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As filed with the Securities and Exchange Commission on October 21, 2013 UNITED STATES FORM S-3 S&W SEED COMPANY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT
Under The Securities Act of 1933
(Exact name of registrant as specified in its charter)
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Nevada |
0139 |
27-1275784 |
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(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(IRS Employer Identification No.) |
25552 South Butte Avenue
Five Points, CA 93624
(559) 884-2535
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Mark S. Grewal
25552 South Butte Avenue
Five Points, CA 93624
(559) 884-2535
Name, including zip code, and telephone number, including area code, of agent for service)
Copy to:
Mark A. von Bergen
Jason H. Barker
Holland & Knight LLP
2300 US Bancorp Tower, 111 SW Fifth Avenue
Portland, OR 97204
(503) 243-2300
Approximate Date of Commencement of the Proposed Sale to the Public: As soon as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box:
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered in connection with dividend or interest reinvestment plans, check the following box: x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 413(b) under the Securities Act, check the following box.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer |
Accelerated filer |
Non-accelerated filer |
Smaller reporting company x |
CALCULATION OF REGISTRATION FEE
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Title of Each Class of |
Amount to be Registered(1)(2)(3) |
Proposed Maximum |
Proposed Maximum |
Amount of |
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Common Stock, $0.001 par value |
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Preferred Stock, $0.001 par value |
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Debt Securities(6) |
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Warrants(7) |
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Units(8) |
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Total |
$100,000,000 |
$11,849(9) |
(1) There are being registered hereunder such indeterminate number of (i) shares of common stock; (ii) preferred stock; (iii) debt securities; (iv) warrants; and (v) units as shall have an aggregate initial offering price not to exceed $100,000,000. Such indeterminate amounts may from time to time be issued at indeterminate prices in U.S. Dollars. Any securities registered hereunder may be sold separately, or as units with other securities registered hereunder. This registration statement also includes such presently indeterminate number of securities as may be issuable from time to time upon conversion or upon exercise of, or in exchange for, any such convertible or exchangeable securities registered hereunder or pursuant to the anti-dilution provisions of any such securities.
(2) Pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act"), the securities offered hereby shall be deemed to cover additional securities to be offered to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(3) The amount to be registered, proposed maximum aggregate offering price per security and proposed maximum aggregate offering price are not specified as to each class of security pursuant to General Instruction II.D of Form S-3 under the Securities Act. The proposed maximum aggregate offering price is estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act.
(4) The proposed maximum per unit and aggregate offering prices per security will be determined, from time to time, by the registrant in connection with the issuance by the registrant of the securities registered hereunder.
(5) With respect to securities to be offered for sale by the Registrant in the primary offering, the registration fee is calculated in accordance with Rule 457(o) of the Securities Act.
(6) May include senior or subordinated debt.
(7) Warrants may entitle the holder to purchase our debt securities, common stock or any combination thereof. Warrants may be issued independently or together with shares of common stock, debt securities or any combination thereof, and the warrants may be attached to or separate from such securities.
(8) Each unit may consist of one or more of the other securities described in this prospectus in any combination.
(9) In accordance with Rule 457(p) of the Securities Act, the total amount of the registration fee payable, $12,880, is offset by $1,031, the amount of a previous registration fee paid for securities that were registered but not sold pursuant to the Registrant's Registration Statement on Form S-3 (SEC Reg. No. 333-178481) filed with the Commission on December 14, 2011.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Exchange Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
PROSPECTUS (Subject to Completion, Dated October 18, 2013)
$100,000,000
Common Stock
Convertible Preferred Stock
Debt Securities
Warrants
Units
From time to time, we may offer up to $100,000,000 of any combination of the securities described in this prospectus, either individually or in units.
This prospectus provides a general description of the securities we may offer. Each time we sell securities, we will provide specific terms of the securities offered in a supplement to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement and any related free writing prospectus may also add, update or change information contained in this prospectus. You should carefully read this prospectus, the applicable prospectus supplement and any related free writing prospectus, as well as any documents incorporated by reference herein and therein before you invest in any securities. This prospectus may not be used to consummate a sale of securities unless accompanied by the applicable prospectus supplement.
Our common stock is listed on The Nasdaq Capital Market under the symbol "SANW." On October 16, 2013, the last reported sale price for our common stock was $7.69 per share. The applicable prospectus supplement will contain information, where applicable, as to any other listing on The Nasdaq Capital Market or any securities market or other exchange of the securities, if any, covered by the prospectus supplement.
INVESTING IN OUR SECURITIES INVOLVES RISKS. YOU SHOULD REVIEW CAREFULLY THE RISKS AND UNCERTAINTIES DESCRIBED UNDER THE HEADING "RISK FACTORS" ON PAGE 8 AND CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT AND ANY RELATED FREE WRITING PROSPECTUS AND UNDER SIMILAR HEADINGS IN THE OTHER DOCUMENTS THAT ARE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
We will sell these securities directly to investors, through agents designated from time to time or to or through underwriters or dealers. For additional information on the methods of sale, you should refer to the section entitled "Plan of Distribution" in this prospectus. If any underwriters are involved in the sale of any securities with respect to which this prospectus is being delivered, the names of such underwriters and any applicable commissions or discounts will be set forth in a prospectus supplement. The price to the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in a prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2013.
TABLE OF CONTENTS
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Page |
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About this Prospectus |
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3 |
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Special Note Regarding Forward-Looking Statements |
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4 |
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Prospectus Summary |
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5 |
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Risk Factors |
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8 |
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Use of Proceeds |
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24 |
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Securities We May Offer |
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25 |
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Description of Capital Stock |
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26 |
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Description of Debt Securities |
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28 |
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Description of Warrants |
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35 |
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Description of Units |
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37 |
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Plan of Distribution |
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39 |
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Experts |
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41 |
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Legal Matters |
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41 |
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Information Incorporated by Reference |
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41 |
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Where You Can Find More Information |
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42 |
No dealer, salesperson, or other person has been authorized to give any information or to make any representation not contained in this prospectus, and, if given or made, such information and representation should not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered by this prospectus in any jurisdiction or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the facts set forth in this prospectus or in our affairs since the date hereof.
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ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement that we filed with the Securities and Exchange Commission (the "Commission") utilizing a "shelf" registration process. Under this shelf registration process, we may sell any combination of the securities described in this prospectus in one or more offerings up to a total dollar amount of $100,000,000. This prospectus provides you with a general description of the securities we may offer. Each time we sell securities under this shelf registration, we will provide a prospectus supplement that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. The prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update or change information contained in this prospectus or in any documents that we have incorporated by reference into this prospectus. You should read this prospectus, any applicable prospectus supplement and any related free writing prospectus, together with the information incorporated herein by reference as described under the heading "Where You Can Find More Information."
You should rely only on the information that we have provided or incorporated by reference in this prospectus, any applicable prospectus supplement and any related free writing prospectus that we may authorize to be provided to you. We have not authorized any dealer, salesman or other person to give any information or to make any representation other than those contained or incorporated by reference in this prospectus, any applicable prospectus supplement or any related free writing prospectus that we may authorize to be provided to you. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus or the accompanying prospectus supplement. This prospectus and the accompanying supplement to this prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities to which they relate, nor do this prospectus and the accompanying supplement to this prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate on any date subsequent to the date set forth on the front of the document or that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus, any applicable prospectus supplement or any related free writing prospectus is delivered or securities sold on a later date.
As permitted by the rules and regulations of the Commission, the registration statement, of which this prospectus forms a part, includes additional information not contained in this prospectus. You may read the registration statement and the other reports we file with the Commission at the Commission's web site or at the Commission's offices described below under the heading "Where You Can Find Additional Information."
You should assume that the information contained or incorporated by reference in this prospectus, any prospectus supplement or other offering materials is accurate only as of the dates of those documents or documents incorporated by reference, as applicable. Our business, financial condition, results of operations and prospects may have changed since those dates.
Unless the context requires otherwise or unless otherwise noted, all references to "S&W Seed" or "S&W" are to S&W Seed Company, a Nevada corporation, and all references to "we," "us" or "our" are to S&W Seed Company and its subsidiaries.
Trademarks, service marks or trade names of any other companies appearing in this Prospectus are the property of their respective owners. Use or display by us of trademarks, service marks or trade names owned by others is not intended to and does not imply a relationship between us, and/or endorsement or sponsorship by, the owners of the trademarks, service marks or trade names.
Our functional and reporting currency is the U.S. Dollar. Foreign currency denominated revenues and expenses are translated using average rates of exchange during the reporting period. Foreign currency denominated monetary assets and liabilities are translated at the rate of exchange in effect at the balance sheet date.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Prospectus that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, tax provisions, earnings, cash flows and other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding our ability to raise capital in the future; any statements concerning expected development, performance or market acceptance relating to our products or services or our ability to expand our grower or customer bases; any statements regarding future economic conditions or performance; any statements of expectation or belief; any statements regarding our ability to retain key employees; and any statements of assumptions underlying any of the foregoing. These forward-looking statements are often identified by the use of words such as, but not limited to, "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "will," "plan," "project," "seek," "should," "target," "will," "would," and similar expressions or variations intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations about future events. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Risks, uncertainties and assumptions include the possibility that certain foreign markets into which our seed is sold may be adversely impacted by discounted pricing of non-proprietary seed by competitors; our alfalfa seed growers choose to grow more profitable crops instead of our alfalfa seed; a decline in the dairy industry; macro-economic and geopolitical trends and events; the execution and performance of contracts by our company and our customers, suppliers and partners; the challenge of managing asset levels, including inventory; the difficulty of aligning expense levels with revenue changes; the outcome of pending or future legislation or court decisions and pending or future accounting pronouncements; and other risks that are described herein, including but not limited to the items discussed in "Risk Factors" below, and that are otherwise described or updated from time to time in our Commission reports, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Many factors discussed in this Prospectus, some of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from the forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this prospectus as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements. Furthermore, such forward-looking statements speak only as of the date of this prospectus. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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PROSPECTUS SUMMARY
This summary highlights information included or incorporated by reference in this prospectus. This summary may not contain all of the information that may be important to you. Before making an investment decision, you should read carefully this entire prospectus, any accompanying prospectus supplement and any other offering materials, together with the additional information described under the heading "Where You Can Find More Information" on page 40 of this prospectus.
Our Company
Founded in 1980 and headquartered in the Central Valley of California, we are the leading producer of warm climate, high-yield alfalfa seed varieties, including varieties that can thrive in poor, saline soils. We also offer seed cleaning and processing for other seed manufacturers. Until we incorporated in 2009, our business was operated for almost 30 years as a general partnership and was owned by five general partners. We incorporated in October 2009 in Delaware, having bought out the former partners between June 2008 and May 2010, and reincorporated as a Nevada corporation in December 2011. Following our initial public offering in fiscal 2010, we expanded certain pre-existing business initiatives and added new ones, including:
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increasing our farming acreage dedicated to alfalfa seed production by both acquisition of leased and purchased farmland and by increasing the number of acres under contract with growers in the Central and Imperial Valleys of California; |
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teaming with Forage Genetics International, LLC ("Forage Genetics") and Monsanto Corporation ("Monsanto") to develop genetically modified organism (GMO) alfalfa seeds, using our germplasm and Monsanto's genetically modified traits; |
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developing stevia varieties in response to growing demand for the all-natural, zero calorie sweetener; |
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acquiring the customer list of our primary international distributor of alfalfa seed; |
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entering into the dormant market via the acquisition of dormant germplasm in August 2012; |
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entering into production of non-GMO seed in the Imperial Valley, California by purchasing farmland and by acquisition of Imperial Valley Seeds, Inc. ("IVS") in October 2012; and |
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entering into production of non-GMO seed in Australia by acquisition in April 2013 of the dominant local producer, Seed Genetics International Pty Ltd ("SGI"). |
Our combination with SGI creates the world's largest non-dormant alfalfa seed company, and our combined company will have the competitive advantages of year-round production, which extends to all areas of the alfalfa seed business, including sales, inventory management and cash collection cycles. SGI was incorporated as a limited proprietary corporation in South Australia in 1993, as Harkness Group, it changed its name to Seed Genetics Australia Pty Ltd in 2002, and in 2011 changed its name to Seed Genetics International Pty Ltd. SGI's principal office space is located in Unley, South Australia.
We also own a seed-cleaning and processing facility in Five Points, California that was modernized and rebuilt in the late 1980's. The property encompasses a total of 40 acres, including 35 acres that are in reserve for future development and five acres with permanent structures and three seed-processing lines. In recent years, the facility has operated at less than 25% of capacity, providing ample opportunity for growth, both in terms of cleaning the alfalfa seed we grow or purchase from our growers and providing cleaning services for San Joaquin Valley growers of small grains such as wheat, barley and triticale.
Our Contact Information
Our principal business office is located at 25552 South Butte Avenue, Five Points, CA 93624, and our telephone is number (559) 884-2535. Our website address is www.swseedco.com. Information contained on our website or any other website does not constitute part of this prospectus.
