Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2017 | May 10, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | S&W Seed Co | |
Entity Central Index Key | 1,477,246 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
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 Common Stock, Shares Outstanding | 17,979,681 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 3,320,659 | $ 6,904,500 |
Accounts receivable, net | 23,179,172 | 27,619,599 |
Inventories, net | 38,052,248 | 21,846,130 |
Prepaid expenses and other current assets | 1,560,194 | 1,218,280 |
TOTAL CURRENT ASSETS | 66,112,273 | 57,588,509 |
Property, plant and equipment, net | 13,465,805 | 12,600,106 |
Intangibles, net | 35,456,992 | 37,006,802 |
Goodwill | 10,292,265 | 10,292,265 |
Deferred tax assets | 7,728,370 | 7,279,923 |
Other assets | 1,553,503 | 2,237,380 |
TOTAL ASSETS | 134,609,208 | 127,004,985 |
CURRENT LIABILITIES | ||
Accounts payable | 7,218,726 | 14,303,877 |
Accounts payable - related parties | 77,599 | 396,027 |
Deferred revenue | 570,662 | 509,857 |
Accrued expenses and other current liabilities | 1,590,559 | 2,385,160 |
Lines of credit | 36,166,497 | 16,687,473 |
Current portion of contingent consideration obligation | 2,346,091 | 0 |
Current portion of long-term debt | 10,261,411 | 275,094 |
Current portion of convertible debt, net | 0 | 6,840,608 |
TOTAL CURRENT LIABILITIES | 58,231,545 | 41,398,096 |
Contingent consideration obligation | 0 | 2,268,416 |
Long-term debt, less current portion | 1,040,414 | 11,114,333 |
Derivative warrant liabilities | 3,512,700 | 4,354,100 |
Other non-current liabilities | 42,049 | 108,596 |
TOTAL LIABILITIES | 62,826,708 | 59,243,541 |
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; 17,989,167 issued and 17,964,167 outstanding at March 31, 2017; 17,086,111 issued and 17,061,111 outstanding at June 30, 2016 | 17,989 | 17,086 |
Treasury stock, at cost, 25,000 shares | (134,196) | (134,196) |
Additional paid-in capital | 82,822,874 | 78,282,461 |
Accumulated deficit | (5,345,205) | (4,614,244) |
Accumulated other comprehensive loss | (5,578,962) | (5,789,663) |
TOTAL STOCKHOLDERS' EQUITY | 71,782,500 | 67,761,444 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 134,609,208 | $ 127,004,985 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Jun. 30, 2016 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $ .001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ .001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 17,989,167 | 17,086,111 |
Common stock, shares outstanding | 17,964,167 | 17,061,111 |
Treasury stock, shares | 25,000 | 25,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 21,012,243 | $ 25,013,779 | $ 57,487,560 | $ 61,409,948 |
Cost of revenue | 15,208,896 | 19,500,605 | 44,520,476 | 49,890,460 |
Gross profit | 5,803,347 | 5,513,174 | 12,967,084 | 11,519,488 |
Operating expenses | ||||
Selling, general and administrative expenses | 2,720,131 | 2,459,737 | 7,767,530 | 7,239,821 |
Research and development expenses | 714,512 | 626,316 | 2,204,625 | 2,049,332 |
Depreciation and amortization | 798,559 | 796,062 | 2,475,710 | 2,376,101 |
Disposal of property, plant and equipment loss (gain) | 7,766 | (2,427) | 7,630 | (2,427) |
Impairment charges | 319,001 | 0 | 319,001 | 0 |
Total operating expenses | 4,559,969 | 3,879,688 | 12,774,496 | 11,662,827 |
Income (loss) from operations | 1,243,378 | 1,633,486 | 192,588 | (143,339) |
Other expense | ||||
Foreign currency loss (gain) | 2,125 | 87,342 | (4,358) | (164,471) |
Change in derivative warrant liabilities | (1,009,901) | (694,800) | (841,400) | (2,176,800) |
Change in contingent consideration obligation | (86,688) | 48,963 | 77,675 | 1,490 |
Loss on equity method investment | 95,591 | 28,916 | 144,841 | 252,619 |
Gain on sale of marketable securities | 0 | 0 | 0 | (123,038) |
Interest expense - amortization of debt discount | 150,875 | 1,150,412 | 1,131,994 | 3,111,866 |
Interest expense - convertible debt and other | 300,627 | 438,879 | 948,211 | 1,672,863 |
Income (loss) before income taxes | 1,790,749 | 573,774 | (1,264,375) | (2,717,868) |
Provision (benefit) from income taxes | 463,509 | 5,901 | (533,414) | (2,773,294) |
Net income (loss) | $ 1,327,240 | $ 567,873 | $ (730,961) | $ 55,426 |
Net income (loss) per common share: | ||||
Basic | $ 0.07 | $ 0.04 | $ (0.04) | $ 0 |
Diluted | $ 0.02 | $ 0.04 | $ (0.09) | $ 0 |
Weighted average number of common shares outstanding: | ||||
Basic | 17,963,598 | 15,420,308 | 17,630,906 | 14,278,107 |
Diluted | 17,979,177 | 15,420,308 | 17,718,243 | 14,278,107 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Consolidated Statements Of Comprehensive Income Loss | ||||
Net income (loss) | $ 1,327,240 | $ 567,873 | $ (730,961) | $ 55,426 |
Foreign currency translation adjustment, net of income tax | 454,319 | 383,723 | 210,701 | (457,391) |
Comprehensive income (loss) | $ 1,781,559 | $ 951,596 | $ (520,260) | $ (401,965) |
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, 2015 | 13,479,101 | (25,000) | ||||
Beginning 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 | 917,487 | 0 | 0 | 917,487 |
Beneficial conversion feature | $ 0 | $ 0 | 871,862 | 0 | 0 | 871,862 |
Exercise of stock options, net of withholding taxes, shares | 8,751 | 0 | ||||
Exercise of stock options, net of withholding taxes, amount | $ 9 | $ 0 | 34,557 | 0 | 0 | 34,566 |
Net issuance to settle RSU's, shares | 45,410 | 0 | ||||
Net issuance to settle RSU's, amount | $ 45 | $ 0 | (83,848) | 0 | 0 | (83,803) |
Proceeds from sale of common stock, net of fees and expenses, shares | 3,306,404 | 0 | ||||
Proceeds from sale of common stock, net of fees and expenses, amount | $ 3,306 | $ 0 | 13,306,410 | 0 | 0 | 13,309,716 |
Other comprehensive income (loss) | 0 | 0 | 0 | 0 | (457,391) | (457,391) |
Net income (loss) | $ 0 | $ 0 | 0 | 55,426 | 0 | 55,426 |
Ending balance, shares at Mar. 31, 2016 | 16,839,666 | (25,000) | ||||
Ending balance, amount at Mar. 31, 2016 | $ 16,839 | $ (134,196) | 77,118,847 | (4,924,045) | (5,553,977) | 66,523,468 |
Beginning balance, shares at Jun. 30, 2016 | 17,086,111 | (25,000) | ||||
Beginning balance, amount at Jun. 30, 2016 | $ 17,086 | $ (134,196) | 78,282,461 | (4,614,244) | (5,789,663) | 67,761,444 |
Stock-based compensation - options, restricted stock and RSU's | $ 0 | $ 0 | 885,456 | 0 | 0 | 885,456 |
Exercise of stock options, net of withholding taxes, shares | 161,781 | 0 | ||||
Exercise of stock options, net of withholding taxes, amount | $ 162 | $ 0 | 601,927 | 0 | 0 | 602,083 |
Net issuance to settle RSU's, shares | 56,954 | |||||
Net issuance to settle RSU's, amount | $ 57 | 0 | (107,552) | 0 | 0 | (107,495) |
Issuance of common stock upon conversion of principal and interest of convertible debentures, shares | 684,321 | |||||
Issuance of common stock upon conversion of principal and interest of convertible debentures | $ 684 | 0 | 3,160,588 | 0 | 0 | 3,161,272 |
Other comprehensive income (loss) | 0 | 0 | 0 | 0 | 210,701 | 210,701 |
Net income (loss) | $ 0 | $ 0 | 0 | (730,961) | 0 | (730,961) |
Ending balance, shares at Mar. 31, 2017 | 17,989,167 | (25,000) | ||||
Ending balance, amount at Mar. 31, 2017 | $ 17,989 | $ (134,196) | $ 82,822,874 | $ (5,345,205) | $ (5,578,962) | $ 71,782,500 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ (730,961) | $ 55,426 |
Adjustments to reconcile net (loss) income to net cash used in operating activities | ||
Stock-based compensation | 885,456 | 917,487 |
Change in allowance for doubtful accounts | 99,640 | (7,350) |
Depreciation and amortization | 2,475,710 | 2,376,101 |
Loss (gain) on disposal of property, plant and equipment | 7,630 | (2,427) |
Impairment charges | 319,001 | 0 |
Change in deferred tax asset | (448,447) | (2,974,375) |
Change in foreign exchange contracts | 50,522 | (55,817) |
Change in derivative warrant liabilities | (841,400) | (2,176,800) |
Change in contingent consideration obligation | 77,675 | 1,490 |
Amortization of debt discount | 1,131,994 | 3,111,866 |
Gain on sale of marketable securities | 0 | (123,038) |
Intercompany foreign exchange gain | 0 | (284,774) |
Loss on equity method investment | 144,841 | 252,619 |
Changes in operating assets and liabilities, net: | ||
Accounts receivable | 4,481,129 | 13,498,542 |
Inventories | (15,972,829) | (16,946,534) |
Prepaid expenses and other current assets | (245,248) | (974,732) |
Other non-current assets | 0 | (140,569) |
Accounts payable | (7,323,842) | 1,632,353 |
Accounts payable - related parties | (318,428) | (1,021,524) |
Deferred revenue | 60,298 | (163,211) |
Accrued expenses and other current liabilities | (770,337) | (277,084) |
Other non-current liabilities | (67,915) | (31,311) |
Net cash used in operating activities | (16,985,511) | (3,333,662) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Additions to property, plant and equipment | (1,624,493) | (1,852,865) |
Proceeds from disposal of property, plant and equipment | 6,000 | 28,100 |
Purchase of marketable securities | 0 | (316,000) |
Sale of marketable securities | 0 | 439,038 |
Equity method investment | 0 | (439,038) |
Additions to internal use software | (118,121) | (236,555) |
Net cash used in investing activities | (1,736,614) | (2,377,320) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net proceeds from sale of common stock | 0 | 13,309,716 |
Net proceeds from exercise of common stock options | 602,083 | 34,566 |
Taxes paid related to net share settlements of stock-based compensation awards | (107,495) | (83,803) |
Borrowings and repayments on line of credit, net | 19,325,988 | 7,822,160 |
Borrowings of long-term debt | 89,717 | 601,341 |
Repayments of long-term debt | (209,454) | (1,974,582) |
Repayments of convertible debt | (4,721,551) | (11,274,679) |
Net cash provided by financing activities | 14,979,288 | 8,434,719 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 158,996 | 8,427 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (3,583,841) | 2,732,164 |
CASH AND CASH EQUIVALENTS, beginning of the period | 6,904,500 | 3,535,458 |
CASH AND CASH EQUIVALENTS, end of period | 3,320,659 | 6,267,622 |
Cash paid during the period for: | ||
Interest | 1,039,100 | 922,561 |
Income taxes | $ 194,886 | $ 205,225 |
NOTE 1 - BACKGROUND AND ORGANIZ
NOTE 1 - BACKGROUND AND ORGANIZATION | 9 Months Ended |
Mar. 31, 2017 | |
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"). More 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 represented 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 | 9 Months Ended |
Mar. 31, 2017 | |
