $ 1,190,126 | $ 896,882 | ||||||
Unvested restricted shares outstanding | 48,666 | |||||||
2009 Plan | ||||||||
Description of the 2009 Equity Incentive Plan | 2009 Equity Incentive Plan In October 2009 and January 2010, the Company's Board of Directors and stockholders, respectively, approved the 2009 Equity Incentive Plan (as amended and/or restated from time to time, the "2009 Plan"). The plan authorized the grant and issuance of options, restricted shares and other equity compensation to the Company's directors, employees, officers and consultants, and those of the Company's subsidiaries and parent, if any. In October 2012 and December 2012, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 1,250,000 shares. In September 2013 and December 2013, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 1,700,000 shares. In September 2015 and December 2015, the Company's Board of Directors and stockholders, respectively, approved the amendment and restatement of the 2009 Plan, including an increase in the number of shares available for issuance as grants and awards under the Plan to 2,450,000 shares. The term of incentive stock options granted under the 2009 Plan may not exceed ten years, or five years for incentive stock options granted to an optionee owning more than 10% of the Company's voting stock. The exercise price of options granted under the 2009 Plan must be equal to or greater than the fair market value of the shares of the common stock on the date the option is granted. An incentive stock option granted to an optionee owning more than 10% of voting stock must have an exercise price equal to or greater than 110% of the fair market value of the common stock on the date the option is granted. | |||||||
Plan Modification, Description and Terms | The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Stock options issued to non-employees are accounted for at their estimated fair value. The fair value of options granted to non-employees is re-measured as they vest. The Company amortizes stock-based compensation expense on a straight-line basis over the requisite service period. Beginning with the quarter ended December 31, 2014, the Company began utilizing 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. The fair value of grants issued prior to the quarter ended December 31, 2014 were estimated using a lattice model. | |||||||
Number of shares reserved for issuance under the plan | 2,450,000 | |||||||
Shares available for future grants and awards | 225,000 | |||||||
Terms of awards and other restrictions | The term of incentive stock options granted under the 2009 Plan may not exceed ten years, or five years for incentive stock options granted to an optionee owning more than 10% of the Company's voting stock. The exercise price of options granted under the 2009 Plan must be equal to or greater than the fair market value of the shares of the common stock on the date the option is granted. An incentive stock option granted to an optionee owning more than 10% of voting stock must have an exercise price equal to or greater than 110% of the fair market value of the common stock on the date the option is granted. | |||||||
May 2012 Grants | ||||||||
Stock option or RSU vesting period | 3 years | |||||||
Restricted stock units granted | 73,000 | |||||||
Share-based compensation | $ 109,500 | $ 109,500 | ||||||
December 2012 Grants | ||||||||
Description of the 2009 Equity Incentive Plan | On December 8, 2012, the Company granted 175,000 stock options to its directors, officers, and employees at an exercise price of $7.20, which was the closing price for the Company's common stock on the date of grant. These options vest in equal quarterly installments over one- and three-year periods, commencing on January 1, 2013, and expire five years from the date of grant. During the year ended June 30, 2014, the Company granted 270,000 stock options to its officers and employees at exercise prices ranging from $5.94 to $8.29, which was the closing price for the Company's common stock on the respective dates of grant. These options vest in equal quarterly installments over periods ranging from six months to three years and expire five years from the date of grant. During the year ended June 30, 2015, the Company granted 227,197 stock options to its directors, officers and employees at exercise prices ranging from $3.61 to $6.25. These options vest in equal quarterly installments over periods ranging from one to three years and expiration dates range from five to ten years from the date of grant. During the year ended June 30, 2016, the Company granted 203,500 stock options to its directors and officers at exercise prices ranging from $4.25 to $4.76. These options vest in quarterly installments over periods ranging from one to three years and expire ten years from the date of grant. | |||||||
Stock options granted | 175,000 | |||||||
Stock option exercise price | $ 7.20 | |||||||
Stock option or RSU vesting period | 3 years | |||||||
Stock option expiration date | Dec. 8, 2017 | |||||||
March 2013 Grants | ||||||||
Description of the 2009 Equity Incentive Plan | On March 16, 2013, the Company issued 280,000 restricted stock units to certain members of the executive management team. The restricted stock units have varying vesting periods whereby 34,000 restricted stock units vested on July 1, 2013 and the remaining 246,000 restricted stock units vest quarterly in equal installments over a four and one-half year period, commencing on July 1, 2013. The fair value of the award was $2,984,800 and was based on the closing stock price on the date of grant. | |||||||
Stock option or RSU vesting period | 4 years 6 months | |||||||
Stock option expiration date | Jan. 1, 2018 | |||||||
Restricted stock units granted | 280,000 | |||||||
Share-based compensation | $ 433,108 | $ 433,370 | ||||||
Fiar value of RSU on date of grant | $ 2,984,800 | |||||||
July 2015 Grants | ||||||||
Description of the 2009 Equity Incentive Plan | On July 15, 2015, the Company issued 88,333 restricted stock units to certain members of the executive management team. The restricted stock units have varying vesting periods whereby 13,250 restricted stock units vest on October 1, 2015 and the remaining 75,083 restricted stock units vest quarterly in equal installments over a three-year period, commencing on July 1, 2015. The fair value of the award was $420,465 and was based on the closing stock price on the date of grant. | |||||||