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SECURITIES WE MAY OFFER With this prospectus, together with any applicable prospectus supplement and related free writing prospectus, we may offer common
stock, preferred stock, debt securities and warrants, or any combination of the foregoing, either individually or as units comprised of one or
more of the other securities. The aggregate initial offering price of all securities we sell in the primary offering under this prospectus will not
exceed $100,000,000. If we issue debt securities at a discount from their original stated principal amount, then, for purposes of calculating the
total dollar amount of all securities issued under this prospectus, we will treat the initial offering price of the debt securities as the total original
principal amount of the debt securities. Each time we offer securities with this prospectus, we will provide offerees with a prospectus
supplement that will contain the specific terms of the securities being offered. The following is a summary of the securities we may offer with
this prospectus. We may sell the securities to or through underwriters, dealers or agents or directly to purchasers. We, as well as any agents acting on
our behalf, reserve the sole right to accept and to reject in whole or in part any proposed purchase of securities. Each prospectus supplement
will set forth the names of any underwriters, dealers or agents involved in the sale of securities described in that prospectus supplement and
any applicable fee, commission or discount arrangements with them. Common Stock We may offer shares of our common stock, par value $0.001 per share, either alone or underlying other registered securities
convertible into or exercisable for our common stock. Holders of our common stock are entitled to such dividends as our board of directors
may declare from time to time out of legally available funds, subject to the preferential rights of the holders of any shares of our preferred
stock that are outstanding or that we may issue in the future. Currently, we do not pay any dividends. Each holder of our common stock is
entitled to one vote per share. In this prospectus, we provide a general description of, among other things, our dividend policy and the rights
and restrictions that apply to holders of our common stock. Preferred Stock We may issue shares of preferred stock in one or more classes or series. Our board of directors or a committee designated by our
board of directors will determine the dividend, voting and conversion rights and other provisions at the time of sale. The particular terms of
each class or series of preferred stock, including redemption privileges, liquidation preferences, voting rights, dividend rights and/or
conversion rights, will be more fully described in the applicable prospectus supplement relating to the preferred stock offered thereby. Debt Securities We may offer general debt obligations, which may be secured or unsecured, senior or subordinated and convertible into shares of
our common stock. In this prospectus, we refer to the senior debt securities and the subordinated debt securities together as the "debt
securities." We may issue debt securities under a note purchase agreement or under an indenture to be entered between us and a
trustee. If we issue debt securities under an indenture, a form of the indenture will be filed as an exhibit to the registration statement of which
this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the Commission. The senior debt
securities will have the same rank as all of our other indebtedness that is not subordinated. The subordinated debt securities will be
subordinated to our senior debt on terms set forth in the applicable prospectus supplement. In addition, the subordinated debt securities will
be effectively subordinated to creditors and preferred stockholders of our subsidiaries. Our board of directors will determine the terms of each
series of debt securities being offered. This prospectus contains only general terms and provisions of the debt securities. The applicable prospectus supplement will describe
the particular terms of the debt securities offered thereby. We urge you to read the prospectus supplements and any free writing prospectus
that we may authorize to be provided to you related to the debt securities being offered, as well as the complete indentures that contain the
terms of the debt securities. Although the forms of indentures may be filed as exhibits to the registration statement to which this prospectus is
a part, supplemental indentures and forms of debt securities containing the terms of debt securities being offered will be incorporated by
reference into the registration statement of which this prospectus is a part in reports we file with the Commission. 6
Warrants We may offer warrants for the purchase of debt securities, shares of preferred stock or shares of common stock. We may issue the
warrants by themselves or together with debt securities, preferred stock or common stock, and the warrants may be attached to or separate
from any offered securities. Each series of securities warrants will be issued under a separate warrant agreement to be entered into between
us and the investors or a warrant agent. Our board of directors will determine the terms of the warrants. This prospectus contains only
general terms and provisions of the warrants. The applicable prospectus supplement will describe the particular terms of the warrants being
offered thereby. We urge you to read the prospectus supplements and any free writing prospectus that we may authorize to be provided to
you related to the warrants being offered, as well as the complete warrant agreements and warrant certificates that contain the terms of the
warrants. Units We may offer units consisting of common stock, preferred stock, debt securities and/or warrants to purchase any of such securities
in one or more series. In this prospectus, we have summarized certain general features of the units under "Description of Units."
We urge you, however, to read the prospectus supplements and any free writing prospectus that we may authorize to be provided to you
related to the series of units being offered, as well as the unit agreements that contain the terms of the units. We will file as exhibits to the
registration statement of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with
the Commission, the form of unit agreement and any supplemental agreements that describe the terms of the series of units we are offering
before the issuance of the related series of units. We will evidence each series of units by unit certificates that we will issue under a separate agreement. We will enter into the unit
agreements with a unit agent. Each unit agent will be a bank or trust company that we select. We will indicate the name and address of the
unit agent in the applicable prospectus supplement relating to a particular series of units. 7
RISK FACTORS Investing in our common stock involves significant risks. You should review carefully the risks and uncertainties described below
and under the heading "Risk Factors" contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2013,
which are incorporated by reference into this prospectus supplement, as well as other information we have provided or incorporated by
reference in the accompanying prospectus, before deciding to invest in shares of our common stock. Each of the referenced risks and
uncertainties could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an
investment in our common stock. Additional risks not known to us or that we believe are immaterial may also adversely affect our business,
operating results and financial condition and the value of an investment in our common stock. Risks Relating to Our Business and Industry Our earnings may be sensitive to fluctuations in demand for our products. Our earnings can be negatively impacted by declining demand brought on by varying factors, many of which are out of our control. By
way of example, the severe downturn in the California dairy industry in recent years that resulted from over-supply of dairy had a negative
effect on sales of alfalfa hay, and as a result, the demand for our alfalfa seed in the domestic market declined. At times, the demand for our
certified seed has also declined in the Middle East as the result of common, uncertified seed flooding the market at lower prices than those at
which we were willing to sell our certified seed. In fiscal 2012 and continuing into fiscal 2013, many of these factors corrected themselves, but
these circumstances could continue or reoccur, and our earnings could again be negatively impacted. In addition, demand for our products
could decline because of other supply and quality issues or for any other reason, including products of competitors that might be considered
superior by end users. A decline in demand for our products could have a material adverse effect on our business, results of operations and
financial condition. Our earnings may also be sensitive to fluctuations in market prices. Market prices for our alfalfa seed can be impacted by factors such as the quality of the seed and the available supply, including whether
lower quality, uncertified seed is available. Growing conditions, particularly weather conditions such as windstorms, floods, droughts and
freezes, as well as diseases and pests and the adventitious presence of GMO, are primary factors influencing the quality and quantity of the
seed and, therefore, the market price at which we can sell our seed to our customers. A decrease in the prices received for our products
could have a material adverse effect on our business, results of operations and financial condition. Our cost of seed production is increasing, which could impact our profitability and margins. We have seen our costs of growing seed continue to increase because our growers, particularly those in California, can elect to grow
more profitable crops on their farmland. In order to ensure that we have adequate inventory to satisfy our customers' requirements, we have
had to increase the amount we pay our growers or make different contractual arrangements from our historical standard terms. In addition,
we have begun to grow some of our seed ourselves, thereby incurring the farming-related costs of production that we avoid when we contract
with external growers for the entirety of our seed production. These factors, both separately and together, could cause our margins and
profitability to decline unless we are able to pass along the increased cost of production to our customers. We may not be able to increase
the price of our seed sufficiently to maintain our margins and profitability in the future. 8
We could encounter farming-related problems unrelated to natural disasters, crop disease and other normal agricultural risks. In fiscal 2012, we began growing a portion of our own alfalfa seed while still continuing to contract for the majority of our planted acreage
with third-party farmers. A portion of our direct farming operations is carried out by our own employees on land we lease, and the remainder
is performed by third-party farmers on their land but under our direction. Some of these arrangements span multiple years, and both direct
farming methods carry large financial risks that we do not face when we pay growers for their seed on a per-pound basis. When we carry the
farming risk, we can expect to incur costs of between $1,300 and $2,300 per acre, regardless of yields. We can and will make decisions that
could adversely impact yields or quality, resulting in a smaller supply of seed to sell to our customers and increasing our cost of production to
unprofitable levels. As we obtain additional farmland, by lease or purchase, both our farming costs and risks could continue to climb, and as
our direct farming operations account for a significant portion of our seed requirements, the farming decisions we make could have a negative
impact on our results of operations. Our inventory of seed can be adversely affected by the market price being paid for other crops. Our seed production, both in California and Australia, substantially relies on unaffiliated growers to grow our proprietary seed and to sell it
to us at negotiated prices each year. Growers have a choice of what crops to plant. If a particular crop is paying a materially higher price than
has been paid in the past, growers may decide to not grow alfalfa seed in favor of receiving a higher return from an alternative crop planted
on the same acreage. If our growers decline to a significant degree to plant the acreage on which we rely, and if we cannot find other growers
to plant the lost acreage, our inventory of seed could be insufficient to satisfy the needs of our customers, and our business, results of
operations and financial condition could materially decline. In addition, our customers could look to other suppliers for their seed if we cannot
satisfy their requirements, and we may not be able to regain them as customers once our inventory levels have returned to normal. Adverse weather conditions, natural disasters, crop disease, pests and other natural conditions can impose significant costs and losses
on our business. Alfalfa seed, our primary product, is vulnerable to adverse weather conditions, including windstorms, floods, drought and temperature
extremes, which are common but difficult to predict. In addition, alfalfa seed is vulnerable to crop disease and to pests, which may vary in
severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic
conditions. Unfavorable growing conditions can reduce both crop size and quality. While historically we have not grown the alfalfa seed we
sell, these factors can nevertheless directly impact us by decreasing the quality and yields of our seed and reducing our inventory and the
supply of seed we sell to our customers. Moreover, in fiscal 2012, we began growing a portion of our alfalfa seed directly as well as farming
alfalfa hay, and therefore, we have a direct vulnerability to the same adverse effects of weather, pests, natural disasters and other natural
conditions that concern our third-party growers. These factors can increase costs, decrease revenue and lead to additional charges to
earnings, which may have a material adverse effect on our business, results of operations and financial condition. Because our alfalfa seed business is highly seasonal, our revenue, cash flows from operations and operating results may fluctuate on a
seasonal and quarterly basis. We expect that the majority of our revenues will continue to be generated from our alfalfa seed business. Our alfalfa seed business is
highly seasonal. The seasonal nature of our operations results in significant fluctuations in our working capital during the growing and selling
cycles. We have experienced, and expect to continue to experience, significant variability in revenue, operating cash flows and net earnings
on a quarterly basis. 9
Because we depend on a core group of significant customers, our sales, cash flows from operations and results of operations may be
negatively affected if our key customers reduce the amount of products they purchase from us. We rely upon a small group of customers for a large percentage of our net revenue, including Sorouh Agricultural Company, which
serves the Saudi Arabian market. In fiscal 2012 and in fiscal 2013, Sorouh accounted for 67% and 24% of our consolidated net revenue,
respectively. We expect that a small number of customers will continue to account for a substantial portion of our net revenue for the
foreseeable future. Similarly, SGI relies upon a small group of customers for a large percentage of its net revenue, including House of
Agriculture Spirou, A.E.B.E., which also serves the Saudi Arabian market, which accounted for 15% and 14% of SGI's net revenue in fiscal
2012 and in fiscal 2013, respectively. The loss of, or a significant adverse change in, our or SGI's relationship with these customers, or any other major customer, could have a
material adverse effect on our business, financial position, results of operations and operating cash flows. The loss of, or a reduction in orders
from, any significant customers, losses arising from customers' disputes regarding shipments, product quality, or related matters, or our
inability to collect accounts receivable from any major customer could have a material adverse effect on us. There is no assurance that we
will be able to maintain the relationships with our major customers or that they will continue to purchase our seed in the quantities that we
expect and rely upon. If we cannot do so, our results of operations could suffer. Because we do not grow most of the alfalfa seed that we sell, we are substantially dependent on our network of growers, and our
sales, cash flows from operations and results of operations may be negatively affected if our largest growers were to stop supplying seed to
us. Historically, we have relied on a relatively small network of growers of alfalfa seed that together has provided all of the seed we sell to our
customers. Although in fiscal 2012, we began growing and producing a portion of our own seed, most of our seed will continue to be grown
under contracts with farmers, most of which are one-year contracts. Many of our growers have had long-term grower relationships with us.