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. Unaudited Interim Financial Information The Company has prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These consolidated financial statements are unaudited and, in the Company's opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the Company's consolidated balance sheets, statements of operations, comprehensive income (loss), cash flows and stockholders' equity for the periods presented. Operating results for the periods presented are not necessarily indicative of the results to be expected for the full year ending June 30, 2017. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended June 30, 2016, as filed with the SEC. 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. One customer accounted for 77% and 65% of its revenue for the three months ended March 31, 2017 and 2016, respectively. One customer accounted for 59% and 50% of its revenue for the nine months ended March 31, 2017 and 2016, respectively. Two customers accounted for 56% of the Company's accounts receivable at March 31, 2017. One customer accounted for 35% of the Company's accounts receivable at June 30, 2016. In addition, the Company sells a substantial portion of its products to international customers. Sales direct to international customers represented 20% and 34% of revenue during the three months ended March 31, 2017 and 2016, respectively. Sales direct to international customers represented 36% and 44% of revenue during the nine months ended March 31, 2017 and 2016, respectively. The net book value of fixed assets located outside the United States was 18% and 17% of total assets at March 31, 2017 and June 30, 2016, respectively. Cash balances located outside of the United States may not be insured and totaled $331,687 and $1,923,290 at March 31, 2017 and June 30, 2016, respectively. The following table shows revenue from external sources by destination country: Three Months Ended March 31, Nine Months Ended March 31, 2017 2016 2017 2016 United States $ 16,850,655 80% $ 16,596,810 66% $ 36,633,044 64% $ 34,092,324 56% Saudi Arabia 1,051,593 5% 3,821,011 15% 6,273,365 11% 13,452,368 22% China 790,486 4% 211,967 1% 889,834 2% 431,288 1% Mexico 549,420 3% 743,617 3% 4,294,447 7% 3,830,117 6% Argentina 316,046 2% 704,059 3% 2,881,050 5% 2,272,120 4% Egypt 394,560 2% 502,250 2% 677,520 1% 502,090 1% Peru 297,438 1% 363,297 1% 821,213 1% 1,529,304 2% Other 762,045 3% 2,070,768 9% 5,017,087 9% 5,300,337 8% Total $ 21,012,243 100% $ 25,013,779 100% $ 57,487,560 100% $ 61,409,948 100% 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 and other services provided according to the terms of the underlying agreement 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 at March 31, 2017 and June 30, 2016. 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. A reserve is recorded against inventory that is determined to be obsolete or impaired 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: March 31, June 30, 2017 2016 Raw materials and supplies $ 224,805 $ 241,268 Work in progress and growing crops 6,322,371 3,120,485 Finished goods 31,505,072 18,484,377 $ 38,052,248 $ 21,846,130 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 reporting unit. 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. 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 $95,591 and $28,916 for the three months ended March 31, 2017 and 2016, respectively. Loss on equity method investment totaled $144,841 and $252,619 for the nine months ended March 31, 2017 and 2016, respectively. 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. Net Income (Loss) Per Common Share Data Basic net income (loss) per common share ("EPS"), is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated by adjusting both the numerator (net income (loss)) and the denominator (weighted-average number of shares outstanding) for the dilutive effects of potentially dilutive securities, including options, restricted stock awards, convertible debt and common stock warrants. The if-converted method is used for convertible debt. Under the if-converted method, interest expense recognized in the period on the convertible debt is added to net income, and the number of shares that would be obtained upon conversion is added to the denominator. The treasury stock method is used for common stock warrants, stock options, and restricted stock awards. Under this method, consideration that would be received upon exercise (as well as remaining compensation cost to be recognized for awards not yet vested) is assumed to be used repurchase shares of stock in the market, with net number of shares assumed to be issued added to the denominator. In addition, the numerator is adjusted to exclude the changes in the fair value of the warrants that are classified as a liability for GAAP, but will be settled in shares. The calculation of Basic and Diluted EPS is shown in the table below. Classes of securities identified in the table with no adjustments in the calculation of Diluted EPS were determined to be antidilutive for the applicable periods. Three Months Ended Nine Months Ended March 31, March 31, 2017 2016 2017 2016 Numerator: Net income (loss) $ 1,327,240 $ 567,873 $ (730,961) $ 55,426 Numerator for basis EPS 1,327,240 567,873 (730,961) 55,426 Effect of dilutive securities: Convertible debt - - - - Warrants (1,009,901) - (841,400) - (1,009,901) - (841,400) - Numerator for diluted EPS $ 317,339 $ 567,873 $ (1,572,361) $ 55,426 Denominator: Denominator for basic EPS - weighted-average shares 17,963,598 15,420,308 17,630,906 14,278,107 Effect of dilutive securities: Employee stock stock options - - - - Employee restricted stock units - - - - Convertible debt - - - - Warrants 15,579 - 87,337 - Dilutive potential common shares 15,579 - 87,337 - Denominator for diluted EPS - adjusted weighted average shares and assumed conversions 17,979,177 15,420,308 17,718,243 14,278,107 Basic EPS $ 0.07 $ 0.04 $ (0.04) $ 0.00 Diluted EPS $ 0.02 $ 0.04 $ (0.09) $ 0.00 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. 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 March 31, 2017 or June 30, 2016. 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 March 31, 2017, the fair value and carrying value of the convertible debentures was zero. At June 30, 2016, the fair value and carrying value of the convertible debentures was $7,829,671 and $6,840,608 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 March 31, 2017 Using: Level 1 Level 2 Level 3 Foreign exchange contract asset $ - $ 173,192 $ - Contingent consideration obligations - - 2,346,091 Derivative warrant liabilities - - 3,512,700 Total $ - $ 173,192 $ 5,858,791 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 There were no transfers in or out of Level 3 during the three and nine months ended March 31, 2017 and 2016. Reclassifications Certain reclassifications have been made to prior period amounts to conform to current period presentation. The reclassifications had no effect on net income (loss), cash flows or stockholders' equity. Recently Issued Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment ("ASU 2017-04") In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15") 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 |
NOTE 3 - BUSINESS COMBINATIONS
NOTE 3 - BUSINESS COMBINATIONS | 9 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
NOTE 3 – BUSINESS COMBINATIONS | NOTE 3 - BUSINESS COMBINATIONS 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 "SV Genetics Acquisition"). The acquisition expanded and diversified the Company's product offerings and provided access to new distribution channels. As consideration for the SV Genetics Acquisition, the Company 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 terms of the SV Genetics Acquisition further provide 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 volume weighted average price 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 March 31, 2017, the estimated fair value of the contingent consideration was zero. 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 |
NOTE 4 - GOODWILL AND INTANGIBL
NOTE 4 - GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 4 - GOODWILL AND INTANGIBLE ASSETS | NOTE 4 - GOODWILL AND INTANGIBLE ASSETS The following table summarizes the activity of goodwill for the nine months ended March 31, 2017 and the year ended June 30, 2016, respectively. Balance at Foreign Currency Balance at July 1, 2016 Additions Translation March 31, 2017 Goodwill $ 10,292,265 $ - $ - $ 10,292,265 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 Intangible assets consist of the following: Balance at Foreign Currency Balance at July 1, 2016 Additions Amortization Translation March 31, 2017 Trade name $ 1,328,786 $ - $ (63,360) $ - $ 1,265,426 Customer relationships 1,359,371 - (75,906) - 1,283,465 Non-compete 198,999 - (72,723) - 126,276 GI customer list 85,967 - (5,373) - 80,594 Supply agreement 1,229,047 - (56,724) - 1,172,323 Distribution agreement 7,113,253 - (288,375) - 6,824,878 Production agreement 335,002 - (167,499) - 167,503 Grower relationships 1,964,024 - (79,056) - 1,884,968 Intellectual property 22,870,760 - (858,916) - 22,011,844 Internal use software 521,593 118,122 - - 639,715 $ 37,006,802 $ 118,122 $ (1,667,932) $ - $ 35,456,992 Balance at Foreign Currency Balance at July 1, 2015 Additions Amortization Translation June 30, 2016 Trade name $ 1,377,840 $ 45,000 $ (82,208) $ (11,846) $ 1,328,786 Customer relationships 968,619 462,000 (60,314) (10,934) 1,359,371 Non-compete 301,354 30,000 (125,815) (6,540) 198,999 GI customer list 93,131 - (7,164) - 85,967 Supply agreement 1,304,679 - (75,632) - 1,229,047 Distribution agreement 7,497,750 - (384,497) - 7,113,253 Production agreement 558,334 - (223,332) - 335,002 Grower relationships 2,183,485 - (120,481) (98,980) 1,964,024 Intellectual property 23,719,724 536,000 (1,159,656) (225,308) 22,870,760 Internal use software 162,417 359,176 - - 521,593 $ 38,167,333 $ 1,432,176 $ (2,239,099) $ (353,608) $ 37,006,802 Amortization expense totaled $555,977 and $558,358 for the three months ended March 31, 2017 and 2016, respectively. Amortization expense totaled $1,667,932 and $1,673,048 for the nine months ended March 31, 2017 and 2016, respectively. Estimated aggregate remaining amortization is as follows: 2017 2018 2019 2020 2021 Thereafter Amortization expense $ 555,977 $ 2,054,597 $ 1,909,612 $ 1,909,612 $ 1,909,612 $ 27,117,582 |
NOTE 5 - PROPERTY, PLANT AND EQ
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT | 9 Months Ended |
Mar. 31, 2017 | |
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: March 31, June 30, 2017 2016 Land and improvements $ 3,091,558 $ 2,908,501 Buildings and improvements 6,391,988 6,192,522 Machinery and equipment 5,156,871 4,781,586 Vehicles 1,080,354 1,080,354 Construction in progress 1,149,349 256,935 Total property, plant and equipment 16,870,120 15,219,898 Less: accumulated depreciation (3,404,315) (2,619,792) Property, plant and equipment, net $ 13,465,805 $ 12,600,106 Depreciation expense totaled $242,582 and $237,704 for the three months ended March 31, 2017 and 2016, respectively. Depreciation expense totaled $807,778 and $703,053 for the nine months ended March 31, 2017 and 2016, respectively. |
NOTE 6 - DEBT
NOTE 6 - DEBT | 9 Months Ended |
Mar. 31, 2017 | |
