S-1/A: Australian Oilseeds Reports Increased Revenue Amidst Mounting Losses and Nasdaq Delisting Concerns

Australian Oilseeds Holdings Limited reported significant revenue growth for the nine months ended March 31, 2025, driven by retail oil sales, but faced substantial net losses and ongoing concerns regarding its Nasdaq listing compliance and liquidity.

Summary

• Sales revenue increased by AUD$3.1 million (49.8%) to AUD$9.4 million for the three months ended March 31, 2025, and by AUD$4.1 million (16.1%) to AUD$30.1 million for the nine months ended March 31, 2025, compared to the prior year periods.
• Retail oils segment was the primary driver of revenue growth, increasing by AUD$1.9 million (69.4%) for the three months and AUD$5.7 million (58.2%) for the nine months ended March 31, 2025, due to new supply contracts with Costco Australia, Woolworths, and Coles supermarket stores.
• The company incurred a net loss after income tax of AUD$630,633 for the three months ended March 31, 2025, compared to a profit of AUD$41,185 in the prior year period.
• For the nine months ended March 31, 2025, the net loss was AUD$1,597,298, a significant decline from a profit of AUD$2,422,104 in the prior year period.
• Gross profit decreased to AUD$565,575 for the three months ended March 31, 2025 (from AUD$603,441), and to AUD$2,600,949 for the nine months ended March 31, 2025 (from AUD$4,918,476), primarily due to increased cost of materials and packaging.
• Cost of sales increased by 55.7% for the three months and 30.8% for the nine months ended March 31, 2025, driven by higher material, packaging, and labor costs.
• General and administrative expenses rose by 49.0% for the three months and 35.3% for the nine months ended March 31, 2025, mainly due to increased audit fees, insurance, and employee costs.
• Selling and marketing expenses saw a substantial increase of 366.8% for the three months and 31.2% for the nine months ended March 31, 2025, attributed to brand awareness promotion.
• Finance expenses surged by 190.4% for the three months and 232.7% for the nine months ended March 31, 2025, due to repayment of a AUD$4 million asset finance loan from Commonwealth Bank of Australia and amortization of convertible note discount.
• The company was in a net current liability position of AUD$9,622,311 as of March 31, 2025, worsening from AUD$6,965,530 at June 30, 2024.
• Net cash outflow from operating activities was AUD$1,942,969 for the nine months ended March 31, 2025, compared to an inflow of AUD$1,259,485 in the prior year period.
• The company's Ordinary Shares and Warrants are listed on Nasdaq under the symbols COOT and COOTW, respectively, but the company received a notice on May 27, 2025, for non-compliance with the $1.00 minimum bid price rule and a notice on June 4, 2025, for not meeting the minimum stockholders' equity requirement of $10,000,000.
• The company is appealing the delisting determination and has applied to list its securities on The Nasdaq Capital Market.
• Financial statements for the years ended June 30, 2023, and 2022, were restated to correct material misstatements related to machinery spare parts, prepayment of stock, revenue recognition, bad debt provision, and lease accounting.

Sentiment

Score: 3

Explanation: While the company shows revenue growth and ambitious expansion plans in a growing market, the significant increase in net losses, deteriorating liquidity, negative operating cash flow, and immediate Nasdaq delisting threats indicate severe financial distress and operational challenges. The positive strategic initiatives are overshadowed by the current financial performance and going concern doubts.