However, we do not have long-term supply contracts with any of these growers, which makes us particularly vulnerable to factors beyond our
control. Events such as a shift in pricing caused by an increase in the value of commodity crops other than seed crops, increase in land
prices, unexpected competition or reduced water availability could disrupt our supply chain. Any of these disruptions could limit the supply of
seed that we obtain in any given year, adversely affecting supply and thereby lowering revenues. Such disruption could also damage our
customer relationships and loyalty to us if we cannot supply the quantity of seed expected by them. We encountered a meaningful shift in our
grower network in fiscal 2011, with some of our growers who had grown for us for many years opting to cut back their alfalfa seed acreage or
to not grow alfalfa seed at all. This situation could reoccur and could negatively impact our revenues if we do not otherwise have sufficient
seed inventory available for sale. SGI relies on a pool of approximately 150 Australian growers to produce its proprietary seeds. Each grower arrangement is typically
made for a term of seven to ten harvests. Although SGI's grower pool is substantially more diversified than our grower pool, it is not without
risks. Adverse agronomic or climatic factors could lead to grower exodus and negatively impact SGI's revenues if SGI does not otherwise
have sufficient seed inventory available for sale. A large majority of our customers are located within regions, including Saudi Arabia, that substantially restrict or prohibit the importation
of GMO seed varieties. We actively test for the presence of GMO in our seed stock in the San Joaquin Valley. The presence of GMO alfalfa
in significant amounts of our seed production could severely limit the amount of seed that we have available to sell into Saudi Arabia and
other locations that prohibit GMO seed varieties. Furthermore, due to widespread negative perception of GMO material, even if we were able
to successfully remediate the accidental occurrence of GMO in our seed production, there are no assurances that we would be able to
achieve export sales to Saudi Arabia and other non-GMO locations at the same levels as we achieved before the accidental occurrence of
GMO. 10
A lack of availability of water in California or Australia could impact our business. Adequate quantities and correct timing of the application of water are vital for most agriculture to thrive. Whether particular farms are
experiencing water shortages depends, in large part, on their location. However, continuing drought conditions can threaten all farmland other
than those properties with their own water sources. Although alfalfa seed is not a water-intensive crop, the availability or the cost of water is a
factor in the planting of the alfalfa hay grown from our seed. If the dairy farmers and others who purchase our alfalfa seed to grow hay cannot
get an adequate supply of water, or if the cost of water makes it uneconomical for the farmers to grow alfalfa, we may not be able to sell our
seed, which could have an adverse impact on our results of operations. We cannot predict if water shortages will impact our business in the
future, but if alfalfa hay growers are impacted by water shortages, our business could also materially decline. We face intense competition, and our inability to compete effectively for any reason could adversely affect our business. The alfalfa seed market is highly competitive, and our products face competition from a number of small seed companies, as well as
large agricultural and biotechnology companies. We also now face new competition with the availability of Roundup Ready® alfalfa
beginning to be a viable alternative. We compete primarily on the basis of consistency of product quality and traits, product availability,
customer service and price. Many of our competitors are, or are affiliated with, large diversified companies that have substantially greater
marketing and financial resources than we have. These resources give our competitors greater operating flexibility that, in certain cases, may
permit them to respond better or more quickly to changes in the industry or to introduce new products more quickly and with greater
marketing support. Increased competition could result in lower profit margins, substantial pricing pressure, reduced market share and lower
operating cash flows. Price competition, together with other forms of competition, could have a material adverse effect on our business,
financial position, results of operations and operating cash flows. If we are unable to estimate our customers' future needs accurately and to match our production to the demand of our customers, our
business, financial condition and results of operations may be adversely affected. We sell our seed primarily to dealers and distributors who, in turn, sell primarily to hay and dairy farmers who grow hay for dairy cattle
and other livestock. Due to the nature of the alfalfa seed industry, we normally produce seed according to our production plan before we sell
and deliver seed to distributors and dealers. Our dealers and distributors generally make purchasing decisions for our products based on
market prices, economic and weather conditions and other factors that we and our dealers and distributors may not be able to anticipate
accurately in advance. If we fail to accurately estimate the volume and types of products sought by the end users and otherwise adequately
manage production amounts, we may produce more seed than our dealers and distributors want, resulting in excess inventory levels. On the
other hand, if we underestimate demand, which has happened in the past, we may not be able to satisfy our dealers and distributors' demand
for alfalfa seed, and thus damage our customer relations and end-user loyalty. Our failure to estimate end users' future needs and to match
our production to the demand of our customers may adversely affect our business, financial condition and results of operations. Our third-party distributors may not effectively distribute our products. We depend in part on third-party distributors and strategic relationships for the marketing and selling of our products. We depend on
these distributors' efforts to market our products, yet we are unable to control their efforts completely. In addition, we are unable to ensure
that our distributors comply with all applicable laws regarding the sale of our products, including the United States Foreign Corrupt Practices
Act. If our distributors
11
fail to effectively market and sell our products, and in full compliance with applicable laws, our operating results and business may suffer. We extend credit to customers who currently represent or are expected to represent the largest percentage of our sales. Although payment terms for our seed sales generally are 90 days, we regularly extend credit to our largest customer, Sorouh Agricultural
Company, and to other international customers. We expect that sales of our alfalfa seed varieties to Sorouh and to other international
customers will represent a material portion of our revenue in fiscal 2014 and that we will continue to extend credit in connection with those
sales. Because these customers are located in foreign countries, collection efforts, were they to become necessary, could be much more
difficult and expensive. Moreover, future political and/or economic factors, as well as future unanticipated trade regulations, could negatively
impact our ability to timely collect outstanding receivables from these important customers. The extension of credit to our major customers
exposes us to the risk that our seed will be delivered but that we may not receive all or a portion of the payment therefor. If these customers
are unable or unwilling to fully pay for the seed they purchase on credit, our results of operations and financial condition could be materially
negatively impacted. Moreover, our internal forecasts on which we make business decisions throughout the year could be severely
compromised, which could, in turn, mean that we spend capital for operations, investment or otherwise that we would not have spent had we
been aware that the customer would not honor its credit extension obligation. Our current reliance on the seed development and production business does not permit us to spread our business risks among different
business segments, and thus a disruption in our seed production or the industry would harm us more immediately and directly than if we were
diversified. We currently operate mainly in the alfalfa seed business, and we do not expect this to change materially in the foreseeable future.
Without business line diversity, we will not be able to spread the risk of our operations. Therefore, our business opportunities, revenue and
income could be more immediately and directly affected by disruptions from such things as drought and disease or widespread problems
affecting the alfalfa industry, payment disruptions and customer rejection of our varieties of alfalfa seed. If there is a disruption as described
above, our revenue and income could be reduced, and our business operations might have to be scaled back. Moreover, because our stevia
operations are also agriculture-based and centered in California's Central Valley where the majority of our United States-based alfalfa seed
operations is located, it is possible that the same problems that might negatively impact our alfalfa seed business could, at the same time,
negatively impact our stevia business. Accordingly, we do not consider our stevia business a hedge against the risks of our alfalfa seed
business. If we fail to introduce and commercialize new alfalfa seed varieties, we may not be able to maintain market share, and our future sales
may be harmed. The performance of our new alfalfa seed varieties may not meet our customers' expectations, or we may not be able to introduce and
commercialize specific seed varieties. Reorder rates are uncertain due to several factors, many of which are beyond our control. These
include changing customer preferences, which could be further complicated by the new availability of Roundup Ready® alfalfa,
competitive price pressures, our failure to develop new products to meet the evolving demands of the end users, the development of higher-
demand products by our competitors and general economic conditions. The process for new products to gain market recognition and
acceptance is long and has uncertainties. If we fail to introduce and commercialize a new seed variety that meets the demand of the end
user, if our competitors develop products that are favored by the end users, or if we are unable to produce our existing products in sufficient
quantities, our growth prospects may be materially and adversely affected, and our revenue may decline. In addition, sales of our new
products could replace sales of some of our current similar products, offsetting the benefit of even a successful product introduction. 12
Deregulation of Roundup Ready® alfalfa could negatively impact our sales and production of alfalfa seed. In December 2010, the USDA published the final environmental impact statement on Roundup Ready® alfalfa. Following that
publication, in late January 2011, the USDA announced the deregulation of Roundup Ready® alfalfa, without imposing any federal
regulations, providing any guidance pertaining to field separation or mandating any other conditions. The availability of Roundup Ready®
alfalfa could adversely impact our sales. Domestically, hay farmers may choose the GMO alfalfa seed over our seed in order to control weeds
with Roundup®, Monsanto's powerful herbicide. GMO crops currently are prohibited in most of the international markets in which our proprietary seed is currently sold. The greater the
use of GMO seed in California, the greater the risk that the adventitious presence of GMO material in our seed production will occur due to
pollination from hay fields or other seed feeds. In fiscal 2013, the number of lots of our seed that tested positive for the adventitious presence
of GMO was greater than in fiscal 2012. The preliminary testing results for our most recent harvest suggest that approximately 5% of our
estimated annual global production and sourced seed for fiscal 2014 will contain GMO material. Our testing is limited to detecting the
presence of GMO material. The extent to which an affected batch of seed contains GMO material must be determined by a third party
laboratory and we will undertake testing of this kind on an as-needed basis. Our seed containing GMO material can only be sold domestically
or in other jurisdictions that permit the importation of GMO alfalfa. We are taking steps to reduce the risk of the adventitious presence of GMO
material in our seed crops. These steps include seeking collaborative agreements, regulations, or other measures to ensure neighboring
farms that raise GMO alfalfa in the San Joaquin Valley limit the extent to which they allow the flowering and cross-pollination of their GMO-
based crops with our conventional non-GMO crops to occur; and acquiring land and expanding our contracted grower base in the Imperial
Valley of California, where to our knowledge GMO alfalfa is not yet being grown. In addition, we may increase the use of leafcutter bees to
pollinate our crops, because these bees do not form colonies and fly more limited ranges than honey bees, which makes the cutter bees less
likely to bring GMO-bearing pollen into our fields. Finally, we plan to grow a portion of our S&W varieties in South Australia. We believe that our testing program is superior to those of our competitors in the non-GMO alfalfa seed market. However, due to
inherent weaknesses in the testing process, including limited sample sizes, we can make no assurances that our testing program, without
more, will continually satisfy our customers and end users that our seed is GMO free or that our farming operations are adequately isolated
from GMO pollination. In April 2013, we entered into a license agreement with Forage Genetics to develop and commercialize seed varieties that incorporate
proprietary traits, including the Roundup Ready® trait. This agreement further documented and formalized our previously announced
collaboration with Forage Genetics and Monsanto to develop genetically modified versions of certain of our proprietary alfalfa varieties. This
agreement contemplates lab work and field trials and may never result in the development of commercially viable seeds. Unless and until we
actually begin selling Roundup Ready® alfalfa, our domestic sales could be negatively impacted, although the actual impact of Roundup
Ready® alfalfa on the alfalfa seed market in general and on sales of our proprietary seed in particular is currently unknown. The adoption of GOZ zones in our primary alfalfa seed growing region in California could impact the international sales of our S&W
varieties. A substantial portion of our S&W varieties is grown in Fresno County, California for both domestic and international sales. In
January 2012, the National Alfalfa & Forage Alliance held a vote of growers in Fresno County to determine if they should form a
Genetically Enhanced, or GE, Grower Opportunity Zone, or GOZ, in part of Fresno County. A GOZ is a seed grower-defined region within
which a super-majority of growers (by number of growers or acreage) elects to focus on the production of either Adventitious Presence
Sensitive or GE alfalfa seed, including Roundup Ready® alfalfa. The January 2012 vote to organize the proposed GOZ in Fresno County
failed to obtain the required super-majority, and therefore the motion failed. However, there is no assurance that another vote will not be
taken and that, at a future meeting, the proposal will not succeed in obtaining the required vote to form a GOZ for GMO alfalfa. If a GOZ were formed in Fresno County or in any
13
other county where we currently produce seed or might produce seed in the future, our efforts to grow
conventional alfalfa seed for international sale in that county could be threatened because of the isolation and contamination issues about
which we remain concerned. In such circumstance, we might be forced to find alternative locations to grow our proprietary S&W alfalfa
seed varieties for sale into Saudi Arabia and other locations that prohibit GMO seed, and there is no assurance that we would be able to do
so successfully. The presence of GMO alfalfa in Australia could impact the international sales of SGI's varieties. GMO alfalfa varieties have not been approved by Australia's Office of the Gene Technology Regulator, and all GMO plant varieties are
currently barred in South Australia. Because GMO plant varieties are currently barred, SGI's representation that its alfalfa seed products are
free from GMO is critical as many of the jurisdictions to which SGI exports its alfalfa seed for sale, including Saudi Arabia, strictly prohibit the
importation of GMO seed varieties. Field testing and commercial production of GMO alfalfa seed has been ongoing in the U.S. for several
years, and the possibility now exits that planting seed imported into Australia from the U.S. may unintentionally contain GMO material, which,
in turn, could intermingle with Australian alfalfa crops. Although Australia has a very comprehensive GMO monitoring protocols in place if
SGI's alfalfa crops were to test positive for the adventitious presence of GMO, its ability to sell into Saudi Arabia and other locations that
prohibit GMO seed varieties could be jeopardized, if not entirely prohibited. Furthermore, due to pervasive negative perception of GMO
material, even if SGI were able to successfully remediate the adventitious presence of GMO in its crops, there are no assurances that SGI
would be able to achieve export sales to Saudi Arabia and other non-GMO locations at the same levels as it achieved before the adventitious
presence of GMO occurred. Our per acre pricing model could cause us to lose money on those contracts. In fiscal 2012, we entered into three contracts, covering approximately 823 acres, with a California grower under which we deviated from
our historical model and agreed to pay the grower a fixed price per acre rather than a fixed price per cleaned pound of seed. As such,
regardless of the amount of seed this grower produces, we will be required to pay the fixed price per acre. This could result in our paying
more per pound of seed than we are able to sell the seed to our customers, thereby causing a loss on this acreage. Moreover, these
contracts cover a three-year period, and therefore, we could potentially be overpaying for seed on these contracts through crop year 2014 if
the grower does not produce the minimum amount of seed we expect. These contracts could negatively impact our results of operations. We may not be able to fully recover the costs of our initial stevia operations. Our stevia operations are subject to the same farming risks that other agricultural operations face, including, weather-related
events and natural disasters, which, depending on the growth cycle at the time of such event, could materially negatively impact our yields.
Our yields also could be negatively impacted by our farming practices. In May 2013, due to weeding-control practices, damage to a majority of our stevia fields occurred and we determined to discontinue
farming these fields and to record a crop loss on stevia totaling $2,333,123 for the year ended June 30, 2013. We have ceased commercial
production of stevia. And although we continue our breeding program and are considering commercial applications for our proprietary stevia,
none of these ventures may ever be profitable or allow us to recoup the amounts expended in connection with our initial stevia production
operations. 14
The stevia market may not develop as we anticipate, and therefore our continued research and development activities with respect to
stevia may never become profitable to us. There are a number of challenges to market acceptance of stevia as a natural, non-caloric sweetener. Stevia has its own unique
flavor, which can affect the taste of some foods and beverages. A common complaint about stevia is that some of its extracts and derivatives
have a bitter aftertaste, and its taste does not uniformly correspond to all regional taste preferences or combine well with some food flavors.