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: March 31, June 30, 2017 2016 Working capital lines of credit KeyBank $ 28,975,875 $ 12,308,828 National Australia Bank Limited 7,190,622 4,378,645 Total working capital lines of credit 36,166,497 16,687,473 Current portion of long-term debt Keith facility (building loan) - National Australia Bank Limited - 37,205 Keith facility (machinery & equipment loans) - National Australia Bank Limited 161,411 137,889 Unsecured subordinate promissory note - related party 100,000 100,000 Promissory note - DuPont Pioneer 10,000,000 - Total current portion 10,261,411 275,094 Long-term debt, less current portion Keith facility (building loan) - National Australia Bank Limited 496,828 446,454 Keith facility (machinery & equipment loans) - National Australia Bank Limited 543,586 567,879 Unsecured subordinate promissory note - related party - 100,000 Promissory note - DuPont Pioneer - 10,000,000 Total long-term portion 1,040,414 11,114,333 Total debt $ 11,301,825 $ 11,389,427 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"). All amounts of unpaid principal and interest due under the KeyBank Credit Facility must be paid in full on or before September 21, 2017. On October 4, 2016, the Company and KeyBank entered into a Second Amendment Agreement effective September 30, 2016 (the "Second Amendment"). The purpose of the Second Amendment was to provide certain temporary changes to the terms of the KeyBank Credit Facility, including: (i) temporarily increasing the borrowing capacity from $20.0 million to (a) up to $25.0 million between October 1, 2016 and November 30, 2016 and (b) up to $30.0 million from February 1, 2017 through March 31, 2017; (ii) temporarily allowing for a $4.0 million over-advance beyond the amounts otherwise available based on the borrowing base calculations, which will be available through February 28, 2017; and (iii) temporarily expanding the borrowing base by reducing the reserves that KeyBank may establish with respect to grower payables to 75% between August 31, 2016 and February 28, 2017. On March 13, 2017, the Company entered into a Third Amendment Agreement (the " Third Amendment"). The purpose of the Third Amendment was to provide certain temporary changes to the terms of the KeyBank Credit Facility, including: (i) further extending the temporary period during which the Company may borrow, repay and reborrow up to $30.0 million in the aggregate under the credit facility until April 21, 2017; and (ii) retroactively and temporarily allowing for over-advances, beyond amounts otherwise available based on the borrowing base calculations under the Credit Facility (a) of up to $3.5 million during the period from March 8, 2017 through March 10, 2017, (b) of up to $5.0 million during the period from March 11, 2017 through March 17, 2017, (c) of up to $6.0 million during the period from March 18, 2017 through March 24, 2017, (d) of up to $7.0 million during the period from March 25, 2017 through March 31, 2017 and (e) of up to $8.5 million during the period from April 1, 2017 through as late as April 20, 2017. Subject to the temporary changes effected by the Second Amendment, 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 is required to maintain one or more lockbox or cash collateral accounts at KeyBank, in KeyBank's name, which 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 March 31, 2017. The outstanding balance on the KeyBank Credit Facility was $28,975,875 at March 31, 2017. 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 $100,000 at March 31, 2017. 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. On December 31, 2014, the Company also issued contingent consideration to DuPont Pioneer which requires the Company to increase the principal amount of the Pioneer Note by up to an additional $5,000,000 if the Company meets certain performance metrics during the three-year period following December 31, 2014. The fair value of the contingent consideration arrangement was $2,290,850 at March 31, 2017. SGI finances the purchase of most of its seed inventory from growers pursuant to a seasonal credit facility with National Australia Bank Ltd ("NAB"). The current facility, referred to as the 2016 NAB Facilities, was amended as of March 30, 2017 and expires on March 30, 2019. As of March 31, 2017, AUD $9,407,499 (USD $7,190,622) 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 $749,063 at March 31, 2017) and a borrowing base facility (the "Borrowing Base Facility"), having a credit limit of AUD $12,000,000 (USD $9,172,200 at March 31, 2017). The Borrowing Base 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 March 31, 2017, the Borrowing Base Facility accrued interest on Australian dollar drawings at approximately 4.90% calculated daily. The Borrowing Base 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 March 31, 2017, the Overdraft Facility accrued interest at approximately 6.77% calculated daily. For both the Overdraft Facility and the Borrowing Base 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 March 31, 2017. 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 $496,828 at March 31, 2017). Since entering into the Keith Building Loan, the limit has been changed on two occasions, with the current limit being AUD $750,000 (USD $573,263 at March 31, 2017), and a separate machinery and equipment facility (the "Keith Machinery and Equipment Facility") has been added of up to AUD $1,200,000 (USD $917,220 at March 31, 2017). At March 31, 2017, the principal balance on the Keith Building Loan was AUD $650,000 (USD $496,828) with unused availability of AUD $100,000 (USD $76,436). At March 31, 2017, the principal balance on the Keith Machinery and Equipment Facility was AUD $746,183 (USD $570,345) with unused availability of AUD $271,851 (USD $207,789). In February 2016, NAB and SGI also entered into a master asset finance facility (the "Master Assets Facility). At March 31, 2017, the principal balance on the Master Assets Facility was AUD $176,165 (USD $134,652) with unused availability of AUD $23,835 (USD $18,218). The Master Asset Facility has various maturity dates through 2021 and have interest rates ranging from 4.86% to 5.31%. The Keith Building Loan and Keith Machinery and Equipment Facility are used for the construction of a building on SGI's Keith, South Australia property, purchase of adjoining land and for the machinery and equipment for use in the operations of the 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 (5.96% as of March 31, 2017). Interest is payable each month in arrears. 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. The annual maturities of short-term and long-term debt, excluding convertible debt addressed in Note 7, are as follows: Fiscal Year Amount 2017 $ 39,601 2018 10,263,438 2019 252,059 2020 277,018 2021 203,360 Thereafter 266,349 Total $ 11,301,825 |
NOTE 7 - SENIOR CONVERTIBLE NOT
NOTE 7 - SENIOR CONVERTIBLE NOTES AND WARRANTS | 9 Months Ended |
Mar. 31, 2017 | |
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. 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. During Fiscal Year 2016, the Company accelerated three redemption payments totaling $2,830,049. Total convertible debt outstanding, excluding debt addressed in Note 6, is presented on the consolidated balance sheet as follows: March 31, 2017 June 30, 2016 Current portion of convertible debt, net Senior secured convertible notes payable $ - $ 7,849,754 Debt discount - (1,009,146) Total convertible debt, net $ - $ 6,840,608 As of March 31, 2017, the Debentures were fully retired and had no outstanding balance. 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. During the nine months ended March 31, 2017, certain holders of the Debentures converted an aggregate of $3,168,342 of principal and interest into 684,321 shares of the Company's common stock in accordance with the terms of the Debentures. Upon conversion, the Company recognized interest expense of $194,939 related to unamortized debt discount on the Debentures and incurred $7,070 of stock issuance costs. 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 March 31, 2017 and June 30, 2016, the fair value of the Warrants was estimated at $3,512,700 and $4,354,100, respectively. The Warrants were valued at March 31, 2017 using the Monte Carlo simulation model, under the following assumptions: (i) remaining expected life of 3.25 years, (ii) volatility of 46.5%, (iii) risk-free interest rate of 1.54% and (iv) dividend rate of zero. The aggregate fair value of the Warrants derived via the Monte Carlo analysis were also weighted by a prior third party market transaction and third party indications of fair value. The prior third party market transaction was provided a weighting of 10.0% while the third party indications of fair value were provided a 50% weighting in the fair value analysis. 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 aggregate fair value of the Warrants derived via the Monte Carlo analysis were also weighted by a prior third party market transaction. The prior third party market transaction was provided a weighting of 10.0% in the fair value analysis. 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. |
NOTE 8 - WARRANTS
NOTE 8 - WARRANTS | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 8 - WARRANTS | NOTE 8 - WARRANTS The following table summarizes the total warrants outstanding at March 31, 2017: Issue Date Exercise Price Per Share Expiration Date Outstanding as of June 30, 2016 New Issuances Expired Outstanding as of March 31, 2017 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 - (50,000) 2,699,999 The following table summarizes the total warrants outstanding at June 30, 2016: Issue Date Exercise Price Per Share Expiration Date Outstanding as of June 30, 2015 New Issuances Expired Outstanding as 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 warrants issued in December 2014 are subject to down-round price protection. See Note 7 under the heading "Warrants" for further discussion. |
NOTE 9 - FOREIGN CURRENCY CONTR
NOTE 9 - FOREIGN CURRENCY CONTRACTS | 9 Months Ended |
Mar. 31, 2017 | |
Note 9 - Foreign Currency Contracts | |
NOTE 9 - FOREIGN CURRENCY CONTRACTS | NOTE 9 - 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 $9,244,230 at March 31, 2017 and their maturities range from April to August 2017. 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 $173,192 at March 31, 2017 compared to foreign currency contract assets of $49,808 at June 30, 2016. The Company recorded a gain on foreign exchange contracts of $360,216 and $110,346, which is reflected in cost of revenue for the three months ended March 31, 2017 and 2016, respectively. The Company recorded a loss on foreign exchange contracts of $212,859 and $275,123, which is reflected in cost of revenue for the nine months ended March 31, 2017 and 2016, respectively. |
NOTE 10 - COMMITMENTS AND CONTI
NOTE 10 - COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | NOTE 10 - 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. 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 11 - RELATED PARTY TRANSAC