Positives

• Significant revenue growth in the retail oils segment, driven by new supply contracts with major Australian supermarkets like Costco, Woolworths, and Coles.
• Successful expansion of the existing Cootamundra facility, with full operations commencing in August 2024.
• Strategic plan to establish a new multi-seed crushing plant in Emerald, Central Queensland, projected to increase total crushing capacity to 160,000 metric tons per annum, four times the current capacity.
• Received AUD$5 million in government incentives and tax credits for the new Queensland plant, demonstrating government support for the project.
• Commitment to sustainable, chemical-free, and non-GMO edible oils and protein meals, aligning with growing global demand for healthier food products.
• Long-standing grower-supply contracts with local and regional farmers committed to sustainable farming practices.
• Strong market position as the largest cold-pressing oil plant in Australia, processing strictly GMO-free conventional and organic oilseeds.
• Exclusive supply agreement for canola seed with Good Earth Growers, a certified Chemical Free Farmers producer.
• Products are certified Halal compliant, Kosher, and Non-GMO verified, enhancing market appeal and consumer trust.
• Management has established a remediation plan to address previously disclosed material weaknesses in internal control over financial reporting.

Negatives

• Significant increase in net losses: AUD$630,633 for Q3 2025 (from AUD$41,185 profit in Q3 2024) and AUD$1,597,298 for the nine months ended March 31, 2025 (from AUD$2,422,104 profit in prior year period).
• Decline in gross profit despite revenue growth, indicating rising cost of sales (55.7% increase for Q3 2025, 30.8% for nine months ended March 31, 2025).
• Company is in a net current liability position of AUD$9,622,311 as of March 31, 2025, a deterioration from AUD$6,965,530 at June 30, 2024.
• Negative net cash outflow from operating activities of AUD$1,942,969 for the nine months ended March 31, 2025, compared to an inflow in the prior period.
• Received Nasdaq notices for non-compliance with the $1.00 minimum bid price rule and the $10,000,000 minimum stockholders' equity requirement, leading to potential delisting.
• Financial statements for prior periods (June 30, 2023, and 2022) were restated due to material misstatements, indicating issues with financial reporting accuracy.
• High dependence on a small group of customers, with top five customers accounting for 87.9% of total sales for the three months ended March 31, 2025, posing a concentration risk.
• Increased general and administrative expenses (49.0% for Q3 2025) and finance expenses (190.4% for Q3 2025), impacting profitability.
• The company's ability to continue as a going concern is dependent on generating sufficient cash from operations and securing additional long-term debt or equity funding.
• Management has limited experience in operating a public company, which could lead to challenges in regulatory compliance and investor relations.