Other factors that could impact market acceptance include the price structure compared to other sugar substitutes and availability. If the
high-intensity, non-caloric sweetener market declines or if stevia fails to achieve substantially greater market acceptance than it currently enjoys,
we might not ever be able to profit from our continued research and development activities relating to stevia or any commercial applications
that we derive therefrom. Even if products conform to applicable safety and quality standards, sales could be adversely affected if consumers
in target markets lose confidence in the safety, efficacy and quality of stevia. Adverse publicity about stevia or stevia-based products may
discourage consumers from buying products that contain stevia. Any of these developments could adversely impact the future amount of dry
leaf stevia, processed stevia leaves or extract we are able to sell, which could adversely impact our results of operations. If demand for stevia does not increase, there may be excess capacity that could decrease the market price of stevia and reduce
our potential future revenue opportunities Historically, stevia has been marketed and sold in the U.S. as a dietary supplement, available in natural food and health food
stores. Since December 2008, stevia producers have increased production capacity in expectation of a large demand for stevia products. We
started our stevia operation because we expect that demand for stevia will increase significantly in the future, particularly since Reb-A, a
highly refined stevia extract, has been the subject of several "generally recognized as safe", or GRAS, notices in the U.S. that
support the conclusion of the companies that Reb-A is generally recognized as safe for its intended use. Since the FDA has not objected to
these notifications, Reb-A may be used as a sweetener in food and beverages, and a market for products incorporating Reb-A has developed
and grown since then. However, there can be no assurance that there will continue to be widespread growth in the demand for stevia extracts
or that FDA will not subsequently question the GRAS status of Reb-A based on new data or information. If demand for stevia extracts does
not increase to the extent predicted by the industry, the stevia market may be subject to significant excess capacity, which would put
downward pressure on the market price of stevia and negatively impact our expectations with respect to stevia as a revenue source. There are difficulties in managing our storage system, which may result in damage to our products held in storage. Alfalfa seed and stevia storage entails risks, including management of moisture, temperature and humidity. Any material storage
problem may result in damage to our seed or dried stevia leaf and, thus, could create operating losses. If we are unable to acquire sufficient raw materials or produce sufficient finished product, we will not be able to meet the demands
of our customers. We must acquire sufficient alfalfa seed to meet the demands of our customers. An alfalfa seed shortage could result in loss of sales and
damage to our reputation. Because our proprietary seed is only available through our direct farming efforts and from our contract growers, if
our growers become unable or unwilling to produce the required commercial quantities of alfalfa seed on a timely basis and at commercially
reasonable prices, we will likely be unable to meet customer demand. We do not own or lease sufficient farmland to make up for a significant
loss of acreage from our grower network. The failure to satisfy our customers not only could adversely impact our financial results but could
irreparably harm our reputation. 15
The loss of key employees or the failure to attract qualified personnel could have a material adverse effect on our ability to run our
business. The loss of any of our current executives, key employees or key advisors, or the failure to attract, integrate, motivate and retain additional
key employees, could have a material adverse effect on our business. Although we have employment agreements with our Chief Executive
Officer, Chief Financial Officer, Chief Operations Officer, Vice President of Sales and Marketing, Vice President of Breeding and Genetics
and our Vice President of Processing, any employee could leave our employ at any time if he chose to do so. We do not carry "key
person" insurance on the lives of any of our management team. As we develop additional capabilities, we may require more skilled
personnel who must be highly skilled and have a sound understanding of our industry, business or processing requirements. Recruiting
skilled personnel is highly competitive. Although to date we have been successful in recruiting and retaining qualified personnel, there can be
no assurance that we will continue to attract and retain the personnel needed for our business. The failure to attract or retain qualified
personnel could have a material adverse effect on our business. We may not be able to manage expansion of our operations effectively. We expect our operations to grow rapidly in the near future, both as we expand our historical alfalfa seed business both domestically and
internationally, expand our mill utilization, increase our growers' production, and develop our stevia business. We also are looking to expand
our business through acquisition of synergistic companies. These efforts will require the addition of employees, expansion of facilities and
greater oversight, perhaps in diverse locations. If we are unable to manage our growth effectively, we may not be able to take advantage of
market opportunities, execute on our business strategies or respond to competitive pressures, and we may have difficulties maintaining and
updating the internal procedures and the controls necessary to meet the planned expansion of our overall business. Our management will also be required to maintain and expand our relationships with customers, suppliers and third parties as well as
attract new customers and suppliers. We expect that our sales and marketing costs will increase as we grow our product lines and as we
increase our sales efforts in new and existing markets. Our current and planned operations, personnel, systems and internal procedures and
controls may not be adequate to support our future growth. We may be unable to successfully integrate acquisitions, including those of IVS and SGI. As part of our growth strategy, we may acquire additional businesses, product lines or other assets, including real property. We may not
be able to locate or make suitable acquisitions on acceptable terms, and future acquisitions may not be effectively and profitably integrated
into our business. Acquisitions involve risks that could adversely affect our operating results, including diverting management resources;
integration of the operations and personnel of the acquired operations; write downs of acquired intangible assets; liabilities associated with
the acquired business or assets; and possible loss of key employees and customers of the acquired operations. We intend to conduct an extensive due diligence investigation for any business we consider acquiring. Intensive due diligence is time
consuming and expensive due to the operations, finance and legal professionals who must be involved in the due diligence process. Even if
we conduct extensive due diligence on a target business that we acquire, this diligence may not identify all material issues that may be
present inside a particular target business, and factors outside of the target business and outside of our control may later arise. If this
diligence fails to discover or identify material issues relating to a target business, or the industry or environment in which it operates, we may
be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses to
us. 16
In fiscal 2013, we acquired all of the assets of IVS and all of the outstanding stock of SGI and believe these acquisitions will enhance our
future financial performance by capitalizing on natural operational synergies. These acquisitions present challenges to management,
including the integration of our administrative operations, systems and personnel with those of IVS and SGI. These acquisitions also pose
other risks commonly associated with similar transactions, including unanticipated liabilities, unexpected costs and the diversion of
management's attention to the integration of the operations of the combined companies. Any difficulties that our combined company
encounters in the transition and integration processes, and any level of integration that is not successfully achieved, could adversely affect
our revenue, level of expenses and operating results. We may also experience operational interruptions or the loss of key employees,
suppliers and customers. As a result, notwithstanding our expectations, we may not realize the anticipated benefits or cost savings of the IVS
and SGI acquisitions. SGI's grower pool is dependent on a limited number of milling facilities to process its seed, with particular dependence on a dominant
operator whose commercial interests may be adverse to SGI. Only five milling facilities are regularly used by SGI's grower pool to clean and process SGI seed. Should one or more of these facilities
become unusable, there could be a significant effect on SGI's ability to get its Australian seed to market in a timely manner or at all. SGI's
growers use Tatiara Seeds Pty Ltd ("Tatiara") to process approximately 70% of seed grown for SGI. The owner of Tatiara has
begun to sell his own common seed and is now a competitor of SGI. This competing seed business creates a potential conflict of interest for
Tatiara in the care and handling of SGI's product. SGI is thinly capitalized and may become dependent upon us for financing. Because SGI has relatively little net working capital it is substantially dependent upon its credit arrangement with NAB to purchase its
seed inventory. SGI has breached debt covenants relating to this credit arrangement in the past, and if future breaches of this credit
arrangement or other reasons cause this credit arrangement to become unavailable to SGI, SGI may become reliant on us to finance its
operations or for financial guarantees. SGI's financial dependency upon us could have a negative adverse effect upon our financial
condition. SGI is dependent on a pool of seed growers and a favorable pricing model. SGI relies on a pool of approximately 150 Australian contract growers to produce its proprietary seeds. In this system, growers contract
with SGI to grow SGI's seed for terms of seven to ten years in the case of alfalfa and two to three years for white clover. SGI uses a
staggered payment system with the growers of its alfalfa and white clover; the payment amounts are based upon an estimated budget price,
or EBP, for compliant seed. EBP is a forecast of the final price that SGI believes will be achieved taking into account prevailing and predicted
market conditions at the time the estimate is made. Following the grower's delivery of uncleaned seed to a milling facility, SGI typically pays
40% of the EBP to the grower based on pre-cleaning weight. Following this initial payment and prior to the final payment, SGI will make a
series of scheduled progress payments and, if applicable, a bonus payment for "first grade" alfalfa seed. The final price payable to
each grower (and therefore the total price) is dependent upon and subject to adjustment based upon the clean weight of the seed grown, on
the average price at which SGI sells the pooled seed and other costs incurred by SGI. Accordingly, the total price paid by SGI to its growers
may be more or less than EBP. This arrangement exposes SGI's business to unique risks, including, the potential for current growers
to make collective demands that are unfavorable to SGI and the potential for our competitors to offer more favorable terms for seed
production, including fixed (instead of variable) payment terms. SGI's reliance upon an estimated purchase price to growers could result in subsequent adjustments to estimates that could impact our
financial results. Our 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 the standard contract production agreement. We record an estimated unit price and accordingly inventory, cost of goods sold
and gross profits are based upon management's best estimate of the final purchase price to our SGI growers. To the extent the estimated
purchase price varies from the final purchase price for seed, the adjustment to actual could materially impact the results in the period when
the difference between estimates and actuals are identified. If the actual purchase price is in excess of our estimated purchase price, this
would negatively impact our financial results including a reduction in gross profits and net income. 17
The value of SGI's rights under the Plant Breeder's Rights (PBR) Act could diminish due to technological developments or challenges by
competitors, making its proprietary alfalfa seed varieties less competitive. SGI is substantially dependent upon the PBR Act for the protection of its proprietary varieties. Currently, SGI's SuperSiriver,
SuperSequel, SuperAurora, SuperHaifa, SuperLadino, SuperHuia, SuperSonic, SuperStar, SuperSiriver II and SuperNova varieties are
protected under the PBR Act. If any competitors of SGI independently develop new seeds that customers or end users determine are better
than SGI's existing varieties, such developments could adversely affect SGI's competitive position. We may need to raise additional capital in the future. We believe our current cash and cash equivalents on hand, together with borrowings available under our credit facility and net proceeds
from this offering, will be sufficient to finance anticipated capital, financing and operating requirements for the foreseeable future. However, if
we elect to aggressively pursue our growth strategies, whether through acquisitions or organic growth, we may need additional capital to fund
these strategies. If we are required to raise additional capital in the future, such additional financing may not be available on favorable terms, or available
at all, may be dilutive to our existing stockholders if in the form of equity financing, or contain restrictions on the operation of our business if in
the form of debt financing. If we fail to obtain additional capital as and when required, such failure could have a material impact on our
business, results of operations and financial condition. Changes in government policies and laws could adversely affect international sales and therefore our financial results. Historically, sales to our distributors who sell our proprietary alfalfa seed varieties outside the U.S. have constituted a substantial portion
of our annual revenue. We anticipate that sales into international markets will continue to represent a substantial portion of our total sales and
that continued growth and profitability will require further international expansion, particularly in the Middle East and Africa. Our financial
results could be affected by changes in trade, monetary and fiscal policies, laws and regulations, or other activities of U.S. and non-U.S.
governments, agencies and similar organizations. These conditions include but are not limited to changes in a country's or region's economic
or political conditions, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations,
reduced protection of intellectual property rights in some countries, changes in the regulatory or legal environment, burdensome taxes and
tariffs and other trade barriers. International risks and uncertainties, including changing social and economic conditions as well as terrorism,
political hostilities and war, could lead to reduced distribution of our products into international markets and reduced profitability associated
with such sales. We are subject to risks associated with doing business globally. Our operations, both inside and outside the United States, are subject to risks inherent in conducting business globally and under the
laws, regulations and customs of various jurisdictions and geographies. Although we sell seed to various regions of the world, our sales
outside the United States in fiscal year 2013, including those of SGI, were principally to customers in the Middle East and North Africa.