NOTE 11 - RELATED PARTY TRANSACTIONS | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 11 - RELATED PARTY TRANSACTIONS | NOTE 11 - 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 $8,232,216 to IVM during the nine months ended March 31, 2017. Amounts due to IVM totaled $77,599 and $396,027 at March 31, 2017 and June 30, 2016, respectively. |
NOTE 12 - EQUITY-BASED COMPENSA
NOTE 12 - EQUITY-BASED COMPENSATION | 9 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 12 - EQUITY-BASED COMPENSATION | NOTE 12 - 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. The Company utilizes a Black-Scholes-Merton option pricing model, which includes assumptions regarding the risk-free interest rate, dividend yield, life of the award, and the volatility of the Company's common stock to estimate the fair value of employee options grants. Weighted average assumptions used in the Black-Scholes-Merton model are set forth below: March 31, June 30, 2017 2016 Risk free rate 1.2% - 1.9% 1.5% - 1.6% Dividend yield 0% 0% Volatility 39.2% - 51.6% 50.4% - 50.8% Average forfeiture assumptions 2.4% 6.1% During the nine months ended March 31, 2017, the Company granted 80,610 options to its directors and officers at exercise prices ranging from $4.75 - $4.86. These options vest in periods ranging from one year annually to quarterly over three years and expire ten years from the date of grant. A summary of stock option activity for the nine months ended March 31, 2017 and year ended June 30, 2016 is presented below: Weighted - Weighted - Average Average Remaining Aggregate Number Exercise Price Contractual Intrinsic Outstanding Per Share Life (Years) Value 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 Granted 80,610 4.81 - - Exercised (232,000) 4.20 - - Canceled/forfeited/expired (29,500) 5.95 - - Outstanding at March 31, 2017 840,528 5.34 4.7 293,619 Options vested and exercisable at March 31, 2017 650,694 5.57 4.2 218,448 Options vested and expected to vest as of March 31, 2017 840,180 $ 5.34 4.7 $ 293,493 The weighted average grant date fair value of options granted and outstanding at March 31, 2017 was $1.45. At March 31, 2017, the Company had $298,860 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 1.4 years. The Company settles employee stock option exercises with newly issued shares of common stock. 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. During the nine months ended March 31, 2017, the Company issued 76,085 restricted stock units to its directors, certain members of the executive management team, and other employees. The restricted stock units have varying vesting periods ranging from immediate vesting to annual installments over a three-year period. The fair value of the awards totaled $369,531 and was based on the closing stock price on the date of grants. The Company recorded $239,579 and $192,719 of stock-based compensation expense associated with grants of restricted stock units during the three months ended March 31, 2017 and 2016, respectively. The Company recorded $674,076 and $586,564 of stock-based compensation expense associated with grants of restricted stock units during the nine months ended March 31, 2017 and 2016, respectively. A summary of activity related to non-vested restricted stock units is presented below: Nine Months Ended March 31, 2017 Weighted - Number of Weighted - Average Nonvested Average Remaining Restricted Grant Date Contractual Stock Units Fair Value Life (Years) Beginning nonvested restricted units outstanding 170,879 $ 7.51 1.5 Granted 76,085 4.86 1.7 Vested (79,700) 7.75 - Forfeited - - - Ending nonvested restricted units outstanding 167,264 $ 6.19 1.1 At March 31, 2017, the Company had $777,295 of unrecognized stock compensation expense related to the restricted stock units, which will be recognized over the weighted average remaining service period of 1.1 years. At March 31, 2017, there were 705,914 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 three months ended March 31, 2017 and 2016, totaled $306,800 and $289,314, respectively. Stock- based compensation expense recorded for stock options, restricted stock grants and restricted stock units for the nine months ended March 31, 2017 and 2016, totaled $885,459 and $917,489, respectively. |
NOTE 13 - NON-CASH ACTIVITIES F
NOTE 13 - NON-CASH ACTIVITIES FOR STATEMENTS OF CASH FLOWS | 9 Months Ended |
Mar. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
NOTE 13 - NON-CASH ACTIVITIES FOR STATEMENTS OF CASH FLOWS | NOTE 13 - NON-CASH 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 nine months ended March 31, 2017 and 2016, respectively. Nine Months Ended March 31, 2017 2016 Issuance of common stock upon conversion of principal and interest of convertible debentures $ 3,168,342 $ - |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2017 | |
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. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The Company has prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These consolidated financial statements are unaudited and, in the Company's opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the Company's consolidated balance sheets, statements of operations, comprehensive income (loss), cash flows and stockholders' equity for the periods presented. Operating results for the periods presented are not necessarily indicative of the results to be expected for the full year ending June 30, 2017. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended June 30, 2016, as filed with the SEC. |
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. One customer accounted for 77% and 65% of its revenue for the three months ended March 31, 2017 and 2016, respectively. One customer accounted for 59% and 50% of its revenue for the nine months ended March 31, 2017 and 2016, respectively. Two customers accounted for 56% of the Company's accounts receivable at March 31, 2017. One customer accounted for 35% of the Company's accounts receivable at June 30, 2016. In addition, the Company sells a substantial portion of its products to international customers. Sales direct to international customers represented 20% and 34% of revenue during the three months ended March 31, 2017 and 2016, respectively. Sales direct to international customers represented 36% and 44% of revenue during the nine months ended March 31, 2017 and 2016, respectively. The net book value of fixed assets located outside the United States was 18% and 17% of total assets at March 31, 2017 and June 30, 2016, respectively. Cash balances located outside of the United States may not be insured and totaled $331,687 and $1,923,290 at March 31, 2017 and June 30, 2016, respectively. The following table shows revenue from external sources by destination country: Three Months Ended March 31, Nine Months Ended March 31, 2017 2016 2017 2016 United States $ 16,850,655 80% $ 16,596,810 66% $ 36,633,044 64% $ 34,092,324 56% Saudi Arabia 1,051,593 5% 3,821,011 15% 6,273,365 11% 13,452,368 22% China 790,486 4% 211,967 1% 889,834 2% 431,288 1% Mexico 549,420 3% 743,617 3% 4,294,447 7% 3,830,117 6% Argentina 316,046 2% 704,059 3% 2,881,050 5% 2,272,120 4% Egypt 394,560 2% 502,250 2% 677,520 1% 502,090 1% Peru 297,438 1% 363,297 1% 821,213 1% 1,529,304 2% Other 762,045 3% 2,070,768 9% 5,017,087 9% 5,300,337 8% Total $ 21,012,243 100% $ 25,013,779 100% $ 57,487,560 100% $ 61,409,948 100% |
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 at March 31, 2017 and June 30, 2016. |
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. A reserve is recorded against inventory that is determined to be obsolete or impaired 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: March 31, June 30, 2017 2016 Raw materials and supplies $ 224,805 $ 241,268 Work in progress and growing crops 6,322,371 3,120,485 Finished goods 31,505,072 18,484,377 $ 38,052,248 $ 21,846,130 |
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 reporting unit. 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. |
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 $95,591 and $28,916 for the three months ended March 31, 2017 and 2016, respectively. Loss on equity method investment totaled $144,841 and $252,619 for the nine months ended March 31, 2017 and 2016, respectively. 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 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. |
Net Income (Loss) Per Common Share Data | Net Income (Loss) Per Common Share Data Basic net income (loss) per common share ("EPS"), is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated by adjusting both the numerator (net income (loss)) and the denominator (weighted-average number of shares outstanding) for the dilutive effects of potentially dilutive securities, including options, restricted stock awards, convertible debt and common stock warrants. The if-converted method is used for convertible debt. Under the if-converted method, interest expense recognized in the period on the convertible debt is added to net income, and the number of shares that would be obtained upon conversion is added to the denominator. The treasury stock method is used for common stock warrants, stock options, and restricted stock awards. Under this method, consideration that would be received upon exercise (as well as remaining compensation cost to be recognized for awards not yet vested) is assumed to be used repurchase shares of stock in the market, with net number of shares assumed to be issued added to the denominator. In addition, the numerator is adjusted to exclude the changes in the fair value of the warrants that are classified as a liability for GAAP, but will be settled in shares. The calculation of Basic and Diluted EPS is shown in the table below. Classes of securities identified in the table with no adjustments in the calculation of Diluted EPS were determined to be antidilutive for the applicable periods. Three Months Ended Nine Months Ended March 31, March 31, 2017 2016 2017 2016 Numerator: Net income (loss) $ 1,327,240 $ 567,873 $ (730,961) $ 55,426 Numerator for basis EPS 1,327,240 567,873 (730,961) 55,426 Effect of dilutive securities: Convertible debt - - - - Warrants (1,009,901) - (841,400) - (1,009,901) - (841,400) - Numerator for diluted EPS $ 317,339 $ 567,873 $ (1,572,361) $ 55,426 Denominator: Denominator for basic EPS - weighted-average shares 17,963,598 15,420,308 17,630,906 14,278,107 Effect of dilutive securities: Employee stock stock options - - - - Employee restricted stock units - - - - Convertible debt - - - - Warrants 15,579 - 87,337 - Dilutive potential common shares 15,579 - 87,337 - Denominator for diluted EPS - adjusted weighted average shares and assumed conversions 17,979,177 15,420,308 17,718,243 14,278,107 Basic EPS $ 0.07 $ 0.04 $ (0.04) $ 0.00 Diluted EPS $ 0.02 $ 0.04 $ (0.09) $ 0.00 |
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. |