Risks

• Inability to predict the actual number of shares to be sold under the Purchase Agreement with Arena or the gross proceeds, and potential lack of access to the full US$50,000,000 available.
• Dilution to existing shareholders from the sale and issuance of Ordinary Shares to Arena, and potential price decline due to sales or perception of sales.
• Investors buying shares at different times may pay different prices and experience varying levels of dilution.
• Arena will pay a discounted price (97% of VWAP) for Ordinary Shares, which could cause the stock price to decline upon resale.
• Broad discretion of management over the use of net proceeds from Arena sales, which may not be invested successfully.
• Stock price volatility and potential for substantial losses for purchasers of Ordinary Shares.
• Inability to maintain Nasdaq listing due to non-compliance with minimum bid price and stockholders' equity requirements, which could adversely affect stock price, liquidity, and financing ability.
• Significant influence of principal shareholders (JSKS Enterprises, controlled by Gary Seaton) over corporate actions, potentially delaying or preventing acquisitions.
• Risk of securities class action litigation following stock price declines.
• Dependence on revenues from the sale of a limited range of products (cold-pressed vegetable oils and protein meals), making the company vulnerable to market changes in these lines.
• Lack of product and business diversification, increasing susceptibility to fluctuations in the agricultural industry.
• Dependence on contracts with local and regional farmers for oilseeds; loss or quality decline of these contracts could materially affect business.
• Risks related to global, federal, state, and local regulations, including trade restrictions, food safety, sustainability, and environmental laws, which could adversely affect operations and financial condition.
• Operations are subject to changing conditions like unfavorable weather (blight, bush fires, drought, flooding) and environmental conditions, which can decrease profitability and production.
• Disruptions in water and power supply could adversely affect operations and supplier farming, impacting oilseed access.
• Operating results may fluctuate due to demand variations, competitive pricing, and increases in oilseed costs and utility costs.
• Revenue may not achieve budget in FY 2025 due to capital expenditure for Cootamundra expansion and new Queensland facility construction, potentially reducing operating results if equity funding is not raised.
• Failure to effectively promote the brand could materially and adversely affect business, financial condition, and results of operations.
• Inability to hire and retain qualified personnel, especially senior management and technical staff, could adversely affect growth and business objectives.
• Dependence on certain key personnel (e.g., Gary Seaton); loss of their services could materially affect business operations.
• Exposure to claims, litigation, or regulatory actions, including those related to de-SPAC merger transactions and misleading disclosures, which could result in substantial costs and diversion of management attention.
• Retail price of products may be subject to government price controls, potentially reducing profit margins.
• Requirement to obtain and maintain various permits and licenses (e.g., FSANZ, FDA, Halal, Kosher, Non-GMO Project); failure to do so or changes in standards could disrupt business.
• Adverse publicity associated with products, raw materials, or suppliers/customers could harm reputation and financial performance.
• Inability to develop new products successfully could adversely affect business and financial condition.
• Geopolitical risks, including international conflicts (Ukraine, Israel-Hamas war) and inflation, could disrupt supply chains, increase costs, and affect international sales.
• Risk of natural disasters, epidemics, and other acts of God causing damage or disruption to facilities and operations.
• Products may be subject to contamination, leading to product liability claims and recalls, despite insurance coverage.
• Failure to compete effectively in competitive markets could lead to lower revenues and higher costs.
• Increased expenses and administrative burdens as a public company, including costs related to remediating material weaknesses in internal control over financial reporting.
• Potential for extreme volatility in Ordinary Share trading price due to various market and company-specific factors.
• No expectation of paying dividends in the foreseeable future, requiring investors to rely on price appreciation for returns.
• Future sales of substantial amounts of Ordinary Shares by the company or existing shareholders could adversely affect market price.
• Anti-takeover provisions in corporate documents and Cayman Act could impair takeover attempts, limiting shareholder premium opportunities.
• Risk of being classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, leading to adverse tax consequences for U.S. Holders.
• Uncertainty regarding enforceability of U.S. judgments against the company or its directors/officers located outside the U.S.

Future Outlook

The company aims to address increased global demand for sustainable, premium cold-pressed, and non-GMO products by expanding its existing cold-pressing capacity from 33,000 to 65,000 metric tons initially, and establishing a new multi-seed crushing plant in Emerald, Queensland, with a projected capacity of 80,000 metric tons per annum. This expansion is expected to make the company the largest cold-pressed player in the APAC region. The company projects AUD$2.4 million net profit before tax from July 2026 to June 2026, subject to market and weather conditions. The company intends to fund the new Queensland plant with a mix of government support (AUD$5 million), operating cashflow (AUD$3 million), bank funding (AUD$6 million to AUD$10 million), and equity funding (AUD$8 million to AUD$11 million).

Management Comments

• "The Company believes that transitioning from a fossil fuel economy to a renewable and chemical free economy is the solution to many health problems the world is facing presently."
• "To that end, the Company is committed to working with suppliers and customers to eliminate chemicals from the edible oil production and manufacturing systems to supply quality products such as non-GMO oilseeds and organic and non-organic food-grade oils to customers globally."
• "Over the past 20+ years, the Company has grown to be the largest cold pressing oil plant in Australia, pressing strictly GMO free conventional and organic oilseeds."
• "The Company believes that the global demand for healthier, natural and chemical-free food products opens avenues for domestic and international economic activity and the Company is an example of this trend."
• "The Company believes that the SDGs in business is good business as they work in the spirit of partnership and pragmatism to make proper choices now to improve life, in a sustainable way, for future generations."
• "Although our operations have not experienced material and adverse impact on supply chain, cybersecurity or other aspects of our business from the ongoing unrest in Ukraine, the Middle East and Africa or due to COVID-19 or other acts of God or causes, there is no assurance that such conflict would not develop or escalate in a way that could materially and adversely affect our business, financial condition, and results of operations in the future."
• "The Company believes its relationship with its employees and contractors is cooperative and its employees and contractors share the same goals as management to industrialize oilseeds, making the products available worldwide."
• "The Company expects to use any proceeds that we will receive under the Purchase Agreement for working capital and general corporate purposes."
• "The Company has determined that the Company's sources of liquidity will be sufficient to meet the Company's financing requirements for the one-year period from the issuance of its consolidated financial statements but there can no assurance these sources are sufficient to fund our capital expenditures, working capital and other cash requirements in the long term."