Accordingly, developments in those parts of the world generally have a more significant effect on our operations than developments in other
places. Our operations outside the United States are subject to special risks and restrictions, including: fluctuations in currency values and
foreign-currency exchange rates; exchange control regulations; changes in local political or economic conditions; governmental pricing
directives; import and trade restrictions; import or export licensing requirements and trade policy; restrictions on the ability to repatriate funds;
and other potentially detrimental domestic and foreign governmental practices or policies affecting U.S. companies doing business abroad,
including the Foreign Corrupt Practices Act and the trade sanctions laws and regulations administered by the U.S. Department of the
Treasury's Office of Foreign Assets Control. Acts of terror or war may impair our
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ability to operate in particular countries or regions, and may
impede the flow of goods and services between countries. Customers in weakened economies may be unable to purchase our products, or it
could become more expensive for them to purchase imported products in their local currency, or sell their commodity at prevailing
international prices, and we may be unable to collect receivables from such customers. Further, changes in exchange rates may affect our
net income, the book value of our assets outside the United States, and our shareholders' equity. Failure to comply with the laws and
regulations that affect our global operations could have an adverse effect on our business, financial condition or results of operations. Failure to comply with the United States Foreign Corrupt Practices Act or similar laws could subject us to penalties and other adverse
consequences. We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies, including their
suppliers, distributors and other commercial partners, from engaging in bribery or other prohibited payments to foreign officials for the
purpose of obtaining or retaining business. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time
in the countries in which we distribute products. We are in the process of adopting formal policies and procedures designed to facilitate
compliance with these laws. If our employees or other agents, including our distributors or suppliers, are found to have engaged in such
practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial
condition and results of operations. Environmental regulation affecting our alfalfa seed or stevia products could negatively impact our business. As an agricultural company, we are subject to evolving environmental laws and regulations by federal and state governments. Federal
laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Federal Seed Act, and
potentially regulations of the FDA. In addition, the State of California regulates our application of agricultural chemicals in connection with
seed harvest. Our Australian operations are also subject to a number of environmental laws, regulations and policies, including in particular the
Environment Protection Act 1993 (SA), the Agricultural and Veterinary Products (Control of Use) Act 2002 (SA), the Genetically Modified
Crops Management Act 2004 (SA), the Dangerous Substances Act 1979 (SA), the Controlled Substances Act 1984 (SA) and related
regulations and policies. These laws regulate matters including air quality, water quality and the use and disposal of agricultural
chemicals. Our failure to comply with these laws and related regulations could have an adverse effect on our business, financial condition or results
of operations. Moreover, it is possible that future developments, such as increasingly strict environmental laws and enforcement policies
thereunder, and further restrictions on the use of agricultural chemicals, could result in increased compliance costs which, in turn, could have
a material adverse effect on our business, financial condition or results of operations. Insurance covering defective seed claims may become unavailable or be inadequate. Defective seed could result in insurance claims and negative publicity. Although we carry general liability insurance to cover defective
seed claims, such coverage may become unavailable or be inadequate. Even if coverage is offered, it may be at a price and on terms not
acceptable to us. If claims exceed coverage limits, or if insurance is not available to us, the occurrence of significant claims could have a
material adverse effect on our business, results of operations and financial condition. 19
We may be exposed to product quality claims, which may cause us to incur substantial legal expenses and, if determined adversely
against us, may cause us to pay significant damage awards. We may be subject to legal proceedings and claims from time to time relating to our seed or dried stevia leaf quality. The defense of
these proceedings and claims can be both costly and time consuming and may significantly divert efforts and resources of our management
personnel. An adverse determination in any such proceeding could subject us to significant liability and damage our market reputation and
prevent us from achieving increased sales and market share. Protracted litigation could also result in our customers or potential customers
deferring or limiting their purchase of our products. The recent global economic downturn has significantly impacted the agricultural industry which in turn has negatively affected our
business. The global economic downturn of the past several years has significantly impacted the agricultural industry, with many farmers losing
their farms or laying fallow their fields, as well as other negative impacts. The full effect of this global economic downturn on growers,
customers, vendors and other business partners cannot be known with any certainty. For example, major customers may have financial
challenges unrelated to us that could result in a decrease in their business with us or, in extreme cases, cause them to file for bankruptcy
protection. Similarly, parties to contracts may be forced to breach their obligations. Although we exercise prudent oversight of the financial
strength of our major business partners and seek to diversify our risk to any single business partner, there can be no assurance that a
significant grower, customer or other business partner that may be unable to meet its contractual commitments to us. Similarly, continued
stresses and pressures that could have wide-ranging negative effects on our industry's future. Capital and credit market issues could negatively affect our liquidity, increase our costs of borrowing and disrupt the operations of our
growers and customers. The capital and credit markets have experienced increased volatility and disruption over the past several years, making it more difficult
for companies to access those markets. Although we believe that our operating cash flows, recent access to the capital market and our lines
of credit will permit us to meet our financing needs for the foreseeable future, continued or increased volatility and disruption in the capital and
credit markets may impair our liquidity or increase our costs of borrowing, if we need to access the credit market. Our business could also be
negatively impacted if our growers or customers experience disruptions resulting from tighter capital and credit markets or a continued
slowdown in the general economy. If we are unable to protect our intellectual property rights, our business and prospects may be harmed. Our ability to compete effectively is dependent upon the proprietary nature of the seeds, seedlings, processes, technologies and
materials owned by or used by us or our growers. If any competitors independently develop new traits, seeds, seedlings, processes or
technologies that customers or end users determine are better than our existing products, such developments could adversely affect our
competitive position. We do not rely upon patent protection, but guard our proprietary property by exercising a high degree of control over the
alfalfa seed supply chain from our S&W varieties, as well as over our stevia material. In Australia, SGI has secured protection under the
PBR Act for its five most popular varieties. However, even with these measures in place, it would be possible for persons with access to our
seed or plants grown from our seed to reproduce and market our proprietary seed varieties, which could significantly harm our business and
our reputation. Litigation may be necessary to protect our proprietary property and determine the validity and scope of the proprietary rights of
competitors. Intellectual property litigation could result in substantial costs and diversion of our management and other resources. If we are
unable to successfully protect our intellectual property rights, our competitors could market products that compete with our proprietary
products without obtaining a license from us. 20
Risks Related to Investment in Our Securities The value of our common stock can be volatile. The overall market and the price of our common stock can fluctuate greatly. The trading price of our common stock may be significantly
affected by various factors, including but not limited to:
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economic status and trends in the dairy industry, which underlies domestic demand for our alfalfa seed; |
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market conditions for alfalfa seed in the Middle East and Africa, where a substantial amount of our seed historically has been purchased by end users; |
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quarterly fluctuations in our operating results; |
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our ability to meet the earnings estimates and other performance expectations of investors or financial analysts; |
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fluctuations in the stock prices of our peer companies or in stock markets in general; and |
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general economic or political conditions. |
Our quarter-to-quarter performance may vary substantially, and this variance, as well as general market conditions, may cause the price of our securities to fluctuate greatly and potentially expose us to litigation.
Our alfalfa seed business, our primary source of revenue, is highly seasonal because it is tied to the growing and harvesting seasons. If sales in any particular quarter are lower than expected, our operating results for that period may be negatively impacted.
Our future expense estimates are based, in large part, on estimates of future revenue, which is difficult to predict. We expect to continue to make significant expenditures in order to expand production, sales, marketing and administrative systems and processes. We may be unable to, or may elect not to, adjust spending quickly enough to offset any unexpected revenue shortfall. If our increased expenses are not accompanied by increased revenue in the same quarter, our quarterly operating results would be harmed.
In one or more future quarters, our results of operations may fall below the expectations of investors or analysts, and the trading price of our securities may decline as a consequence. We believe that quarter-to-quarter comparisons of our operating results will not be a good indication of our future performance and should not be relied upon to predict the future performance of our stock price. In the past, companies that have experienced volatility in the market price of their stock have often been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management's attention from other business concerns, which could seriously harm our business.
While the Class B warrants are outstanding, it may be more difficult to raise additional equity capital.
During the term that the Class B warrants are outstanding, the holders of those warrants are given the opportunity to profit from a rise in the market price of our common stock. We may find it more difficult to raise additional equity capital while these warrants are outstanding. Also, we may be forced to honor the exercise of the warrants at times when we may be able to obtain additional equity capital on more favorable terms from other sources.
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Future sales or the potential for sale of a substantial number of shares of our common stock could cause the trading price of our common stock and warrants to decline and could impair our ability to raise capital through subsequent equity offerings.
As of June 30, 2013, we had 1,590,000 warrants to purchase our common stock outstanding. Sales of a substantial number of shares of our common stock in the public markets, or the perception that these sales may occur, could cause the market price of our stock and redeemable warrants to decline and could materially impair our ability to raise capital through the sale of additional equity securities. For example, the grant of a large number of stock options or other securities under an equity incentive plan or the sale of our securities in private placement transactions at a discount from market value could adversely affect the market price of our common stock or warrants.
If we issue shares of preferred stock, your investment could be diluted or subordinated to the rights of the holders of preferred stock.
Our board of directors is authorized by our articles of incorporation to establish classes or series of preferred stock and fix the designation, powers, preferences and rights of the shares of each such class or series without any further vote or action by our stockholders. Any shares of preferred stock so issued could have priority over our common stock with respect to dividend or liquidation rights. Although we have no plans to issue any shares of preferred stock or to adopt any new series, preferences or other classification of preferred stock, any such action by our board of directors or issuance of preferred stock by us could dilute your investment in our securities or subordinate your holdings to the higher priority rights of the holders of shares of preferred stock issued in the future.
Our principal stockholder will continue to have substantial control over our company, which could limit the ability of our other stockholders to influence the outcome of key transactions, including a change in control, and could result in the approval of transactions that would be adverse to their interests.
Yellowjacket, LP, our largest stockholder, owned 1,139,605 shares, or approximately 9.8%, of our outstanding common stock as of June 30, 2013. Although its ownership interest will decline, if outstanding stock options or warrants are exercised or if we sell additional shares of common stock or securities convertible into common stock, Yellowjacket may, for the foreseeable future, have influence over our management and affairs and may be able to influence matters requiring stockholder approval, including the election of directors and significant corporate transactions such as mergers or other sales of our company or assets. Its interests could differ from ours and those of our other stockholders. In addition, the concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.
Our actual operating results may differ significantly from our guidance.
Although we have not provided earnings guidance to date, from time to time, we may release guidance in our quarterly earnings releases, our quarterly earnings conference call, or otherwise, regarding our future performance that represents our management's estimates as of the date of release. If given, this guidance, which includes forward-looking statements, will be based on projections prepared by our management. These projections are not prepared with a view toward compliance with published guidelines of the American Institute of Certified Public Accountants, and neither our registered public accountants nor any other independent expert or outside party compiles or examines the projections, and accordingly, no such person expresses any opinion or any other form of assurance with respect thereto.
Projections are based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and
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contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions, some of which will change. If we issue guidance, we will generally state possible outcomes as high and low ranges that are intended to provide a sensitivity analysis as variables are changed but are not intended to represent that actual results could not fall outside of the suggested ranges. The principal reason that we would release guidance would be to provide a basis for our management to discuss our business outlook with analysts and investors. We do not accept any responsibility for any projections or reports published by any such persons.
Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will not materialize or will vary significantly from actual results. Accordingly, our guidance, if given, is only an estimate of what management believes is realizable as of the date of release. Actual results will vary from our guidance, and the variations may be material. In light of the foregoing, investors are urged not to rely upon, or otherwise consider, our guidance in making an investment decision about our securities.
Our securities are thinly traded and there may not be an active, liquid trading market for them.
We may not maintain an active trading market for our securities on The Nasdaq Capital Market, or the volume of trading may not be sufficient to allow for timely trades. Investors may not be able to sell their securities quickly or at the latest market price if trading in our securities is not active or if trading volume is limited. In addition, if trading volume in our securities is limited, trades of relatively small numbers of securities may have a disproportionate effect on the market price of our securities.
We do not anticipate declaring any cash dividends on our common stock.
We have never declared or paid cash dividends on our common stock and do not plan to pay any cash dividends in the near future. Our current policy is to retain all funds and any earnings for use in the operation and expansion of our business. If we do not pay cash dividends, our stock may be less valuable to investors because a return on their investment will only occur if our stock price appreciates.
Anti-takeover provisions and our right to issue preferred stock could make a third-party acquisition of us difficult.
Our articles of incorporation and bylaws contain provisions that would make it more difficult for a third party to acquire control of us, including a provision that our board of directors may issue preferred stock without stockholder approval. In addition, certain anti-takeover provisions of Nevada law, if and when applicable, could make it more difficult for a third party to acquire control of us, even if such change in control would be beneficial to our stockholders.
We expect to be an "accelerated filer" in future years, and as a result, we could incur significant additional compliance costs.
We are currently classified as a "Smaller Reporting Company" under Rule 12b-2 of the Exchange Act. Until we are classified as an "Accelerated Filer" (based upon our market capitalization reaching $75 million as of the applicable measuring date, among other requirements), we are exempt from compliance with Section 404(b) of the Sarbanes-Oxley Act of 2002 ("SOX"), relating to the attestation and reporting by our external auditing firm on our internal controls. In addition, we are permitted to make scaled disclosures in our periodic reports and are subject to less stringent reporting deadlines. In future years, and possibly as early as fiscal year 2015, we expect to become an Accelerated Filer and will, therefore, be subject to the auditor attestation requirements of SOX and the expanded disclosure and accelerated reporting requirements of the Exchange Act. As a result of these heightened disclosure requirements, we could incur significant additional costs, which could affect our results of operations.
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USE OF PROCEEDS
Except as described in any prospectus supplement, we currently intend to use the net proceeds from the sale of the securities for general corporate purposes, including for research and development, sales and marketing initiatives and general administrative expenses, working capital and capital expenditures. In addition, our use of proceeds may include the repayment of debt or refinancing of indebtedness or the acquisition of complementary products or companies.
We have not determined the amount of net proceeds to be used specifically for the foregoing purposes. As a result, our management will have broad discretion in the allocation of the net proceeds and investors will be relying on the judgment of our management regarding the application of the proceeds of any sale of the securities. Pending use of the net proceeds, we intend to invest the proceeds in a variety of capital preservation instruments, including short-term, investment-grade, interest-bearing instruments.
When we offer a particular series of securities, we will describe the intended use of the net proceeds from that offering in a prospectus supplement. The actual amount of net proceeds we spend on a particular use will depend on many factors, including our future revenue growth, if any, our future capital expenditures and the amount of cash required by our operations. Many of these factors are beyond our control. Therefore, we will retain broad discretion in the use of the net proceeds.
