Five Points, California, USA
May 16, 2011

S&W Seed Company (NASDAQ: SANW) today announced its fiscal third quarter results for the three and nine months ended March 31, 2011.

"Approximately one year ago this month, we began implementing an aggressive growth strategy focused on fully leveraging S&W's reputation, longstanding industry relationships and agricultural expertise to build a diversified Ag company of enduring value and substance. Volatile market dynamics at play during the past year have proven to be quite challenging for S&W's overall sales performance, resulting in declining revenues for the last several quarters. However, we remain confident that the investments we have made, and will continue to make, to implement and support planned growth initiatives should ultimately prove to be very rewarding for all S&W stakeholders," stated Mark Grewal, President and Chief Executive Officer of S&W.

"Steps we've taken to monetize underutilized capacity at our Five Points milling facility is but one example of how our early efforts are beginning to pay off," continued Grewal. "Sales growth in this area of our business has been pronounced in the past two quarters and is expected to gain greater strength and momentum as we continue to increase the number of independent growers and grain companies for which we clean and process seed and small grains. Moreover, our stevia program, which has been in development since fiscal 2010 and represented a notable portion of the increase in our overhead expenses, is poised to take flight with our first commercial scale planting due to commence within only a matter of days."

"Other strategic initiatives that are expected to contribute to S&W's future growth include our recently announced plan to farm our own crops, rather than strictly contracting alfalfa seed production to local growers. Through our lease of 800 acres of farmland in Kern County, we hope to participate in and financially benefit from the production, milling and sale of other profitable crops complementary to our core alfalfa business that may include wheat, safflower, sorghum and stevia," noted Grewal.

"Following its 2008/2009 market collapse, the U.S. dairy market is now showing signs of stabilizing, which bodes well for the strong recovery of the alfalfa hay market, and in turn, the demand for our alfalfa varieties from domestic growers in the upcoming fall planting season," Grewal added. "Further, early indications from our international distribution channels are suggesting that alfalfa seed sales to the Middle East and North Africa should continue to ramp-up measurably over the next six to nine months, particularly in view of the fact that seed pricing in Saudi Arabia is now on the rise. Our decision to protect our margins and storehouse our seed until market prices in Saudi rebounded should fuel strong and profitable seed sales growth for our Company in the coming year."

Concluding, Grewal stated, "S&W's plans to grow through strategic acquisition and joint ventures remain firmly intact. Our executive management team has been cautiously proceeding with due diligence and negotiations related to several possible transactions, and will continue to consider all new opportunities that may be presented to us."

Financial Highlights When Comparing Three Months Ended March 31, 2011 to Three Months Ended March 31, 2010:

• Total revenues declined 48% to $439,890 from $839,306.
• Revenues from seed milling services significantly increased, rising to $236,138 from $1,356.
• Revenues from alfalfa seed sales totaled $203,752, down from  $837,950. Similarly to what was reported in the first and second quarter periods, seed sales have continued to be challenged by the glut of low price, non-proprietary seed being sold in Saudi Arabia and the downturn in the U.S. dairy industry on which the alfalfa hay market is highly dependent.
• Due primarily to the increase in sales of higher margin milling services, gross profit margin on sales improved to 43% from 17%.
• Total operating expenses increased 100% to $753,179 from $375,899, due to higher expenses relating to the expansion of the Company's sales, marketing and support teams; increased investment in domestic advertising and marketing initiatives; ongoing investment in the development of S&W's new U.S. stevia initiative; ongoing costs of developing new alfalfa seed varieties; and the costs associated with becoming a fully reporting, publicly traded company.
• The net loss was $293,634, or $0.05 loss per basic and diluted common share, compared to a net loss of $204,589, or 0.07 loss per basic and diluted common share.

Financial Highlights When Comparing Nine Months Ended March 31, 2011 to Nine Months Ended March 31, 2010:

• Total revenues were $2,282,689, a 59% decrease from $5,500,504.
• Revenues from seed cleaning and processing climbed 51% to $883,198 from $586,442.
• Sales of the Company's alfalfa varieties decreased 72% to $1,399,491 from $4,914,062. The sales decline can be primarily attributed to a $2,764,340 decrease in sales to Genetics International, the Company's distributor who sells into Saudi Arabia.
• Gross profit margin on sales rose to 45% from 29%, due to the increase in higher margin sales of seed cleaning and processing services.
• For the reasons previously mentioned, total operating expenses increased 164% to $2,160,417 from $819,021.
• The net loss totaled $629,910, or $0.11 loss per basic and diluted share, compared to net income of $645,141, or $0.22 earnings per basic and diluted shares.

As of March 31, 2011, assets totaled $15.17 million; working capital was $11.45 million; there was zero long-term debt and stockholders' equity totaled $14.71 million.

For more detailed information regarding S&W's third quarter results for Fiscal 2011, please refer to the related 10-Q which will be filed with the U.S. Securities and Exchange Commission later today.

Full release

Website: http://www.swseedco.com/

Published: May 16, 2011