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 March 31, 2017 or June 30, 2016. 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 March 31, 2017, the fair value and carrying value of the convertible debentures was zero. At June 30, 2016, the fair value and carrying value of the convertible debentures was $7,829,671 and $6,840,608 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 March 31, 2017 Using: Level 1 Level 2 Level 3 Foreign exchange contract asset $ - $ 173,192 $ - Contingent consideration obligations - - 2,346,091 Derivative warrant liabilities - - 3,512,700 Total $ - $ 173,192 $ 5,858,791 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 There were no transfers in or out of Level 3 during the three and nine months ended March 31, 2017 and 2016. |
Reclassifications | Reclassifications Certain reclassifications have been made to prior period amounts to conform to current period presentation. The reclassifications had no effect on net income (loss), cash flows or stockholders' equity. |
Recent Accounting Pronouncements | Recently Issued Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment ("ASU 2017-04") In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15") 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 |
Stock-Based Compensation | 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. The Company utilizes a Black-Scholes-Merton option pricing model, which includes assumptions regarding the risk-free interest rate, dividend yield, life of the award, and the volatility of the Company's common stock to estimate the fair value of employee options grants. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Certain Risks and Concentrations) (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
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: Three Months Ended March 31, Nine Months Ended March 31, 2017 2016 2017 2016 United States $ 16,850,655 80% $ 16,596,810 66% $ 36,633,044 64% $ 34,092,324 56% Saudi Arabia 1,051,593 5% 3,821,011 15% 6,273,365 11% 13,452,368 22% China 790,486 4% 211,967 1% 889,834 2% 431,288 1% Mexico 549,420 3% 743,617 3% 4,294,447 7% 3,830,117 6% Argentina 316,046 2% 704,059 3% 2,881,050 5% 2,272,120 4% Egypt 394,560 2% 502,250 2% 677,520 1% 502,090 1% Peru 297,438 1% 363,297 1% 821,213 1% 1,529,304 2% Other 762,045 3% 2,070,768 9% 5,017,087 9% 5,300,337 8% Total $ 21,012,243 100% $ 25,013,779 100% $ 57,487,560 100% $ 61,409,948 100% |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Inventories) (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Inventories Tables | |
Inventories (Tables) | Components of inventory are: March 31, June 30, 2017 2016 Raw materials and supplies $ 224,805 $ 241,268 Work in progress and growing crops 6,322,371 3,120,485 Finished goods 31,505,072 18,484,377 $ 38,052,248 $ 21,846,130 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Net Income (Loss) Per Common Share Data) (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Net Income Loss Per Common Share Data Tables | |
Net Income (Loss) Per Common Share Data (Tables) | The calculation of Basic and Diluted EPS is shown in the table below. Classes of securities identified in the table with no adjustments in the calculation of Diluted EPS were determined to be antidilutive for the applicable periods. Three Months Ended Nine Months Ended March 31, March 31, 2017 2016 2017 2016 Numerator: Net income (loss) $ 1,327,240 $ 567,873 $ (730,961) $ 55,426 Numerator for basis EPS 1,327,240 567,873 (730,961) 55,426 Effect of dilutive securities: Convertible debt - - - - Warrants (1,009,901) - (841,400) - (1,009,901) - (841,400) - Numerator for diluted EPS $ 317,339 $ 567,873 $ (1,572,361) $ 55,426 Denominator: Denominator for basic EPS - weighted-average shares 17,963,598 15,420,308 17,630,906 14,278,107 Effect of dilutive securities: Employee stock stock options - - - - Employee restricted stock units - - - - Convertible debt - - - - Warrants 15,579 - 87,337 - Dilutive potential common shares 15,579 - 87,337 - Denominator for diluted EPS - adjusted weighted average shares and assumed conversions 17,979,177 15,420,308 17,718,243 14,278,107 Basic EPS $ 0.07 $ 0.04 $ (0.04) $ 0.00 Diluted EPS $ 0.02 $ 0.04 $ (0.09) $ 0.00 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Fair Value Measurement) (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 Using: Level 1 Level 2 Level 3 Foreign exchange contract asset $ - $ 173,192 $ - Contingent consideration obligations - - 2,346,091 Derivative warrant liabilities - - 3,512,700 Total $ - $ 173,192 $ 5,858,791 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 |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Business Combination Tables | |
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 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Goodwill And Intangible Assets Tables | |
Goodwill | The following table summarizes the activity of goodwill for the nine months ended March 31, 2017 and the year ended June 30, 2016, respectively. Balance at Foreign Currency Balance at July 1, 2016 Additions Translation March 31, 2017 Goodwill $ 10,292,265 $ - $ - $ 10,292,265 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 |
Carrying values of intangible assets (Tables) | Intangible assets consist of the following: Balance at Foreign Currency Balance at July 1, 2016 Additions Amortization Translation March 31, 2017 Trade name $ 1,328,786 $ - $ (63,360) $ - $ 1,265,426 Customer relationships 1,359,371 - (75,906) - 1,283,465 Non-compete 198,999 - (72,723) - 126,276 GI customer list 85,967 - (5,373) - 80,594 Supply agreement 1,229,047 - (56,724) - 1,172,323 Distribution agreement 7,113,253 - (288,375) - 6,824,878 Production agreement 335,002 - (167,499) - 167,503 Grower relationships 1,964,024 - (79,056) - 1,884,968 Intellectual property 22,870,760 - (858,916) - 22,011,844 Internal use software 521,593 118,122 - - 639,715 $ 37,006,802 $ 118,122 $ (1,667,932) $ - $ 35,456,992 Balance at Foreign Currency Balance at July 1, 2015 Additions Amortization Translation June 30, 2016 Trade name $ 1,377,840 $ 45,000 $ (82,208) $ (11,846) $ 1,328,786 Customer relationships 968,619 462,000 (60,314) (10,934) 1,359,371 Non-compete 301,354 30,000 (125,815) (6,540) 198,999 GI customer list 93,131 - (7,164) - 85,967 Supply agreement 1,304,679 - (75,632) - 1,229,047 Distribution agreement 7,497,750 - (384,497) - 7,113,253 Production agreement 558,334 - (223,332) - 335,002 Grower relationships 2,183,485 - (120,481) (98,980) 1,964,024 Intellectual property 23,719,724 536,000 (1,159,656) (225,308) 22,870,760 Internal use software 162,417 359,176 - - 521,593 $ 38,167,333 $ 1,432,176 $ (2,239,099) $ (353,608) $ 37,006,802 |
Finite-lived intangible assets - future amortization expense | Estimated aggregate remaining amortization is as follows: 2017 2018 2019 2020 2021 Thereafter Amortization expense $ 555,977 $ 2,054,597 $ 1,909,612 $ 1,909,612 $ 1,909,612 $ 27,117,582 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Property Plant And Equipment Tables | |
Components of Property, Plant and Equipment | Components of property, plant and equipment were as follows: March 31, June 30, 2017 2016 Land and improvements $ 3,091,558 $ 2,908,501 Buildings and improvements 6,391,988 6,192,522 Machinery and equipment 5,156,871 4,781,586 Vehicles 1,080,354 1,080,354 Construction in progress 1,149,349 256,935 Total property, plant and equipment 16,870,120 15,219,898 Less: accumulated depreciation (3,404,315) (2,619,792) Property, plant and equipment, net $ 13,465,805 $ 12,600,106 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Debt Tables | |
Debt Components | Total debt outstanding, excluding convertible debt addressed in Note 7, are presented on the consolidated balance sheet as follows: March 31, June 30, 2017 2016 Working capital lines of credit KeyBank $ 28,975,875 $ 12,308,828 National Australia Bank Limited 7,190,622 4,378,645 Total working capital lines of credit 36,166,497 16,687,473 Current portion of long-term debt Keith facility (building loan) - National Australia Bank Limited - 37,205 Keith facility (machinery & equipment loans) - National Australia Bank Limited 161,411 137,889 Unsecured subordinate promissory note - related party 100,000 100,000 Promissory note - DuPont Pioneer 10,000,000 - Total current portion 10,261,411 275,094 Long-term debt, less current portion Keith facility (building loan) - National Australia Bank Limited 496,828 446,454 Keith facility (machinery & equipment loans) - National Australia Bank Limited 543,586 567,879 Unsecured subordinate promissory note - related party - 100,000 Promissory note - DuPont Pioneer - 10,000,000 Total long-term portion 1,040,414 11,114,333 Total debt $ 11,301,825 $ 11,389,427 |
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 $ 39,601 2018 10,263,438 2019 252,059 2020 277,018 2021 203,360 Thereafter 266,349 Total $ 11,301,825 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
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: March 31, 2017 June 30, 2016 Current portion of convertible debt, net Senior secured convertible notes payable $ - $ 7,849,754 Debt discount - (1,009,146) Total convertible debt, net $ - $ 6,840,608 |
Warrants (Warrants Outstanding)
Warrants (Warrants Outstanding) (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Warrants Warrants Outstanding Tables | |
Warrants Outstanding (Tables) | The following table summarizes the total warrants outstanding at March 31, 2017: Issue Date Exercise Price Per Share Expiration Date Outstanding as of June 30, 2016 New Issuances Expired Outstanding as of March 31, 2017 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 - (50,000) 2,699,999 The following table summarizes the total warrants outstanding at June 30, 2016: Issue Date Exercise Price Per Share Expiration Date Outstanding as of June 30, 2015 New Issuances Expired Outstanding as 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 |
Equity-Based Compensation (Plan
Equity-Based Compensation (Plan Activity) (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
Stock Options | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Weighted average assumptions used in the Black-Scholes-Merton model are set forth below: March 31, June 30, 2017 2016 Risk free rate 1.2% - 1.9% 1.5% - 1.6% Dividend yield 0% 0% Volatility 39.2% - 51.6% 50.4% - 50.8% Average forfeiture assumptions 2.4% 6.1% |
Summary of Share-Based Compensation Arrangements By Share-Based Payment Award (Tables) | A summary of stock option activity for the nine months ended March 31, 2017 and year ended June 30, 2016 is presented below: Weighted - Weighted - Average Average Remaining Aggregate Number Exercise Price Contractual Intrinsic Outstanding Per Share Life (Years) Value 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 Granted 80,610 4.81 - - Exercised (232,000) 4.20 - - Canceled/forfeited/expired (29,500) 5.95 - - Outstanding at March 31, 2017 840,528 5.34 4.7 293,619 Options vested and exercisable at March 31, 2017 650,694 5.57 4.2 218,448 Options vested and expected to vest as of March 31, 2017 840,180 $ 5.34 4.7 $ 293,493 |
Nonvested restricted stock | |