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SECURITIES WE MAY OFFER
We may offer shares of common stock, shares of preferred stock, debt securities, or warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other securities. We may offer up to $100,000,000 of securities under this prospectus. If securities are offered as units, we will describe the terms of the units in a prospectus supplement.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 50,000,000 shares of common stock and 5,000,000 shares of preferred stock, all with a par value of $0.001 per share. As of October 16, 2013, we had 11,623,498 shares of common stock and no shares of preferred stock outstanding.
Common Stock
Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. Subject to the preference in dividend rights of any series of preferred stock that we may issue in the future, the holders of common stock are entitled to receive such cash dividends, if any, as may be declared by our board of directors out of legally available funds. Upon liquidation, dissolution or winding up, after payment of all debts and liabilities and after payment of the liquidation preferences of any shares of preferred stock then outstanding, the holders of the common stock will be entitled to participate pro rata in all assets that are legally available for distribution.
Other than the rights described above, the holders of common stock have no preemptive subscription, redemption, sinking fund or conversion rights and are not subject to further calls or assessments. The rights and preferences of holders of common stock will be subject to the rights of any series of preferred stock that we may issue in the future.
Preferred Stock
Our board of directors, without any further vote or action by our stockholders, has the authority to issue up to an aggregate of 5,000,000 shares of preferred stock from time to time, in one or more classes or series or shares, on terms that it may determine, the rights, preferences, privileges and restrictions of the preferred stock of each series will be fixed by the certificate of designation relating to each series. A prospectus supplement relating to each series will specify the terms of the preferred stock, including, but not limited to:
- the distinctive designation and the maximum number of shares in the series;
- the terms on which dividends, if any, will be paid;
- the voting rights, if any, on the shares of the series;
- the terms and conditions, if any, on which the shares of the series shall be convertible into, or exchangeable for, shares of any other class or classes of capital stock;
- the terms on which the shares may be redeemed, if at all;
- the liquidation preference, if any; and
- any or all other preferences, rights, restrictions, including restrictions on transferability, and qualifications of shares of the series.
We will describe the specific terms of a particular series of preferred stock in the prospectus supplement relating to that series. The description of preferred stock above is not, and the description of the terms of a particular series of preferred stock in the prospectus supplement will not be, complete. You should refer to the applicable certificate of designation for complete information. The prospectus supplement will contain a description of U.S. federal income tax consequences relating to the preferred stock.
We believe that our board of directors' ability to issue preferred stock on such a wide variety of terms will enable the preferred stock to be used for important corporate purposes, such as financing acquisitions or raising additional capital. Were it inclined to do so, our board of directors could issue all or part of the preferred stock with, among other things, substantial voting power or advantageous conversion rights. This stock could be
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issued to persons deemed by our board of directors likely to support our current management in a context for control of us, either as a precautionary measure or in response to a specific takeover threat.
The issuance of preferred stock may delay, deter or prevent a change in control.
Anti-Takeover Effects of Certain Provisions of Nevada Law and Our Articles of Incorporation and Bylaws
Nevada Revised Statutes ("NRS") 78.378 to 78.3793 contain anti-takeover provisions in certain circumstances whereby a person acquires a controlling interest in a Nevada corporation (the "Controlling Interest Law"). This law generally provides that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly held Nevada corporation in the secondary public or private market will be denied voting rights with respect to the acquired shares, unless a majority of the disinterested stockholders of the corporation elects to grant such voting rights in whole or in part to the investor. Under the law, a person or entity acquires "control shares" whenever it acquires shares that, but for the operation of the law, would bring its voting power to elect directors within any of the following three ranges: (1) one-fifth or more but less than one-third, (2) one-third or more but less than a majority, or (3) a majority or more.
This law defines an "acquisition" as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding voting shares. A corporation's articles of incorporation or bylaws may provide that the Controlling Interest Law does not apply to the corporation. Neither our articles of incorporation nor our bylaws exclude us from the application of the Controlling Interest Law.
However, this law is applicable only to a Nevada corporation (1) with 200 or more stockholders (100 of whom are both stockholders of record and residents of Nevada), and (2) that does business in Nevada directly or through an affiliated corporation. At this time, we do not have 100 stockholders of record who are residents of Nevada. Therefore, the provisions of the Controlling Interest Law do not currently apply to acquisitions of our shares and will not until the number of our stockholders of record who are residents of Nevada exceeds 100. If the Controlling Interest Law becomes applicable to us, its application may discourage companies or persons interested in acquiring a significant interest in or control of us, regardless of whether such acquisition may be in the interest of our stockholders.
In addition, our authorized but unissued shares of common stock and preferred stock are available for our board of directors to issue without stockholder approval. We may use these additional shares for a variety of corporate purposes, including future public or private offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of our authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of our company by means of a proxy contest, tender offer, merger or other transaction. Our authorized but unissued shares may be used to delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. The board of directors is also authorized to adopt, amend or repeal our bylaws which could delay, defer or prevent a change in control.
Certain provisions of our bylaws may be considered to have anti-takeover effects, including advance notice requirements for director nominations and other shareholder proposals. Our bylaws establish advance notice procedures for stockholder proposals to be brought before an annual meeting of stockholders, and for proposed nominations of candidates for election to our board of directors at an annual or special meeting of stockholders. Generally, such notices must be received by our corporate secretary, in the case of an annual meeting, between 90 days and 120 days prior to the first anniversary of the preceding year's annual meeting and, in the case of a special meeting called for the purpose of electing directors, between 90 and 120 days prior to the date of the special meeting or within 10 days after the day on which public announcement of the date of the special meeting is first made by us. In addition, the exclusive authority to adopt, amend or repeal our bylaws is vested with our board of directors.
Transfer Agent, Warrant Agent and Registrar
Our transfer agent and registrar for our common stock and the warrant agent for our Class B warrants is Transfer Online, Inc., Portland, Oregon.
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DESCRIPTION OF DEBT SECURITIES
The following description, together with the additional information we include in any applicable prospectus supplements or free writing prospectuses, summarizes the material terms and provisions of the debt securities that we may offer under this prospectus. We may issue debt securities, in one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. While the terms we have summarized below will apply generally to any future debt securities we may offer under this prospectus, we will describe the particular terms of any debt securities that we may offer in more detail in the applicable prospectus supplement or free writing prospectus. The terms of any debt securities we offer under a prospectus supplement may differ from the terms we describe below. However, no prospectus supplement shall fundamentally change the terms that are set forth in this prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness. As of the date of this prospectus, we have no outstanding registered debt securities. Unless the context requires otherwise, whenever we refer to the "indentures," we also are referring to any indenture or supplemental indentures that specify the terms of a particular series of debt securities.
We will issue any senior debt securities under the senior indenture that we will enter into with the trustee named in the senior indenture. We will issue any subordinated debt securities under the subordinated indenture that we will enter into with the trustee named in the subordinated indenture. We will file forms of these documents, supplemental indentures and forms of debt securities containing the terms of the debt securities as exhibits to the registration statement, of which this prospectus is a part, or they will be incorporated by reference from reports that we file with the Commission.
The indentures will be qualified under the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act. We use the term "trustee" to refer to either the trustee under the senior indenture or the trustee under the subordinated indenture, as applicable.
The following summaries of material provisions of the senior debt securities, the subordinated debt securities and the indentures are subject to, and qualified in their entirety by reference to, all of the provisions of the indenture applicable to a particular series of debt securities. We urge you to read the applicable prospectus supplements and any related free writing prospectuses related to the debt securities that we may offer under this prospectus, as well as the complete indentures that contains the terms of the debt securities. Except as we may otherwise indicate, the terms of the senior indenture and the subordinated indenture are identical.
General
The terms of each series of debt securities will be established by or pursuant to a resolution of our board of directors and set forth or determined in the manner provided in an officers' certificate or by a supplement indenture. Debt securities may be issued in separate series without limitation as to aggregate principal amount. We may specify a maximum aggregate principal amount for the debt securities of any series. We will describe in the applicable prospectus supplement the terms of the series of debt securities being offered, including:
- the title;
- the principal amount being offered, and if a series, the total amount authorized and the total amount outstanding;
- any limit on the amount that may be issued;
- whether or not we will issue the series of debt securities in global form, and, if so, the terms and who the depositary will be;
- the maturity date;
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- whether and under what circumstances, if any, we will pay additional amounts on any debt securities held by a person who is not a United States person for tax purposes, and whether we can redeem the debt securities if we have to pay such additional amounts;
- the annual interest rate, which may be fixed or variable, or the method for determining the rate and the date interest will begin to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining such dates;
- whether or not the debt securities will be secured or unsecured, and the terms of any secured debt;
- the terms of the subordination of any series of subordinated debt;
- the place where payments will be payable;
- restrictions on transfer, sale or other assignment, if any;
- our right, if any, to defer payment of interest and the maximum length of any such deferral period;
- the date, if any, after which, and the price at which, we may, at our option, redeem the series of debt securities pursuant to any optional or provisional redemption provisions and the terms of those redemption provisions;
- the date, if any, on which, and the price at which we are obligated, pursuant to any mandatory sinking fund or analogous fund provisions or otherwise, to redeem, or at the holder's option, to purchase, the series of debt securities and the currency or currency unit in which the debt securities are payable;
- whether the indenture will restrict our ability or the ability of our subsidiaries to:
• incur additional indebtedness;
• issue additional securities;
• create liens;
• pay dividends or make distributions in respect of our capital stock or the capital stock of our subsidiaries;
• redeem capital stock;
• place restrictions on our subsidiaries' ability to pay dividends, make distributions or transfer assets;
• make investments or other restricted payments;
• sell or otherwise dispose of assets;
• enter into sale-leaseback transactions;
• engage in transactions with stockholders or affiliates;
• issue or sell stock of our subsidiaries; or
• effect a consolidation or merger;
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- whether the indenture will require us to maintain any interest coverage, fixed charge, cash flow-based, asset-based or other financial ratios;
- a discussion of certain material or special United States federal income tax considerations applicable to the debt securities;
- information describing any book-entry features;
- provisions for a sinking fund purchase or other analogous fund, if any;
- the applicability of the provisions in the indenture on discharge;
- whether the debt securities are to be offered at a price such that they will be deemed to be offered at an "original issue discount" as defined in paragraph (a) of Section 1273 of the Internal Revenue Code of 1986, as amended;
- the denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral multiple thereof;
- the currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S. dollars; and
- any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, including any additional events of default or covenants provided with respect to the debt securities, and any terms that may be required by us or advisable under applicable laws or regulations.
Conversion or Exchange Rights
We will set forth in the applicable prospectus supplement the terms on which a series of debt securities may be convertible into or exchangeable for our common stock, our preferred stock or other securities (including securities of a third party). We will include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option. We may include provisions pursuant to which the number of shares of our common stock, our preferred stock or other securities (including securities of a third party) that the holders of the series of debt securities receive would be subject to adjustment.
Consolidation, Merger or Sale
Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the indentures will not contain any covenant that restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of all or substantially all of our assets. However, any successor to or acquirer of such assets must assume all of our obligations under the indentures or the debt securities, as appropriate. If the debt securities are convertible into or exchangeable for our other securities or securities of other entities, the person with whom we consolidate or merge or to whom we sell all of our property must make provisions for the conversion of the debt securities into securities that the holders of the debt securities would have received if they had converted the debt securities before the consolidation, merger or sale.
Events of Default under the Indenture
Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the following are events of default under the indentures with respect to any series of debt securities that we may issue:
- if we fail to pay interest when due and payable and our failure continues for 90 days and the time for payment has not been extended;
- if we fail to pay the principal, premium or sinking fund payment, if any, when due and payable at maturity, upon redemption or repurchase or otherwise, and the time for payment has not been extended;
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- if we fail to observe or perform any other covenant contained in the debt securities or the indentures, other than a covenant specifically relating to another series of debt securities, and our failure continues for 90 days after we receive notice from the trustee or we and the trustee receive notice from the holders of at least 25% in aggregate principal amount of the outstanding debt securities of the applicable series; and
- if specified events of bankruptcy, insolvency or reorganization occur.
We will describe in each applicable prospectus supplement any additional events of default relating to the relevant series of debt securities.
If an event of default with respect to debt securities of any series occurs and is continuing, other than an event of default specified in the last bullet point above, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series, by notice to us in writing, and to the trustee if notice is given by such holders, may declare the unpaid principal, premium, if any, and accrued interest, if any, due and payable immediately. If an event of default specified in the last bullet point above occurs with respect to us, the unpaid principal, premium, if any, and accrued interest, if any, of each issue of debt securities then outstanding shall be due and payable without any notice or other action on the part of the trustee or any holder.
The holders of a majority in principal amount of the outstanding debt securities of an affected series may waive any default or event of default with respect to the series and its consequences, except defaults or events of default regarding payment of principal, premium, if any, or interest, unless we have cured the default or event of default in accordance with the indenture. Any waiver shall cure the default or event of default.
Subject to the terms of the indentures, if an event of default under an indenture shall occur and be continuing, the trustee will be under no obligation to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of the applicable series of debt securities, unless such holders have offered the trustee reasonable indemnity or security satisfactory to it against any loss, liability or expense. The holders of a majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series, provided that:
- the direction so given by the holder is not in conflict with any law or the applicable indenture; and
- subject to its duties under the Trust Indenture Act, the trustee need not take any action that might involve it in personal liability or might be unduly prejudicial to the holders not involved in the proceeding.
