SEC Company Response from S&W Seed Co (SANW) (CIK 0001477246) — Mar 2, 2020
S&W Seed Co (SANW) (CIK 0001477246)
Date: March 2, 2020 · CIK: 0001477246 · Accession: 0001564590-20-007983
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-34719
Letter
sanw-corresp.htm
Science | Seed | Life
March 2, 2020
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Life Sciences
100 F Street, N.E.
Washington, D.C. 20549
Attn:
Christie Wong
Brian Cascio
Re:
S&W Seed Company
Form 10-K for the Fiscal Year Ended June 30, 2019
Filed September 18, 2019
Form 8-K Filed on February 12, 2020
File No. 001-34719
Ladies and Gentlemen:
We are in receipt of the comment letter, dated February 20, 2020, from the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) regarding the above captioned filings on Form 10-K for the fiscal year ended June 30, 2019, filed on September 18, 2019 (the “Form 10-K”) and Form 8-K, filed on February 12, 2020 (the “Form 8-K”). Below is the response of S&W Seed Company (the “Company,” “we,” “our” or similar terminology) to the Staff’s comments.
For the Staff’s convenience, we have incorporated your comments into this response letter in italics. The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the Form 10-K and the Form 8-K.
Form 10-K for the Fiscal Year Ended June 30, 2019
Notes to Consolidated Financial Statements
Note 4 – Revenue Recognition, page 61
1.
We note on page 60 that you received a payment of $45 million in May 2019 from Pioneer/Corteva of which $34.2 million was recognized as licensing revenue. Please explain to us your basis for recognizing the entire amount in fiscal 2019. Refer to ASC 606-10-55-57 through 55-58.
S&W Seed Company
2101 Ken Pratt Blvd, Suite 201
Longmont, CO 80501
720.506.9191
www.swseedco.com
Science | Seed | Life
Response: The Company determined that the Corteva license agreement transfers to Corteva a right to use the Company’s intellectual property, as discussed in ASC 606-10-55-58b. The germplasm represents functional intellectual property that Corteva can benefit from on a standalone basis that requires no further support from the Company. Corteva could obtain all the benefits of the intellectual property at the point in time that the license was granted as it had the ability, at that time, to grow and distribute products using the intellectual property immediately.
While the termination agreement also required the Company to transfer to Corteva certain quantities of seed held by the Company as of the May 22, 2019 agreement date, the license and seed are distinct performance obligations. The license is both capable of being distinct and is distinct in the context of the contract, as Corteva can and intends to use the licensed intellectual property on its own. Therefore, the guidance in ASC 606-10-55-57 does not alter the conclusion that the revenue from the license of functional intellectual property should be recognized at a point in time, as discussed in ASC 606-10-55-58B.
2.
In future filings, please provide the disclosures required by ASC 606-10-50-8 with respect to contract balances, including opening and closing balances and the related revenue recognized in the reporting period.
Response: We respectfully acknowledge the Staff’s comment. In future filings, we confirm that we will provide the disclosures required by ASC 606-10-50-8 with respect to contract balances.
Form 8-K Filed on February 12, 2020
Exhibit 99.1, page 7
3.
We note you present full income statements of non-GAAP measures in tables A1 and A2. Please tell us how you considered the guidance in Question 102.10 of the updated Compliance and Disclosure Interpretation on Non-GAAP financial measures.
Response: We respectfully acknowledge the Staff's comment and undertake that in future earnings releases and filings we will reconcile our non-GAAP measures to the most directly comparable GAAP measures without presenting a full income statement of non-GAAP measures.
* * *
S&W Seed Company
2101 Ken Pratt Blvd, Suite 201
Longmont, CO 80501
720.506.9191
www.swseedco.com
Science | Seed | Life
Please advise us if we can provide any further information or assistance to facilitate your review. Please direct any questions or further comments regarding this response letter to the undersigned at (720) 506-9191. Thank you.