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: Nine Months Ended March 31, 2017 Weighted - Number of Weighted - Average Nonvested Average Remaining Restricted Grant Date Contractual Stock Units Fair Value Life (Years) Beginning nonvested restricted units outstanding 170,879 $ 7.51 1.5 Granted 76,085 4.86 1.7 Vested (79,700) 7.75 - Forfeited - - - Ending nonvested restricted units outstanding 167,264 $ 6.19 1.1 |
Non-Cash Investing and Financin
Non-Cash Investing and Financing Activities for Statements of Cash Flows (Tables) | 9 Months Ended |
Mar. 31, 2017 | |
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 nine months ended March 31, 2017 and 2016, respectively. Nine Months Ended March 31, 2017 2016 Issuance of common stock upon conversion of principal and interest of convertible debentures $ 3,168,342 $ - |
Background and Organization (Na
Background and Organization (Narrative) (Details) | Mar. 31, 2017 |
Background And Organization Narrative Details | |
Number of Countries in which S&W Operates | 30 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Concentrations Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | |
Summary Of Significant Accounting Policies Concentrations Narrative Details | |||||
Sales revenue, major customer, percentage | 77.00% | 65.00% | 59.00% | 50.00% | |
Accounts receivable from major customers, percentage of total | 56.00% | 56.00% | 35.00% | ||
International sales revenue, percentage | 20% | 34% | 36% | 44% | |
Cash, Uninsured Amount | $ 331,687 | $ 331,687 | $ 1,923,290 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Revenue Recognition Narrative) (Details) | 9 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Revenue Recognition Narrative Details | |
Number of customers with right of return | 0 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Revenues from External Customers By Country Of Domicile) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues from external customers | $ 21,012,243 | $ 25,013,779 | $ 57,487,560 | $ 61,409,948 |
Revenue from external customers by country, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Disclosure on Geographic Areas, Fixed Assets | The net book value of fixed assets located outside the United States were 11% at September 30, 2015 and June 30, 2015, respectively. | |||
United States | ||||
Revenues from external customers | $ 16,850,655 | $ 16,596,810 | $ 36,633,044 | $ 34,092,324 |
Revenue from external customers by country, percentage | 80.00% | 66.00% | 64.00% | 56.00% |
Saudi Arabia | ||||
Revenues from external customers | $ 1,051,593 | $ 3,821,011 | $ 6,273,365 | $ 13,452,368 |
Revenue from external customers by country, percentage | 14.00% | 5.00% | 11.00% | 22.00% |
China | ||||
Revenues from external customers | $ 790,486 | $ 211,967 | $ 889,834 | $ 431,288 |
Revenue from external customers by country, percentage | 15.00% | 4.00% | 2.00% | 1.00% |
Mexico | ||||
Revenues from external customers | $ 549,420 | $ 743,617 | $ 4,294,447 | $ 3,830,117 |
Revenue from external customers by country, percentage | 1.00% | 3.00% | 7.00% | 6.00% |
Agrentina | ||||
Revenues from external customers | $ 316,046 | $ 704,059 | $ 2,881,050 | $ 2,272,120 |
Revenue from external customers by country, percentage | 3.00% | 2.00% | 5.00% | 4.00% |
Egypt | ||||
Revenues from external customers | $ 394,560 | $ 502,250 | $ 677,520 | $ 502,090 |
Revenue from external customers by country, percentage | 3.00% | 2.00% | 1.00% | 1.00% |
Peru | ||||
Revenues from external customers | $ 297,438 | $ 363,297 | $ 821,213 | $ 1,529,304 |
Revenue from external customers by country, percentage | 1.00% | 1.00% | 1.00% | 2.00% |
Other | ||||
Revenues from external customers | $ 762,045 | $ 2,070,768 | $ 5,017,087 | $ 5,300,337 |
Revenue from external customers by country, percentage | 3.00% | 9.00% | 9.00% | 8.00% |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Accounts Receivable Narrative) (Details) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Summary Of Significant Accounting Policies Accounts Receivable Narrative Details | ||
Allowance for doubtful trade receivables | $ 177,295 | $ 177,295 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Inventories by Component) (Details) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Summary Of Significant Accounting Policies Inventories By Component Details | ||
Raw materials and supplies | $ 224,805 | $ 241,268 |
Work in progress and growing crops | 6,322,371 | 3,120,485 |
Finished goods | 31,505,072 | 18,484,377 |
Inventories | $ 38,052,248 | $ 21,846,130 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Property, Plant and Equipment Useful Life Narrative) (Details) | 9 Months Ended |
Mar. 31, 2017 | |
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 Accoun41
Summary of Significant Accounting Policies (Intangible Assets Useful Life Narrative) (Details) | 9 Months Ended |
Mar. 31, 2017 | |
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 | 10 years |
Customer Relationships | Maximum | |
Useful life | 20 years |
Customer Relationships | Weighted Average | |
Useful life | 18 years |
Trade Name | Minimum | |
Useful life | 10 years |
Trade Name | Maximum | |
Useful life | 20 years |
Trade Name | 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 Accoun42
Summary of Significant Accounting Policies (Equity Method Investments Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Summary Of Significant Accounting Policies Equity Method Investments Narrative Details | ||||
Loss on equity method investment | $ 95,591 | $ 28,916 | $ 144,841 | $ 252,619 |
Summary of Significant Accoun43
Summary of Significant Accounting Policies (Impairment of Long-Lived Assets Narrative) (Details) - USD ($) | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Summary Of Significant Accounting Policies Impairment Of Long-lived Assets Narrative Details | ||
Impairment of Long-lived Assets | $ 319,001 | $ 0 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies (Net Income (Loss) Per Common Share) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||
Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | |
Summary Of Significant Accounting Policies Net Income Loss Per Common Share Details | |||||||
Basic EPS | $ 0.07 | $ 0.07 | $ 0.04 | $ 0.04 | $ 0 | $ (0.04) | $ 0 |
Diluted EPS | $ 0.02 | $ 0.02 | $ 0.04 | $ 0.04 | $ 0 | $ (0.09) | $ 0 |
Net income (loss) | $ 1,327,240 | $ 1,327,240 | $ 567,873 | $ 567,873 | $ 55,426 | $ (730,961) | $ 55,426 |
Numerator for basic EPS | 1,327,240 | 567,873 | 55,426 | (730,961) | |||
Convertible debt | 0 | 0 | 0 | 0 | |||
Warrants | (1,009,901) | 0 | 0 | (841,400) | |||
Total effect of dilutive securities: | (1,009,901) | 0 | 0 | (841,400) | |||
Numerator for diluted EPS | $ 317,339 | $ 567,873 | $ 55,426 | $ (1,572,361) | |||
Denominator: | |||||||
Denominator for basic EPS - weighted-average shares | 17,963,598 | 17,963,598 | 15,420,308 | 15,420,308 | 14,278,107 | 17,630,906 | 14,278,107 |
Effect of dilutive securities, shares: | |||||||
Employee stock options | 0 | 0 | 0 | 0 | |||
Employee restricted stock units | 0 | 0 | 0 | 0 | |||
Convertible debt | 0 | 0 | 0 | 0 | |||
Warrants | 15,579 | 0 | 0 | 87,337 | |||
Dilutive potential common shares | 15,579 | 0 | 0 | 87,337 | |||
Denominator for diluted EPS - adjusted weighted average shares and assumed conversions | 17,979,177 | 17,979,177 | 15,420,308 | 15,420,308 | 14,278,107 | 17,718,243 | 14,278,107 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies (Fair Value of Financial Instruments) (Details) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Foreign exchange contract asset | $ 173,192 | $ 49,808 |
Contingent consideration obligation | 0 | 2,268,416 |
Derivative warrant liabilities | 3,512,700 | 4,354,100 |
(Level 1) | ||
Foreign exchange contract asset | 0 | 0 |
Total | 0 | 0 |
Contingent consideration obligation | 0 | 0 |
Derivative warrant liabilities | 0 | 0 |
Total | 0 | 0 |
(Level 2) | ||
Foreign exchange contract asset | 173,192 | 49,808 |
Total | 173,192 | 49,808 |
Contingent consideration obligation | 0 | 0 |
Derivative warrant liabilities | 0 | 0 |
Total | 0 | 0 |
(Level 3) | ||
Foreign exchange contract asset | 0 | 0 |
Total | 0 | 0 |
Contingent consideration obligation | 2,346,091 | 2,268,416 |
Derivative warrant liabilities | 3,512,700 | 4,354,100 |
Total | $ 5,858,791 | $ 6,622,516 |
Business Combinations (Purchase
Business Combinations (Purchase Price Components Narrative) (Details) | 1 Months Ended |
May 31, 2016 | |
Business Combinations Purchase Price Components Narrative Details | |
Business Acquisition, Description of Acquired Entity | 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 "SV Genetics Acquisition"). The acquisition expanded and diversified the Company's product offerings and provided access to new distribution channels. As consideration for the SV Genetics Acquisition, the Company 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 terms of the SV Genetics Acquisition further provide 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 December 31, 2016, the estimated fair value of the contingent consideration was $141,929. |
Business Combinations (Purcha47
Business Combinations (Purchase Price Allocation) (Details) | 1 Months Ended |
May 31, 2016USD ($) | |
Purchase Price Allocation | |
Accounts receivable | $ 37,888 |
Inventory | 150,000 |
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 |
Current liabilities | (16,901) |
Total acquisition cost allocated | 2,085,324 |
Purchase price components | |
Cash | 1,000,000 |
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) - SV Genetics Acquisition | 1 Months Ended |
May 31, 2016USD ($) | |
Technology/IP - germplasm | |
Estimated Useful Life (years) | 25 years |
Fair value of asset | $ 479,000 |
Technology/IP seed varieties | |
Estimated Useful Life (years) | 15 years |
Fair value of asset | $ 57,000 |
Customer relationships | |
Estimated Useful Life (years) | 10 years |
Fair value of asset | $ 462,000 |
Trade name | |
Estimated Useful Life (years) | 10 years |
Fair value of asset | $ 45,000 |
Non-compete agreements | |
Estimated Useful Life (years) | 5 years |
Fair value of asset | $ 30,000 |
Total identifiable intangible assets | |
Fair value of asset | $ 1,073,000 |
Changes in Carrying Amount of G
Changes in Carrying Amount of Goodwill (Detail) - USD ($) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Jun. 30, 2016 | |
Changes In Carrying Amount Of Goodwill Detail | ||
Goodwill, Beginning Balance | $ 10,292,265 | $ 9,630,279 |
Goodwill additions | 0 | 796,064 |
Foreign Currency Translation | 0 | (134,078) |
Goodwill, Ending Balance | $ 10,292,265 | $ 10,292,265 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2016 | Jun. 30, 2015 | |
Intangible asset | $ 37,006,802 | $ 35,456,992 | $ 38,167,333 | ||||
Intangible addition | $ 118,122 | 1,432,176 | |||||
Intangible amortization expense | $ (555,977) | $ (558,358) | (1,667,932) | $ (1,673,048) | (2,239,099) | ||
Foreign currency translation | 0 | (353,608) | |||||
Trade name | |||||||
Intangible asset | 1,328,786 | 1,265,426 | 1,377,840 | ||||
Intangible addition | 0 | 45,000 | |||||