The indentures will provide that if an event of default has occurred and is continuing, the trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The trustee, however, may refuse to follow any direction that conflicts with law or the indenture, or that the trustee determines is unduly prejudicial to the rights of any other holder of the relevant series of debt securities, or that would involve the trustee in personal liability. Prior to taking any action under the indentures, the trustee will be entitled to indemnification against all costs, expenses and liabilities that would be incurred by taking or not taking such action.
A holder of the debt securities of any series will have the right to institute a proceeding under the indentures, appoint a receiver or trustee, or seek other remedies only if:
- the holder has given written notice to the trustee of a continuing event of default with respect to that series;
- the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written request, and such holders have offered reasonable indemnity to the trustee or security satisfactory to it against any loss, liability or expense or to be incurred in compliance with instituting the proceeding as trustee; and
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- the trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series other conflicting directions within 90 days after the notice, request and offer.
These limitations do not apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium, if any, or interest on, the debt securities, or other defaults that may be specified in the applicable prospectus supplement.
We will periodically file statements with the trustee regarding our compliance with specified covenants in the indentures.
The indentures provide that if a default occurs and is continuing and is actually known to a responsible officer of the trustee, the trustee must mail to each holder notice of the default within the earlier of 90 days after it occurs and 30 days after it is known by a responsible officer of the trustee or written notice of it is received by the trustee, unless such default has been cured or waived. Except in the case of a default in the payment of principal or premium of or interest on any debt security or certain other defaults specified in an indenture, the trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors, or responsible officers of the trustee, in good faith determine that withholding notice is in the best interests of holders of the relevant series of debt securities.
Modification of Indenture; Waiver
Subject to the terms of the indenture for any series of debt securities that we may issue, we and the trustee may change an indenture without the consent of any holders with respect to the following specific matters:
- to fix any ambiguity, defect or inconsistency in the indenture;
- to comply with the provisions described above under "Description of Debt Securities - Consolidation, Merger or Sale";
- to comply with any requirements of the Commission in connection with the qualification of any indenture under the Trust Indenture Act;
- to add to, delete from or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication and delivery of debt securities, as set forth in the indenture;
- to provide for the issuance of and establish the form and terms and conditions of the debt securities of any series as provided under "Description of Debt Securities - General," to establish the form of any certifications required to be furnished pursuant to the terms of the indenture or any series of debt securities, or to add to the rights of the holders of any series of debt securities;
- to evidence and provide for the acceptance of appointment hereunder by a successor trustee;
- to provide for uncertificated debt securities and to make all appropriate changes for such purpose;
- to add to our covenants such new covenants, restrictions, conditions or provisions for the benefit of the holders, to make the occurrence, or the occurrence and the continuance, of a default in any such additional covenants, restrictions, conditions or provisions an event of default or to surrender any right or power conferred to us in the indenture; or
- to change anything that does not adversely affect the interests of any holder of debt securities of any series in any material respect.
- In addition, under the indentures, the rights of holders of a series of debt securities may be changed by us and the trustee with the written consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of each series that is affected. However, subject to the terms of the indenture for any series of debt securities that we may issue or otherwise provided in the
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- to extend the stated maturity of the series of debt securities;
- to reduce the principal amount, reducing the rate of or extending the time of payment of interest, or reducing any premium payable upon the redemption or repurchase of any debt securities; or
- to reduce the percentage of debt securities, the holders of which are required to consent to any amendment, supplement, modification or waiver.
prospectus supplement applicable to a particular series of debt securities, we and the trustee may only make the following changes with the consent of each holder of any outstanding debt securities affected:
Discharge
Each indenture will provide that, subject to the terms of the indenture and any limitation otherwise provided in the prospectus supplement applicable to a particular series of debt securities, we can elect to be discharged from our obligations with respect to one or more series of debt securities, except for specified obligations, including obligations to:
- register the transfer or exchange of debt securities of the series;
- replace stolen, lost or mutilated debt securities of the series;
- maintain paying agencies;
- hold monies for payment in trust;
- recover excess money held by the trustee;
- compensate and indemnify the trustee; and
- appoint any successor trustee.
In order to exercise our rights to be discharged, we must deposit with the trustee money or government obligations sufficient to pay all the principal of and any premium and interest on the debt securities of the series on the dates payments are due.
Denominations, Registrations and Transfer
Unless an accompanying prospectus supplement states otherwise, debt securities will be represented by one or more global certificates registered in the name of a nominee for The Depository Trust Company ("DTC"). In such case, each holder's beneficial interest in the global securities will be shown on the records of DTC and transfers of beneficial interests will only be effected through DTC's records.
A holder of debt securities may only exchange a beneficial interest in a global security for certificated securities registered in the holder's name if:
- we deliver to the trustee notice from DTC that it is unwilling or unable to continue to act as depository or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor depositary is not appointed by us within 120 days after the date of such notice from DTC;
- we in our sole discretion determine that the debt securities (in whole but not in part) should be exchanged for definitive debt securities and deliver a written notice to such effect to the trustee; or
- there has occurred and is continuing a default or event of default with respect to the debt securities.
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If debt securities are issued in certificated form, they will only be issued in the minimum denomination specified in the accompanying prospectus supplement and integral multiples of such denomination. Transfers and exchanges of such debt securities will only be permitted in such minimum denomination. Transfers of debt securities in certificated form may be registered at the trustee's corporate office or at the offices of any paying agent or trustee appointed by us under the indentures. Exchanges of debt securities for an equal aggregate principal amount of debt securities in different denominations may also be made at such locations.
Information Concerning the Trustee
The trustee or trustees under the indentures will be named in any applicable prospectus supplement.
The trustee, other than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only those duties as are specifically set forth in the applicable indenture and is under no obligation to exercise any of the powers given it by the indentures at the request of any holder of debt securities unless it is offered reasonable security and indemnity against the costs, expenses and liabilities that it might incur. However, upon an event of default under an indenture, the trustee must use the same degree of care as a prudent person would exercise or use in the conduct of his or her own affairs.
Payment and Paying Agents
Unless we otherwise indicate in the applicable prospectus supplement, we will make payment of the interest on any debt securities on any interest payment date to the person in whose name the debt securities, or one or more predecessor securities, are registered at the close of business on the regular record date for the interest.
We will pay principal of and any premium and interest on the debt securities of a particular series at the office of the paying agents designated by us, except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments by check that we will mail to the holder or by wire transfer to certain holders. Unless we otherwise indicate in the applicable prospectus supplement, we will designate the corporate trust office of the trustee as our sole paying agent for payments with respect to debt securities of each series. We will name in the applicable prospectus supplement any other paying agents that we initially designate for the debt securities of a particular series. We will maintain a paying agent in each place of payment for the debt securities of a particular series.
All money we pay to a paying agent or the trustee for the payment of the principal of or any premium or interest on any debt securities that remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to us, and the holder of the debt security thereafter may look only to us for payment thereof.
Governing Law
The indentures and the debt securities will be governed by and construed in accordance with the laws of the State of New York, except to the extent that the Trust Indenture Act is applicable.
Ranking Debt Securities
The subordinated debt securities will be unsecured and will be subordinate and junior in priority of payment to certain other indebtedness to the extent described in a prospectus supplement. The subordinated indenture does not limit the amount of subordinated debt securities that we may issue. It also does not limit us from issuing any other secured or unsecured debt.
The senior debt securities will be unsecured and will rank equally in right of payment to all our other senior unsecured debt. The senior indenture does not limit the amount of senior debt securities that we may issue. It also does not limit us from issuing any other secured or unsecured debt.
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DESCRIPTION OF WARRANTS
The following description, together with the additional information we may include in any applicable prospectus supplements and free writing prospectuses, summarizes the material terms and provisions of the warrants that we may offer under this prospectus, which may consist of warrants to purchase common stock, preferred stock or debt securities and may be issued in one or more series. Warrants may be offered independently or together with common stock, preferred stock or debt securities offered by any prospectus supplement, and may be attached to or separate from those securities. While the terms we have summarized below will apply generally to any warrants that we may offer under this prospectus, we will describe the particular terms of any series of warrants that we may offer in more detail in the applicable prospectus supplement and any applicable free writing prospectus. The terms of any warrants offered under a prospectus supplement may differ from the terms described below. However, no prospectus supplement will fundamentally change the terms that are set forth in this prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness.
We will issue the warrants under a warrant agreement that we will enter into with a warrant agent to be selected by us. The warrant agent will act solely as an agent of ours in connection with the warrants and will not act as an agent for the holders or beneficial owners of the warrants. We will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the Commission, the form of warrant agreement, including a form of warrant certificate, that describes the terms of the particular series of warrants we are offering before the issuance of the related series of warrants. The following summaries of material provisions of the warrants and the warrant agreements are subject to, and qualified in their entirety by reference to, all the provisions of the warrant agreement and warrant certificate applicable to a particular series of warrants. We urge you to read the applicable prospectus supplement and any applicable free writing prospectus related to the particular series of warrants that we sell under this prospectus, as well as the complete warrant agreements and warrant certificates that contain the terms of the warrants.
General
We will describe in the applicable prospectus supplement the terms relating to a series of warrants, including:
- the offering price and aggregate number of warrants offered;
- the currency for which the warrants may be purchased;
- if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;
- if applicable, the date on and after which the warrants and the related securities will be separately transferable;
- in the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant and the price at, and currency in which, this principal amount of debt securities may be purchased upon such exercise;
- in the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise;
- the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreements and the warrants;
- the terms of any rights to redeem or call the warrants;
- any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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- the dates on which the right to exercise the warrants will commence and expire;
- the manner in which the warrant agreements and warrants may be modified;
- United States federal income tax consequences of holding or exercising the warrants;
- the terms of the securities issuable upon exercise of the warrants; and
- any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
Before exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including:
- in the case of warrants to purchase debt securities, the right to receive payments of principal of, or premium, if any, or interest on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture; or
- in the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or payments upon our liquidation, dissolution or winding up, or to exercise voting rights, if any.
Exercise of Warrants
Each warrant will entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants at any time up to the specified time on the expiration date that we set forth in the applicable prospectus supplement. After the close of business on the expiration date, unexercised warrants will become void.
Holders of the warrants may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together with specified information, and paying the required amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement. We will set forth on the reverse side of the warrant certificate and in the applicable prospectus supplement the information that the holder of the warrant will be required to deliver to the warrant agent.
Upon receipt of the required payment and the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable upon such exercise. If fewer than all of the warrants represented by the warrant certificate are exercised, we will issue a new warrant certificate for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender securities as all or part of the exercise price for warrants.
Enforceability of Rights by Holders of Warrants
Each warrant agent will act solely as our agent under the applicable warrant agreement and will not assume any obligation or relationship of agency or trust with any holder of any warrant. A single bank or trust company may act as warrant agent for more than one issue of warrants. A warrant agent will have no duty or responsibility in case of any default by us under the applicable warrant agreement or warrant, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a warrant may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate legal action its right to exercise, and receive the securities purchasable upon exercise of, its warrants.
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DESCRIPTION OF UNITS
The following description, together with the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions of the units that we may offer under this prospectus. While the terms we have summarized below will apply generally to any units that we may offer under this prospectus, we will describe the particular terms of any series of units in more detail in the applicable prospectus supplement. The terms of any units offered under a prospectus supplement may differ from the terms described below. However, no prospectus supplement will fundamentally change the terms that are set forth in this prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness.
We will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the Commission, the form of unit agreement that describes the terms of the series of units we are offering, and any supplemental agreements, before the issuance of the related series of units. The following summaries of material terms and provisions of the units are subject to, and qualified in their entirety by reference to, all the provisions of the unit agreement and any supplemental agreements applicable to a particular series of units. We urge you to read the applicable prospectus supplements related to the particular series of units that we sell under this prospectus, as well as the complete unit agreement and any supplemental agreements that contain the terms of the units.
General
We may issue units comprised of one or more debt securities, shares of common stock, shares of preferred stock and warrants in any combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
We will describe in the applicable prospectus supplement the terms of the series of units, including:
- the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
- any provisions of the governing unit agreement that differ from those described below; and
- any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units.
The provisions described in this section, as well as those described under "Description of Capital Stock," "Description of Debt Securities" and "Description of Warrants" will apply to each unit and to any common stock, preferred stock, debt security or warrant included in each unit, respectively.
Issuance in Series
We may issue units in such amounts and in numerous distinct series as we determine.
Enforceability of Rights by Holders of Units
Each unit agent will act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship of agency or trust with any holder of any unit. A single bank or trust company may act as unit agent for more than one series of units. A unit agent will have no duty or responsibility in case of any default by us under the applicable unit agreement or unit, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a unit may, without the consent of the related unit agent or the holder of any other unit, enforce by appropriate legal action its rights as holder under any security included in the unit.
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We, the unit agents and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units evidenced by that certificate for any purpose and as the person entitled to exercise the rights attaching to the units so requested, despite any notice to the contrary.
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PLAN OF DISTRIBUTION
We may sell the securities being offered hereby in one or more of the following ways from time to time:
- through agents to the public or to investors;
- to underwriters for resale to the public or to investors;
- directly to investors; or
- through a combination of any of these methods of sale.
We will set forth in a prospectus supplement the terms of that particular offering of securities, including:
- the name or names of any agents or underwriters;
- the purchase price of the securities being offered and the proceeds we will receive from the sale;
- any over-allotment options under which underwriters may purchase additional securities from us;
- any agency fees or underwriting discounts and other items constituting agents' or underwriters' compensation;
- any initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchanges or markets on which such securities may be listed.