Industry Context

The company operates in the global oilseeds market, which was valued at USD$249.05 billion in 2023 and is projected to grow to USD$373.32 billion by 2033 (CAGR of 4.13%). Key drivers include the increasing use of oilseeds in animal feed and demand for healthy/organic oilseed-processed goods. The non-GMO food market, a key focus for the company, was valued at USD$740.65 billion in 2023 and is projected to reach USD$2,003.68 billion by 2032 (CAGR of 11.94%), driven by rising consumer awareness of health benefits and willingness to pay more for sustainable products. The Asia-Pacific region, where the company operates, is a significant and emerging market for oilseeds and non-GMO foods. The company's expansion plans in Queensland aim to capitalize on the region's oilseed production potential and address the lack of local processing infrastructure, positioning itself as a major player in the APAC cold-pressed oil market.

Comparison to Industry Standards

• The company aims to become the largest cold-pressed producer in the Oceanic/APAC region by expanding its capacity to 160,000 metric tons per annum, up from 40,000 metric tons, which is a significant scale-up compared to its current operations.
• Australia produces 15-20% of the global canola seed trade, positioning the company well to supply Asia-Pacific markets, contrasting with Canadian canola oil which is mostly genetically modified.
• The company's cold-pressing method, which avoids chemicals and high heat, is presented as a healthier alternative to conventional oil extraction methods used by competitors, which often involve hexane and high temperatures that can create harmful compounds like Glycidyl Esters and 3-MCPDs.
• The new Emerald, Queensland plant aims to revive the oilseed industry in Central Queensland, a region that previously produced over 80,000 hectares of sunflower seed but now imports 30,000-40,000 tons of sunflower oil annually, indicating a significant local market opportunity for import substitution.
• The company's alignment with UN Sustainable Development Goals (SDGs) and focus on regenerative farming practices differentiates it from traditional agriculture systems that are described as degenerative and damaging to ecosystems.
• The company's current Cootamundra facility partially adopts renewable solar energy, abating 42.2 metric tons of CO2 per month, with a goal to become carbon neutral, which is a strong environmental commitment compared to industry norms.
• The company's products are certified Halal, Kosher, and Non-GMO Project verified, meeting specific quality and ethical standards that may provide a competitive edge in certain consumer segments compared to uncertified products.

Management Changes

Corporate Governance

Legal Proceedings

• Two litigation claims filed against subsidiaries Cowcumbla Investments Pty Ltd. and Cootamundra Oilseeds Pty Ltd. in the Supreme Court of New South Wales, related to a AUD$1.2 million related party loan with a former director. These claims were settled following repayment of the loan and an additional AUD$95,000 payment on June 1, 2023.
• The company acknowledges the risk of securities class action litigation, particularly against SPACs following de-SPAC merger transactions, and nuisance claims alleging misleading disclosures in proxy statements.