Intangible amortization expense | (63,360) | (82,208) | |||||
Foreign currency translation | 0 | (11,846) | |||||
Customer relationships | |||||||
Intangible asset | 1,359,371 | 1,283,465 | 968,619 | ||||
Intangible addition | 0 | 462,000 | |||||
Intangible amortization expense | (75,906) | (60,314) | |||||
Foreign currency translation | 0 | (10,934) | |||||
Non-compete | |||||||
Intangible asset | 198,999 | 126,276 | 301,354 | ||||
Intangible addition | 0 | 30,000 | |||||
Intangible amortization expense | (72,723) | (125,815) | |||||
Foreign currency translation | 0 | (6,540) | |||||
GI Customer list | |||||||
Intangible asset | 85,967 | 80,594 | 93,131 | ||||
Intangible addition | 0 | 0 | |||||
Intangible amortization expense | (2,373) | (7,164) | |||||
Foreign currency translation | 0 | 0 | |||||
Supply Agreement | |||||||
Intangible asset | 1,229,047 | 1,172,323 | 1,304,679 | ||||
Intangible addition | 0 | 0 | |||||
Intangible amortization expense | (56,724) | (75,632) | |||||
Foreign currency translation | 0 | 0 | |||||
Distribution Agreement | |||||||
Intangible asset | 6,824,878 | ||||||
Intangible addition | 0 | ||||||
Intangible amortization expense | (288,375) | ||||||
Foreign currency translation | 0 | ||||||
Distribution agreement | |||||||
Intangible asset | 7,113,253 | 7,497,750 | |||||
Intangible addition | 0 | ||||||
Intangible amortization expense | (384,497) | ||||||
Foreign currency translation | 0 | ||||||
Production agreement | |||||||
Intangible asset | 335,002 | 167,503 | 558,334 | ||||
Intangible addition | 0 | 0 | |||||
Intangible amortization expense | (167,499) | (223,332) | |||||
Foreign currency translation | 0 | 0 | |||||
Grower Relationships | |||||||
Intangible asset | 1,964,024 | 1,884,968 | 2,183,485 | ||||
Intangible addition | 0 | 0 | |||||
Intangible amortization expense | (79,056) | (120,481) | |||||
Foreign currency translation | 0 | (98,980) | |||||
Intellectual Property | |||||||
Intangible asset | 22,870,760 | 22,298,150 | 23,719,724 | ||||
Intangible addition | 0 | 536,000 | |||||
Intangible amortization expense | (858,916) | (1,159,656) | |||||
Foreign currency translation | 0 | (225,308) | |||||
Internal use software | |||||||
Intangible asset | 521,593 | $ 639,715 | $ 162,417 | ||||
Intangible addition | 118,122 | 359,176 | |||||
Intangible amortization expense | 0 | 0 | |||||
Foreign currency translation | $ 0 | $ 0 |
Intangible Assets (Amortization
Intangible Assets (Amortization Expense Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | |
Intangible Assets Amortization Expense Narrative Details | |||||
Amortization expense | $ 555,977 | $ 558,358 | $ 1,667,932 | $ 1,673,048 | $ 2,239,099 |
Intangible Assets (Future Amort
Intangible Assets (Future Amortization) (Details) | Dec. 31, 2016USD ($) |
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract] | |
2,017 | $ 555,977 |
2,018 | 2,054,597 |
2,019 | 1,909,612 |
2,020 | 1,909,612 |
2,021 | 1,909,612 |
Thereafter | $ 27,117,582 |
Property, Plant and Equipment53
Property, Plant and Equipment (Details) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Balance Sheet Related Disclosures [Abstract] | ||
Land and improvements | $ 3,091,558 | $ 2,908,501 |
Buildings and improvements | 6,391,988 | 6,192,522 |
Machinery and equipment | 5,156,871 | 4,781,586 |
Vehicles | 1,080,354 | 1,080,354 |
Construction in progress | 1,149,349 | 256,935 |
Property and equipment, gross | 16,870,120 | 15,219,898 |
Less: accumulated depreciation | (3,404,315) | (2,619,792) |
Property, plant and equipment, net | $ 13,465,805 | $ 12,600,106 |
Property, Plant and Equipment54
Property, Plant and Equipment (Depreciation Expense Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Property Plant And Equipment Depreciation Expense Narrative Details | ||||
Depreciation expense | $ 242,582 | $ 237,704 | $ 807,778 | $ 703,053 |
Debt (Details)
Debt (Details) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Working capital lines of credit | ||
Key Bank | $ 28,975,875 | $ 12,308,828 |
National Australia Bank Limited | 7,190,622 | 4,378,645 |
Total working capital lines of credit | 36,166,497 | 16,687,473 |
Current portion of long-term debt | ||
Keith facility (building loan) - National Australia Bank Limited | 0 | 37,205 |
Keith facility (machinery & equipment loan) - National Australia Bank Limited | 161,411 | 137,889 |
Unsecured subordinate promissory note - related party | 100,000 | 100,000 |
Promissory note - DuPont Pioneer, current | 10,000,000 | 0 |
Total current portion | 10,261,411 | 275,094 |
Long-term debt, less current portion | ||
Keith facility (building loan) - National Australia Bank Limited | 496,828 | 446,454 |
Keith facility (machinery & equipment loan) - National Australia Bank Limited | 543,586 | 567,879 |
Unsecured subordinate promissory note - related party | 0 | 100,000 |
Promissory note - DuPont Pioneer | 0 | 10,000,000 |
Total long-term portion | 1,040,414 | 11,114,333 |
Total debt | 11,301,825 | $ 11,389,427 |
Fiscal Year | ||
2,017 | 39,601 | |
2,018 | 10,263,438 | |
2,019 | 252,059 | |
2,020 | 277,018 | |
2,021 | 203,348 | |
Thereafter | 266,349 | |
Total | $ 11,301,825 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | 1 Months Ended | 9 Months Ended | |
Dec. 31, 2014 | Oct. 31, 2012 | Mar. 31, 2017 | |
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"). All amounts of unpaid principal and interest due under the KeyBank Credit Facility must be paid in full on or before September 21, 2017. On October 4, 2016, the Company and KeyBank entered into a Second Amendment Agreement effective September 30, 2016 (the "Second Amendment"). The purpose of the Second Amendment was to provide certain temporary changes to the terms of the KeyBank Credit Facility, including: (i) temporarily increasing the borrowing capacity from $20.0 million to (a) up to $25.0 million between October 1, 2016 and November 30, 2016 and (b) up to $30.0 million from February 1, 2017 through March 31, 2017; (ii) temporarily allowing for a $4.0 million over-advance beyond the amounts otherwise available based on the borrowing base calculations, which will be available through February 28, 2017; and (iii) temporarily expanding the borrowing base by reducing the reserves that KeyBank may establish with respect to grower payables to 75% between August 31, 2016 and February 28, 2017. On March 13, 2017, the Company entered into a Third Amendment Agreement (the " Third Amendment"). The purpose of the Third Amendment was to provide certain temporary changes to the terms of the KeyBank Credit Facility, including: (i) further extending the temporary period during which the Company may borrow, repay and reborrow up to $30.0 million in the aggregate under the credit facility until April 21, 2017; and (ii) retroactively and temporarily allowing for over-advances, beyond amounts otherwise available based on the borrowing base calculations under the Credit Facility (a) of up to $3.5 million during the period from March 8, 2017 through March 10, 2017, (b) of up to $5.0 million during the period from March 11, 2017 through March 17, 2017, (c) of up to $6.0 million during the period from March 18, 2017 through March 24, 2017, (d) of up to $7.0 million during the period from March 25, 2017 through March 31, 2017 and (e) of up to $8.5 million during the period from April 1, 2017 through as late as April 20, 2017. Subject to the temporary changes effected by the Second Amendment, 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 is required to maintain one or more lockbox or cash collateral accounts at KeyBank, in KeyBank's name, which 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 March 31, 2017. The outstanding balance on the KeyBank Credit Facility was $28,975,875 at March 31, 2017. | ||
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 $100,000 at March 31, 2017. | ||
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. On December 31, 2014, the Company also issued contingent consideration to DuPont Pioneer which requires the Company to increase the principal amount of the Pioneer Note by up to an additional $5,000,000 if the Company meets certain performance metrics during the three-year period following December 31, 2014. The fair value of the contingent consideration arrangement was $2,290,850 at March 31, 2017. | ||
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 National Australia Bank Ltd ("NAB"). The current facility, referred to as the 2016 NAB Facilities, was amended as of March 30, 2017 and expires on March 30, 2019. As of March 31, 2017, AUD $9,407,499 (USD $7,190,622) 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 $749,063 at March 31, 2017) and a borrowing base facility (the "Borrowing Base Facility"), having a credit limit of AUD $12,000,000 (USD $9,172,200 at March 31, 2017). The Borrowing Base 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 March 31, 2017, the Borrowing Base Facility accrued interest on Australian dollar drawings at approximately 4.90% calculated daily. The Borrowing Base 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 March 31, 2017, the Overdraft Facility accrued interest at approximately 6.77% calculated daily. For both the Overdraft Facility and the Borrowing Base 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 March 31, 2017. 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 $496,828 at March 31, 2017). Since entering into the Keith Building Loan, the limit has been changed on two occasions, with the current limit being AUD $750,000 (USD $573,263 at March 31, 2017), and a separate machinery and equipment facility (the "Keith Machinery and Equipment Facility") has been added of up to AUD $1,200,000 (USD $917,220 at March 31, 2017). At March 31, 2017, the principal balance on the Keith Building Loan was AUD $650,000 (USD $496,828) with unused availability of AUD $100,000 (USD $76,436). At March 31, 2017, the principal balance on the Keith Machinery and Equipment Facility was AUD $746,183 (USD $570,345) with unused availability of AUD $271,851 (USD $207,789). In February 2016, NAB and SGI also entered into a master asset finance facility (the "Master Assets Facility). At March 31, 2017, the principal balance on the Master Assets Facility was AUD $176,165 (USD $134,652) with unused availability of AUD $23,835 (USD $18,218). The Master Asset Facility has various maturity dates through 2021 and have interest rates ranging from 4.86% to 5.31%. The Keith Building Loan and Keith Machinery and Equipment Facility are used for the construction of a building on SGI's Keith, South Australia property, purchase of adjoining land and for the machinery and equipment for use in the operations of the building. The Keith Building Loan matures on November 30, 2024. The interest rate on the Keith Building Loan varies from pricing period to pricing period (each such period approximately 30 days), based on the weighted average of a specified basket of interest rates (5.96% as of March 31, 2017). Interest is payable each month in arrears. The Keith Machinery and Equipment Facility bears interest, payable in arrears, based on the Australian Trade Refinance Rate quoted by NAB at the time of the drawdown, plus 2.9%. The Keith Credit Facilities contain customary representations and warranties, affirmative and negative covenants and customary events of default that permit NAB to accelerate SGI's outstanding obligations, all as set forth in the facility agreement. They are secured by a lien on all the present and future rights, property and undertakings of SGI, the Company's corporate guarantee and a mortgage on SGI's Keith, South Australia property. |