Agents, Underwriters, and Direct Sales
We may designate agents who agree to use their reasonable efforts to solicit purchases of our securities for the period of their appointment or to sell our securities on a continuing basis.
If we use underwriters for a sale of securities, the underwriters will acquire the securities for their own account. The underwriters may resell the securities in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject to the conditions set forth in the applicable underwriting agreement. The underwriters will be obligated to purchase all the securities of the series offered if they purchase any of the securities of that series. We may change from time to time any initial public offering price and any discounts or concessions the underwriters allow or reallow or pay to dealers. We may use underwriters with whom we have a material relationship. We will describe the nature of any such relationship in any prospectus supplement naming any such underwriter. Only underwriters we name in the prospectus supplement are underwriters of the securities offered by the prospectus supplement.
Underwriters, dealers and agents that participate in the distribution of the securities may be underwriters as defined in the Securities Act, and any discounts or commissions they receive from us and any profit on their resale of the securities may be treated as underwriting discounts and commissions under the Securities Act. We will identify in the applicable prospectus supplement any underwriters, dealers or agents and will describe their compensation. We may have agreements with the underwriters, dealers and agents to indemnify them against specified civil liabilities, including liabilities under the Securities Act. Underwriters, dealers and agents may engage in transactions with or perform services for us in the ordinary course of their businesses.
We may also sell securities directly to one or more purchasers without using underwriters or agents.
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Trading Markets and Listing of Securities
Unless otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no established trading market, other than our common stock and Class B warrants, which are listed on the NASDAQ Capital Market. We may elect to list any other class or series of securities on any exchange or market, but we are not obligated to do so. It is possible that one or more underwriters may make a market in a class or series of securities, but the underwriters will not be obligated to do so and may discontinue any market making at any time without notice. We cannot give any assurance as to the liquidity of the trading market for any of the securities.
Stabilization Activities
Any underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation M under the Exchange Act. Overallotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Short covering transactions involve purchases of the securities in the open market after the distribution is completed to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a covering transaction to cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of these activities at any time.
Passive Market Making
Any underwriters who are qualified market makers on the NASDAQ Capital Market may engage in passive market making transactions in the securities on the NASDAQ Capital Market in accordance with Rule 103 of Regulation M, during the business day prior to the pricing of the offering, before the commencement of offers or sales of the securities. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security. If all independent bids are lowered below the passive market maker's bid, however, the passive market maker's bid must then be lowered when certain purchase limits are exceeded.
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EXPERTS
Our consolidated balance sheets as of June 30, 2012 and 2013 and our consolidated statements of operations, stockholders' equity and cash flows for the fiscal years ended June 30, 2012 and 2013 have been incorporated by reference in this prospectus in reliance on the reports of M&K CPAS, PLLC, our independent registered public accounting firm, given on the authority of that firm as experts in accounting and auditing.
SGI's consolidated balance sheets as of June 30, 2011 and 2012 and SGI's consolidated statements of operations, stockholders' equity and cash flows for the fiscal years ended June 30, 2011 and 2012 have been incorporated by reference in this prospectus in reliance on the reports of Grant Thornton Audit Pty Ltd, SGI's independent registered public accounting firm, given on the authority of that firm as experts in accounting and auditing.
The validity of the securities offered hereby will be passed on by Holland & Knight LLP, Portland, Oregon.
INFORMATION INCORPORATED BY REFERENCE
This prospectus is part of a registration statement on Form S-3. The Commission allows this filing to "incorporate by reference" information that we previously have filed with the Commission. This means we can disclose important information to you by referring you to other documents that we have filed with the Commission. The information that is incorporated by reference is considered part of this prospectus, and information that we file later will automatically update and may supersede this information. For further information about our company and the securities being offered, you should refer to the registration statement and the following documents that are incorporated by reference:
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Our annual report on Form 10-K filed with the Commission on September 30, 2013, which contains audited financial statements for the fiscal year ended June 30, 2013;
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Our Current Reports on Form 8-K filed on September 23, 2013, and September 27, 2013, respectively;
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Our Current Report on Form 8-K/A filed on September 21, 2013;
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All other reports filed by us pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report referred to above; and
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The description of our common stock contained in Forms 8-A filed on April 23, 2010 and amended on April 29, 2010 and any amendments or reports filed for the purpose of updating such description. |
All documents filed by the Company subsequent to those listed above with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, following the date of filing of the registration statement of which this is a part and prior to the termination of the offering, shall be deemed to be incorporated by reference into this prospectus and to be a part hereof from the date of filing of such documents (all of such documents, and the documents enumerated above, being hereinafter referred to as "Incorporated Documents"). The information relating to our Company contained in this prospectus does not purport to be comprehensive and should be read together with the information contained in the Incorporated Documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
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You may request a copy of all documents that are incorporated by reference in this prospectus by writing or telephoning us at the following address and number: S&W Seed Company, P.O. Box 235, Five Points, CA 93624, telephone (559) 884-2535. We will provide copies of all documents requested (not including exhibits to those documents, unless the exhibits are specifically incorporated by reference into those documents or this prospectus) without charge.
You should rely only on the information provided in and incorporated by reference into this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front cover of these documents.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 filed with the Commission under the Securities Act. This prospectus does not contain all the information set forth in the registration statement because certain information has been incorporated into the registration statement by reference in accordance with the rules and regulations of the Commission. Please review the documents incorporated by reference for a more complete description of the matters to which such documents relate.
We are subject to the informational reporting requirements of the Exchange Act. In accordance with the Exchange Act, we file reports, proxy statements, and other information with the Commission. You can inspect and copy these reports, proxy statements and other information at the Public Reference Room of the Commission, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. Please call the Commission at 1-800-Commission-0330 for further information on the operation of the public reference rooms. Our Commission filings are also available on the Commission's website. The address of this site is http://www.sec.gov.
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$100,000,000
Common Stock
Convertible Preferred Stock
Debt Securities
Warrants
Units
__________________
PROSPECTUS
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, 2013
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses to be paid by the Registrant in connection with this offering are as follows:
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Nature of Expense |
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Amount |
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Securities and Exchange Commission registration fee |
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$ 11,849 |
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Legal fees and expenses |
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* |
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Accounting fees and expenses |
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* |
|
|
Transfer Agent and Trustee fees and expenses |
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|
* |
|
|
Printing expenses |
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|
* |
|
|
Miscellaneous expenses |
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|
* |
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|
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|
|
|
|
Total |
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|
$ * |
|
Item 15. Indemnification of Directors and Officers
Nevada Revised Statutes ("NRS") 78.138(7) provides that, subject to certain very limited statutory exceptions or unless the articles of incorporation provide for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders for any damages as a result of any act or failure to act in his or her capacity as a director or officer, unless it is proven that the act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and such breach involved intentional misconduct, fraud or a knowing violation of law.
NRS 78.7502(1) empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (an "Indemnified Party"), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Indemnified Party in connection with such action, suit or proceeding if the Indemnified Party would not be liable pursuant to NRS 78.138 or the Indemnified Party acted in good faith and in a manner the Indemnified Party reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnified Party's conduct was unlawful.
NRS 78.7502(2) empowers a corporation to indemnify any Indemnified Party who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor against expenses (including amounts paid in settlement and attorneys' fees actually
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and reasonably incurred by such Indemnified Party) in connection with the defense or settlement of such action or suit if such Indemnified Party would not be liable pursuant to NRS 78.138 or such Indemnified Party acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which the Indemnified Party shall have been adjudged to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which such action or suit was brought determines upon application that in view of all the circumstances, the Indemnified Party is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
NRS 78.7502(3) provides that to the extent an Indemnified Party has been successful on the merits or otherwise in the defense of any action, suit or proceeding referred to in Subsection 1 or 2 of NRS 78.7502 described above or in the defense of any claim, issue or matter therein, the corporation shall indemnify the Indemnified Party against expenses (including attorneys' fees) actually and reasonably incurred by the Indemnified Party in connection therewith.
NRS 78.751(1) provides that any discretionary indemnification pursuant to NRS 78.7502, unless ordered by a court or advanced pursuant to NRS 78.751(2), may be made by a corporation only as authorized in the specific case upon a determination that indemnification of the Indemnified Person is proper in the circumstances. Such determination must be made (a) by the stockholders, (b) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding, (c) if a majority vote of a quorum of such disinterested directors so orders, by independent legal counsel in a written opinion, or (d) by independent legal counsel in a written opinion if a quorum of such disinterested directors cannot be obtained.
NRS 78.751(2) provides that a corporation's articles of incorporation or bylaws or an agreement made by the corporation may require the corporation to pay the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding as such expenses are incurred and in advance of the final disposition, upon receipt by the corporation of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the corporation. The provisions of NRS 78.751(2) do not affect any rights to advancement of expenses to which corporate personnel other than officers and directors may be entitled under contract or otherwise by law.
NRS 78.751(3) provides that indemnification pursuant to NRS 78.7502 and advancement of expenses authorized in or ordered by a court pursuant to NRS 78.751 does not exclude any other rights to which an Indemnified Party may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his or her official capacity or in another capacity while holding his or her office; provided, however, that unless ordered by a court pursuant to NRS 78.7502 or for the advancement of expenses pursuant to NRS 78.751(2), indemnification may not be made to or on behalf of any director or officer of the corporation if a final adjudication establishes that his or her acts or omissions involved intentional misconduct, fraud or a knowing violation of the law which was material to the cause of action. Additionally, the scope of such indemnification and advancement of expenses shall continue as to an Indemnified Party who has ceased to hold one of the positions specified above, and shall inure to the benefit of his or her heirs, executors and administrators.
NRS 78.752 empowers a corporation to purchase and maintain insurance or make other financial arrangements on behalf of an Indemnified Party for any liability asserted against such Indemnified Party or liability and expenses incurred by such Indemnified Party, whether or not the corporation has the authority to indemnify such person against such liability and expenses.
The Bylaws of the registrant provide for indemnification of Indemnified Parties substantially identical in scope to that permitted under the NRS. Such Bylaws provide that the expenses of directors and officers of the registrant incurred in defending any action, suit or proceeding, whether civil, criminal, administrative or investigative, must be paid by the registrant as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it is ultimately determined by a court of competent jurisdiction that the director or officer is not entitled to be indemnified by the registrant.
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The registrant has a contract for insurance coverage under which the registrant and certain Indemnified Parties (including the directors and officers of the registrant) are indemnified under certain circumstances with respect to litigation and other costs and liabilities arising out of actual or alleged misconduct of such Indemnified Parties.
The registrant may enter into indemnification agreements with its officers and directors in the future.
The above-described provisions relating to the indemnification of directors and officers are sufficiently broad to permit the indemnification of such persons in certain circumstances against liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933, as amended (the "Securities Act"). Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers or persons controlling S&W Seed Company pursuant to applicable state law, we have been informed that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 16. Exhibits and Financial Statement Schedules
The following exhibits are filed herewith or incorporated by reference:
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Incorporated by Reference |
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Exhibit |
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Exhibit Description |
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Form |
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Commission File |
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Exhibit |
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Filing |
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Filed |
|
3.1 |
Articles of Incorporation of S&W Seed Company |
8-K |
001-34719 |
3.1 |
12/19/2011 |
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|
3.2 |
Amended and Restated Bylaws of S&W Seed Company |
8-K |
001-34719 |
3.1 |
5/28/2013 |
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4.1 |
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Form of Common Stock Certificate |
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S-1 |
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333-164588 |
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4.1 |
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4/23/2010 |
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5.1* |
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Opinion of Holland & Knight LLP |
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23.1 |
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Consent of M&K CPAS PLLC |
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X |
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23.2 |
Consent of Grant Thornton Audit Pty Ltd |
X |
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23.3 * |
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Consent of Holland & Knight LLP (included in Exhibit 5.1 herein) |
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24.1 |
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Power of Attorney (see signature page) |
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X |
_________
* To the extent applicable, to be filed by an amendment or as an exhibit to a document filed under the Securities Exchange Act of 1934, as amended and incorporated by reference herein.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
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(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
Provided, however,
that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to
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a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; and
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of an undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
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(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in Five Points, California on October 16, 2013.
S&W SEED COMPANY
By: /s/ Mark S. Grewal
Mark S. Grewal
President and Chief Executive Officer
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POWER OF ATTORNEY
We, the undersigned directors and officers of S&W Seed Company do hereby constitute and appoint Mark S. Grewal and Matthew K. Szot or either of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said corporation to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names and in the capacities indicated below, any and all amendments (including post-effective amendments) to this Registration Statement, or any related registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; and we do hereby ratify and confirm all that the said attorneys and agents, or either of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
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Signature |
Title |
Date |
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/s/ Mark S. Grewal |
President, Chief Executive Officer and Director (Principal Executive Officer) |
October 16, 2013 |
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/s/ Matthew K. Szot |
Senior Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer) |
October 16, 2013 |
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/s/ Grover T. Wickersham |
Chairman of the Board |
October 16, 2013 |
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/s/ Glen D. Bornt |
Director |
October 16, 2013 |
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/s/ Michael C. Culhane |
Director |
October 16, 2013 |
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/s/ Michael M. Fleming |
Director |
October 16, 2013 |
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/s/ Mark Harvey |
Director |
October 16, 2013 |
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/s/ Michael N. Nordstrom |
Director |
October 16, 2013 |
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II-8
|
/s/ Charles B. Seidler |
Director |
October 16, 2013 |
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