December 2015 Grants | ||||||||
Description of the 2009 Equity Incentive Plan | On December 11, 2015, the Company issued 28,059 restricted stock units to certain members of the executive management team and other employees. The restricted stock units have varying vesting periods whereby 500 restricted stock units vest on December 11, 2015, 4,259 restricted stock units vest in quarterly installments over a one-year period, and the remaining 23,300 restricted stock units vest annually in equal installments over a three-year period. The fair value of the award was $119,251 and was based on the closing stock price on the date of grant. | |||||||
March 2016 Grants | ||||||||
Description of the 2009 Equity Incentive Plan | On March 18, 2016, the Company issued 3,000 restricted stock units. The restricted stock units have varying vesting periods whereby 1,000 restricted stock units vested on March 18, 2016; and the remaining 2,000 restricted stock units vest annually in equal installments over a three-year period. The fair value of the award was $12,180 and was based on the closing stock price on the date of grant. |
Equity-Based Compensation (Weig
Equity-Based Compensation (Weighted Average Assumptions) (Details) - Stock Options - $ / shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Risk-free rate of interest | 1.40% | 1.40% |
Risk Free Interest Rate, maximum | 1.50% | 1.50% |
Dividend yield | 0.00% | 0.00% |
Volatility of common stock, minimum | 50.40% | |
Volatility of common stock | 50.80% | |
Volatility of common stock, maximum | 50.80% | |
Average forfeiture assumptions | 0.061 | 0.019 |
Weighted average grant date fair value of options granted and outstanding | $ 1.08 | |
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 2 years 216 days |
Equity-Based Compensation (Sche
Equity-Based Compensation (Schedule Of Stock Option Activity) (Details) | 12 Months Ended | ||
Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | Jun. 30, 2014USD ($) | |
Equity-based Compensation Schedule Of Stock Option Activity Details | |||
Options, Outstanding as of beginning of period | shares | 901,697 | 1,087,000 | |
Options, Granted | shares | 203,500 | 227,197 | |
Options, Forfeited, cancelled or expired | shares | (69,197) | (12,500) | |
Options, Outstanding as of end of period | shares | 1,021,418 | 901,697 | |
Options, vested and exercisable at end of period | shares | 773,387 | ||
Options, vested and expected to vest | shares | 1,019,225 | ||
Weighted-Average Exercise Prices, Outstanding as of beginnig of period | $ 5.33 | $ 5.17 | |
Weighted-Average Exercise Prices, Granted | 4.56 | 3.89 | |
Weighted-Average Exercise Prices, Exercised | 3.95 | 4 | |
Weighted-Average Exercise Prices, Forfeited, cancelled or expired | 6.08 | 7.75 | |
Weighted-Average Exercise Prices, Outstanding as of end of period | 5.14 | $ 5.33 | |
Weighted-Average Exercise Prices, Vested and Exercisable | 5.33 | ||
Weighted-Average Exercise Price, Vested and expected to vest | $ 5.14 | ||
Options Outstanding, Weighted-Average Remaining Contractual Term (in years) | 4 years 72 days | 4 years 36 days | |
Weighted-Average Remaining Contractual Term (in years), Vested and Exercisable | 3 years | ||
Options Granted, Weighted-Average Remaining Contractual Term (in years) | 9.7 | 9.5 | |
Weighted-Average Remaining Contractual Term (in years), Vested and expected to vest | 4 years 72 days | ||
Options, Outstanding, Aggregate Intrinsic Value | $ | $ 142,381 | $ 392,850 | $ 1,562,712 |
Options, vested and xxercisable, Aggregate Intrinsic Value | $ | 100,494 | ||
Options, Vested and expected to vest, Aggregate Intrinsic Value | $ | $ 141,514 |
Equity-Based Compensation (Sc73
Equity-Based Compensation (Schedule Of Other Than Option Plan Activity) (Details) - Nonvested RSU's - $ / shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Nonvested units outstanding at beginning | 136,672 | |
Units granted | 119,392 | |
Units vested | (85,185) | |
Units forfeited | 0 | |
Nonvested units outstanding at end | 170,879 | 136,672 |
Nonvested units outstanding, weighted average grant date fair value per unit | $ 7.51 | $ 10.66 |
Granted in Period, Weighted Average Grant Date Fair Value | 4.62 | |
Vested in Period, Weighted Average Grant Date Fair Value | $ 8.52 | |
Weighted-average remaining contractual life (years) | 1 year 180 days |
Equity-Based Compensation (Narr
Equity-Based Compensation (Narrative) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Stock-based compensation | $ 1,190,126 | $ 896,882 |
Stock Options | ||
Unrecognized stock compensation expense, net of estimated forfeitures, related to options | 340,550 | |
Nonvested restricted stock | ||
Unrecognized stock compensation expense related to restricted stock grants | $ 14,786 | |
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 1 year 205 days | |
Stock-based compensation | $ 124,287 | 146,000 |
Nonvested RSU's | ||
Unrecognized stock compensation expense related to restricted stock grants | $ 1,081,839 | |
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 1 year 180 days | |
Stock-based compensation | $ 576,951 | $ 577,299 |
Non-Cash Investing Activities f
Non-Cash Investing Activities for Statements of Cash Flows (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2016 | Jun. 30, 2015 | |
Non-cash Investing Activities For Statements Of Cash Flows Details | |||
Increase in non-cash net assets of subsidiary due to foreign currency translation loss, net of income tax | $ (693,077) | $ (3,427,819) | |
Fair value of assets acquired | 2,102,225 | 60,937,152 | |
Cash paid for the acquisition | (1,000,000) | (27,000,000) | |
Promissory note issued | 0 | (10,000,000) | |
Restricted stock consideration | (950,000) | 0 | |
Contingent consideration issued | (135,324) | (2,004,000) | |
Amount payable to seller | $ 9,684,646 | 0 | (9,684,646) |
Liabilities assumed | $ 16,901 | $ 12,248,506 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Subsequent Events Narrative Details | |
Subsequent Event, Description | In August 2016, certain holders of the convertible debentures converted $425,346 of principal and interest, into 91,872 shares of common stock in accordance with the conversion terms of the Debentures. |