Senior Convertible Notes and Wa
Senior Convertible Notes and Warrants (Details) - USD ($) | Mar. 31, 2017 | Jun. 30, 2016 |
Current portion of convertible debt, net | ||
Senior secured convertible notes payable | $ 0 | $ 7,849,754 |
Debt discount | 0 | (1,009,146) |
Total convertible debt, net | $ 0 | $ 6,840,608 |
Senior Convertible Notes and 58
Senior Convertible Notes and Warrants (Narrative) (Details) | 9 Months Ended |
Mar. 31, 2017 | |
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. 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. During Fiscal Year 2016, the Company accelerated three redemption payments totaling $2,830,049. As of March 31, 2017, the Debentures were fully retired and had no outstanding balance. 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. During the nine months ended March 31, 2017, certain holders of the Debentures converted an aggregate of $3,168,342 of principal and interest into 684,321 shares of the Company's common stock in accordance with the terms of the Debentures. Upon conversion, the Company recognized interest expense of $194,939 related to unamortized debt discount on the Debentures and incurred $7,070 of stock issuance costs. 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 March 31, 2017 and June 30, 2016, the fair value of the Warrants was estimated at $3,512,700 and $4,354,100, respectively. The Warrants were valued at March 31, 2017 using the Monte Carlo simulation model, under the following assumptions: (i) remaining expected life of 3.25 years, (ii) volatility of 46.5%, (iii) risk-free interest rate of 1.54% and (iv) dividend rate of zero. The aggregate fair value of the Warrants derived via the Monte Carlo analysis were also weighted by a prior third party market transaction and third party indications of fair value. The prior third party market transaction was provided a weighting of 10.0% while the third party indications of fair value were provided a 50% weighting in the fair value analysis. 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 aggregate fair value of the Warrants derived via the Monte Carlo analysis were also weighted by a prior third party market transaction. The prior third party market transaction was provided a weighting of 10.0% in the fair value analysis. 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. |
Warrants Outstanding (Details)
Warrants Outstanding (Details) - $ / shares | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
Warrants outstanding, beginning | 2,749,999 | 2,749,999 | |
Warrant issuances | 0 | 0 | |
Warrants expired | (50,000) | 0 | |
Warrants outstanding. ending | 2,699,999 | 2,749,999 | |
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 | (50,000) | 0 | |
Warrants outstanding. ending | 0 | 50,000 | |
Warrants | |||
Warrant issue date | 2014-12 | 2014-12 | |
Warrants outstanding, beginning | 2,699,999 | 2,699,999 | |
Exercise price per share | $ 4.63 | $ 4.33 | |
Warrant expiration date | 2020-06 | 2020-06 | |
Warrant issuances | 0 | 0 | |
Warrants expired | 0 | 0 | |
Warrants outstanding. ending | 2,699,999 | 2,699,999 |
Foreign Currency Contract (Narr
Foreign Currency Contract (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | |
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 $9,244,230 at March 31, 2017 and their maturities range from April to August 2017. 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 $173,192 at March 31, 2017 compared to foreign currency contract assets of $49,808 at June 30, 2016. The Company recorded a gain on foreign exchange contracts of $360,216 and $110,346, which is reflected in cost of revenue for the three months ended March 31, 2017 and 2016, respectively. The Company recorded a loss on foreign exchange contracts of $212,859 and $275,123, which is reflected in cost of revenue for the nine months ended March 31, 2017 and 2016, respectively. | ||||
Foreign exchange contract asset | $ 173,192 | $ 173,192 | $ 49,808 | ||
Gain on foreign exchange contracts | $ 360,216 | $ 110,346 | |||
Loss on foreign exchange contracts | $ 212,859 | $ 275,123 |
Commitments and Contingencies (
Commitments and Contingencies (Operating Leases) (Details) | Mar. 31, 2017USD ($) |
Commitments And Contingencies Operating Leases Details | |
Purchase commitments | $ 7,000,000 |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) - USD ($) | 9 Months Ended | |
Mar. 31, 2017 | Jun. 30, 2016 | |
Accounts Receivable, Related Parties, Current | $ 0 | $ 0 |
Accounts Payable, Related Parties, Current | $ 77,599 | 396,027 |
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 $8,232,216 to IVM during the nine months ended March 31, 2017. Amounts due to IVM totaled $77,599 and $396,027 at March 31, 2017 and June 30, 2016, respectively. | |
Related Party Transaction, Purchases from Related Party | $ 8,232,216 | |
Accounts Payable, Related Parties, Current | $ 77,599 | $ 396,027 |
Equity-Based Compensation (Weig
Equity-Based Compensation (Weighted Average Assumptions Narrative) (Details) - Stock Options - $ / shares | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Risk Free Interest Rate, minimum | 1.20% | 1.50% |
Risk Free Interest Rate, maximum | 1.90% | 1.60% |
Dividend yield | 0.00% | 0.00% |
Volatility of common stock, minimum | 39.20% | 50.40% |
Volatility of common stock, maximum | 51.60% | 50.80% |
Forfeiture assumption | 2.40% | 6.10% |
Weighted average grant date fair value of options granted and outstanding | $ 1.09 | |
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 1 year 144 days |
Equity-Based Compensation (Sche
Equity-Based Compensation (Schedule Of Stock Option Activity) (Details) | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($) | |
Equity-based Compensation Schedule Of Stock Option Activity Details | |||
Options, Outstanding as of beginning of period | shares | 1,021,418 | 901,697 | |
Options, Granted | shares | 80,610 | 203,500 | |
Options, Exercised | shares | (232,000) | (14,582) | |
Options, Forfeited, cancelled or expired | shares | (29,500) | (69,197) | |
Options, Outstanding as of end of period | shares | 840,528 | 1,021,418 | |
Options, vested and exercisable at end of period | shares | 620,292 | ||
Options, vested and expected to vest | shares | 840,041 | ||
Weighted-Average Exercise Prices, Outstanding as of beginnig of period | $ / shares | $ 5.14 | $ 5.33 | |
Weighted-Average Exercise Prices, Granted | $ / shares | 4.56 | ||
Weighted-Average Exercise Prices, Exercised | $ / shares | 4.20 | 3.95 | |
Weighted-Average Exercise Prices, Forfeited, cancelled or expired | $ / shares | 5.95 | 6.08 | |
Weighted-Average Exercise Prices, Outstanding as of end of period | $ / shares | 5.34 | $ 5.14 | |
Weighted-Average Exercise Prices, Vested and Exercisable | $ / shares | 5.57 | ||
Weighted-Average Exercise Price, Vested and expected to vest | $ / shares | $ 5.34 | ||
Options Outstanding, Weighted-Average Remaining Contractual Term (in years) | 4 years 252 days | 4 years 72 days | |
Weighted-Average Remaining Contractual Term (in years), Vested and Exercisable | 4 years 72 days | ||
Options Granted, Weighted-Average Remaining Contractual Term (in years) | 9.7 | ||
Weighted-Average Remaining Contractual Term (in years), Vested and expected to vest | 4 years 252 days | ||
Options, Outstanding, Aggregate Intrinsic Value | $ | $ 293,619 | $ 142,381 | $ 392,850 |
Options, vested and xxercisable, Aggregate Intrinsic Value | $ | 218,448 | ||
Options, Vested and expected to vest, Aggregate Intrinsic Value | $ | $ 293,493 |
Equity-Based Compensation (Sc65
Equity-Based Compensation (Schedule Of Other Than Option Plan Activity) (Details) - Nonvested RSU's | 9 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Nonvested units outstanding at beginning | 170,879 |
Units granted | 76,085 |
Units vested | (79,700) |
Units forfeited | 0 |
Nonvested units outstanding at end | 167,264 |
Units granted, weighted average grant date fair value per unit | $ / shares | $ 4.86 |
Units vested, weighted average grant date fair value per unit | $ / shares | 7.75 |
Nonvested units outstanding, weighted average grant date fair value per unit | $ / shares | $ 6.19 |
Weighted-average remaining contractual life (years) | 1 year 36 days |
Equity-Based Compensation (2009
Equity-Based Compensation (2009 Equity Incentive Plan Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2016 | Dec. 31, 2015 | Jul. 31, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2016 | |
Stock option exercise price | $ 4.56 | |||||||
Share-based compensation | $ 306,800 | $ 289,314 | $ 885,459 | $ 917,489 | ||||
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. | |||||||
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. | |||||||
Number of shares reserved for issuance under the plan | 2,450,000 | |||||||
Shares available for future grants and awards | 705,914 | |||||||
March 2013 Grants | ||||||||
Share-based compensation | $ 207,059 | $ 145,511 | ||||||
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. | |||||||
Fiar value of RSU on date of grant | $ 420,465 | |||||||
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. | |||||||
Fiar value of RSU on date of grant | $ 119,251 | |||||||
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. | |||||||
Fiar value of RSU on date of grant | $ 12,180 |
Equity-Based Compensation (Narr
Equity-Based Compensation (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Stock-based compensation | $ 306,800 | $ 289,314 | $ 885,459 | $ 917,489 |
Nonvested RSU's | ||||
Unrecognized stock compensation expense related to restricted stock grants | 777,295 | $ 777,295 | ||
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 1 year 36 days | |||
Stock-based compensation | 239,579 | $ 192,719 | $ 674,076 | 586,564 |
Stock Options | ||||
Unrecognized stock compensation expense, net of estimated forfeitures, related to options | $ 298,860 | $ 298,860 | ||
Stock Options | ||||
Stock-based compensation, total compensation cost not yet recognized, period for recognition | 1 year 144 days | |||
Nonvested restricted stock | ||||
Stock-based compensation | $ 207,059 | $ 145,511 |
Non-Cash Investing Activities f
Non-Cash Investing Activities for Statements of Cash Flows (Details) - USD ($) | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Non-cash Investing Activities For Statements Of Cash Flows Details | ||
Issuance of common stock upon conversion of principal and interest of convertible debentures | $ 3,168,342 | $ 0 |