Related Party Transactions

• Related party loans owed to JSKS Enterprises Pty Ltd. (trustee of Gary Seaton Family Trust) with a 6% per annum interest rate, repayable within 12 months after year-end, with remaining principal due after 12 months.
• Related party loans owed to Energreen Nutrition Australia Pty Ltd. (controlled by Gary Seaton) with a 6% per annum interest rate, expected to be repaid in full within 12 months after year-end.
• Interest-free loan owed to CQ Oilseeds Pty Ltd.
• Purchases of seed from Energreen Nutrition Australia Pty Ltd. totaling AUD$12,651,382 for the year ended June 30, 2024, and AUD$7,222,239 for the nine months ended March 31, 2025.
• Sales of meals to Energreen Nutrition Australia Pty Ltd. totaling AUD$4,838,204 for the year ended June 30, 2024, and AUD$4,290,895 for the nine months ended March 31, 2025.
• Management fees paid to Energreen Nutrition Australia Pty Ltd. totaling AUD$312,000 for the year ended June 30, 2024, and AUD$264,000 for the nine months ended March 31, 2025.
• Purchases of seed from Sunmania Pty Ltd. totaling AUD$104,000 for the year ended June 30, 2024.
• Purchases of oils from Soon Soon Oilmills Sdn Bhd. totaling AUD$723,714 for the nine months ended March 31, 2025 (Gary Seaton has a 20% share).
• Promissory notes issued to American Physicians, LLC (shareholders from the Sponsor of EDOC) totaling USD$450,000 (First Promissory Note) and USD$500,000 (Second Promissory Note) on March 21, 2024, with accrued interest.
• Conversion of JSKS loan amounting to AUD$4.9 million to 4,452,479 shares at USD$0.7241 per share, executed and shares transferred on May 22, 2025, to meet the Shareholder equity requirement of USD$10,000,000.

Stakeholder Impact

• **Shareholders:** Face significant dilution risk from potential future equity issuances (Arena ELOC, PIPE debentures) and the conversion of related party loans into shares. Existing shareholders' economic and voting interests will be diluted. The ongoing Nasdaq delisting threat poses a substantial risk to liquidity and share price.
• **Employees:** The company aims to attract, recruit, and retain a sizeable workforce for growth, indicating potential job opportunities. However, financial instability and the need to control costs could impact employee benefits or job security.
• **Customers:** New supply contracts with major supermarkets (Costco, Woolworths, Coles) indicate increased product availability and market penetration. The company's commitment to chemical-free, non-GMO, and sustainable products caters to growing consumer demand for healthier options.
• **Suppliers (Farmers):** The company's dependence on grower-supply contracts with local and regional farmers for oilseeds provides a stable market for their produce, especially those committed to sustainable farming. However, disruptions in supply (e.g., weather) could impact these relationships.
• **Creditors:** The company is in a net current liability position and has incurred losses, raising concerns about its ability to meet financial obligations. The reliance on drawing down additional long-term debt and potential capital raises is critical for its going concern status, impacting creditor risk.

Next Steps

• Company to actively monitor its performance to regain compliance with Nasdaq's $1.00 minimum bid price rule by November 24, 2025.
• Company to appeal Nasdaq's delisting determination regarding minimum stockholders' equity by requesting a hearing before the Nasdaq Hearings Panel, with an oral hearing scheduled for July 22, 2025.
• Company to submit any supplemental information to the Nasdaq Hearings Panel by July 2, 2025.
• Company to continue construction of the new crushing and production plant in Emerald, Central Queensland, with groundbreaking expected in Q1 2025 calendar year and construction from January 2025 to December 2026.
• Company to continue efforts to raise AUD$8 million to AUD$11 million in equity funding for the new Queensland plant.
• Company to potentially draw down additional US$6 million of redeemable debentures from existing PIPE investors or utilize the US$50 million equity line of credit (ELOC) for financing requirements.
• Company to continue implementing its remediation plan to address material weaknesses in internal control over financial reporting.

Key Dates

Recommendation

Keywords

Oilseeds, Cold-pressed oil, Non-GMO, Sustainable agriculture, Edible oils, Protein meals, Australia, Nasdaq listing, SEC filing, S-1/A, Financial results, Liquidity, Capital raise, Business combination, SPAC, Corporate governance, Risk factors, Food industry, Agricultural products, Supply chain, International Financial Reporting Standards, IFRS