Sincerely,
By:
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CORRESP 1 filename1.htm sanw-corresp.htm Science | Seed | Life March 2, 2020 United States Securities and Exchange Commission Division of Corporation Finance Office of Life Sciences 100 F Street, N.E. Washington, D.C. 20549 Attn: Christie Wong Brian Cascio Re: S&W Seed Company Form 10-K for the Fiscal Year Ended June 30, 2019 Filed September 18, 2019 Form 8-K Filed on February 12, 2020 File No. 001-34719 Ladies and Gentlemen: We are in receipt of the comment letter, dated February 20, 2020, from the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) regarding the above captioned filings on Form 10-K for the fiscal year ended June 30, 2019, filed on September 18, 2019 (the “Form 10-K”) and Form 8-K, filed on February 12, 2020 (the “Form 8-K”). Below is the response of S&W Seed Company (the “Company,” “we,” “our” or similar terminology) to the Staff’s comments. For the Staff’s convenience, we have incorporated your comments into this response letter in italics. The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the Form 10-K and the Form 8-K. Form 10-K for the Fiscal Year Ended June 30, 2019 Notes to Consolidated Financial Statements Note 4 – Revenue Recognition, page 61 1. We note on page 60 that you received a payment of $45 million in May 2019 from Pioneer/Corteva of which $34.2 million was recognized as licensing revenue. Please explain to us your basis for recognizing the entire amount in fiscal 2019. Refer to ASC 606-10-55-57 through 55-58. S&W Seed Company 2101 Ken Pratt Blvd, Suite 201 Longmont, CO 80501 720.506.9191 www.swseedco.com Science | Seed | Life Response: The Company determined that the Corteva license agreement transfers to Corteva a right to use the Company’s intellectual property, as discussed in ASC 606-10-55-58b. The germplasm represents functional intellectual property that Corteva can benefit from on a standalone basis that requires no further support from the Company. Corteva could obtain all the benefits of the intellectual property at the point in time that the license was granted as it had the ability, at that time, to grow and distribute products using the intellectual property immediately. While the termination agreement also required the Company to transfer to Corteva certain quantities of seed held by the Company as of the May 22, 2019 agreement date, the license and seed are distinct performance obligations. The license is both capable of being distinct and is distinct in the context of the contract, as Corteva can and intends to use the licensed intellectual property on its own. Therefore, the guidance in ASC 606-10-55-57 does not alter the conclusion that the revenue from the license of functional intellectual property should be recognized at a point in time, as discussed in ASC 606-10-55-58B. 2. In future filings, please provide the disclosures required by ASC 606-10-50-8 with respect to contract balances, including opening and closing balances and the related revenue recognized in the reporting period. Response: We respectfully acknowledge the Staff’s comment. In future filings, we confirm that we will provide the disclosures required by ASC 606-10-50-8 with respect to contract balances. Form 8-K Filed on February 12, 2020 Exhibit 99.1, page 7 3. We note you present full income statements of non-GAAP measures in tables A1 and A2. Please tell us how you considered the guidance in Question 102.10 of the updated Compliance and Disclosure Interpretation on Non-GAAP financial measures. Response: We respectfully acknowledge the Staff's comment and undertake that in future earnings releases and filings we will reconcile our non-GAAP measures to the most directly comparable GAAP measures without presenting a full income statement of non-GAAP measures. * * * S&W Seed Company 2101 Ken Pratt Blvd, Suite 201 Longmont, CO 80501 720.506.9191 www.swseedco.com Science | Seed | Life Please advise us if we can provide any further information or assistance to facilitate your review. Please direct any questions or further comments regarding this response letter to the undersigned at (720) 506-9191. Thank you. Sincerely, By: /s/ Matthew K. Szot Matthew K. Szot Executive Vice President of Finance and Administration and Chief Financial Officer cc: Mark W. Wong, S&W Seed Company Steven M. Przesmicki, Cooley LLP Phillip S. McGill, Cooley LLP Alexander M. Davis, Cooley LLP S&W Seed Company 2101 Ken Pratt Blvd, Suite 201 Longmont, CO 80501 720.506.9191 www.swseedco.com