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S&W Seed Company (NASDAQ:SANW)

Discussion Regarding Stevia Sourcing Agreement Signed With PureCircle Conference Call

August 2, 2010, 4:15 PM ET

Executives

Dodi Handy – IR & Public Relations for S&W Seed Company; CEO - Elite Financial Communications Group

Grover Wickersham – Chairman – S&W Seed Company

Analysts

Ron Tracy – Paulson Investment Company

Ian Gilson - Zacks Investment Research

Keith Gil – Paulson Investment Company

Jim Wasserman – Sacramento Bee

Operator

Ladies and gentlemen, thank you for standing by and welcome to the S&W Seed Company conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. If you have a question, please press the star followed by the one on your touchtone phone. Please press star, zero for operator assistance at any time. For participants using speaker equipment, it may be necessary to pick up your handset before making your selection. This conference is being recorded today, August 2nd, 2010.

I would now like to turn the conference over to our host, Dodi Handy. Please go ahead.

Dodi Handy

Hello, ladies and gentlemen, and thank you very much for joining us this afternoon. The purpose of today’s call is to discuss S&W Seed Company’s recently announced stevia sourcing agreement with PureCircle Limited. In view of the fact that S&W’s Chairman has been running point on this stevia opportunity, he has kindly agreed to share his time today to help us all better understand why this is an exciting opportunity for the Company.

As Alicia, our operator, noted, my name is Dodi Handy. I am President and CEO of Elite Financial Communications Group. My firm has the privilege of managing strategic corporate communications for S&W.

Once I cover the Safe Harbor Statement, I’m going to be joined by Mr. Grover Wickersham, Chairman of S&W Seed; and then Grover and I will engage in an informal discussion related to the Company and the stevia opportunity. Then, after we cover several key points, we will have Alicia again provide you with instructions on how to queue into the question and answer period. Now, during the Q&A, I would ask that you restrict your questions to the discussion on stevia. When the Company announces its year-end results, we will be hosting a call with the entire management team, who will be on hand to cover a much broader spectrum of the Company’s operating activities at that time. But, for today, if you would, let’s just stick to stevia.

First, however, allow me to remind you that on this afternoon’s call, we may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results, or strategies, and are generally preceded by words such as “may,” “future,” “plan” or “planned,” “will” or “should,” “expected,” “anticipates,” “draft,” “eventually,” or “projected.” You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risk that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the Company’s prospectus, which is dated May 3rd, 2010, and other filings made by the Company with the Securities and Exchange Commission.

So, with that said, I’d now like to welcome S&W Chairman, Grover Wickersham, to our call. Hi, Grover. Thanks so much for agreeing to talk with us today.

Grover Wickersham

Oh, hi, Dodi. Thanks a lot for hosting the call and thanks to everybody else who’s taken the time to listen in.

Dodi Handy

Well, Grover, let’s talk about stevia. What is it and why did S&W elect to undertake a plan to bring commercial-scale production of this plant to the United States?

Grover Wickersham

Okay. Well, just a little background first. S&W Seed’s been around for over 30 years. It’s a profitable alfalfa seed company and it historically has been a major wheat processor for the Middle East—and is based in California and the Central Valley. We have been working with the general partners of S&W and trying to transform it from a small seed company into an industry player, using it as a platform, and we knew we needed to build upon our existing base. So, a few years ago, we began investigating potential new crops that are grown elsewhere around the world that could also be grown in California—and that’s just part of our overall plan, which is to try to put additional products—agricultural products—through our Five Points facility.

Then, in December of 2008, the FDA approved the use of stevia for use as an ingredient in food and beverage products. It had been around for, well, 200 or 300 years, but until 2008, it was not GRAS—which stands for Generally Recognized As Safe—and so, it had to get that designation before it could be generally marketed. On the cusp of the Obama administration taking over, the FDA approved the use of stevia for use as an ingredient in food and beverage products. And the primary component of stevia that’s used today—you know, this is kind of a developing area; there are other components that are being considered—but the primary component is Reb A, and that’s extracted from the stevia leaf, and it’s an all-natural, zero-calorie sweetener—it’s up to about 300 times sweeter than sugar. It is similar in intensity to aspartame and Splenda, with the difference being that instead of being a chemical product, it’s actually a natural product.

So, manufacturers started introducing stevia in the States as a tabletop sugar substitute. It’s also in a broad range of food and beverages, and there’s been a very substantial amount of growth. In 2007, the entire production of stevia products was about $10 million. Mintel reported that it grew to be a $100 million industry in 2009, and they’re now forecasting that it’ll be $2 billion by the end of 2011 and beginning of 2012 timeframe.

Stevia leaf is currently grown almost exclusively in the developing world. We’ve recognized, based on studies that were done by one of our consultants when he was on the faculty at UC Davis 30 years ago, that stevia could be successfully grown in California. We coupled that with the fact that the largest consumption of stevia is the US food and beverage manufacturing industry. So, we wanted to participate in this market. We thought stevia was going to potentially take off because American consumers like all-natural products as opposed to something like aspartame that’s petrochemical-based. In looking at the industry, nobody had really engaged in the large-scale farming of stevia. So, we have chosen to come in literally at the bottom of the food chain because we see an opportunity to produce the raw material. It falls neatly into S&W’s area of expertise, which is growing agricultural products.

Dodi Handy

For clarity, Grover, stevia is not currently being grown in the United States?

Grover Wickersham

Well, I mean, on a small scale, it’s been around for a while. Dr. Clint Shock at the University of California, who is one of our key advisors, was writing papers on it regarding growing in California more than 30 years ago—but it’s not been cultivated on a meaningful commercial scale. And most of the production is in the developing—I mean, I’d say 99% of the production is in the developing world. GLG, the biggest competitor of PureCircle, stated in their prospectus that they had over 200,000 farmers in China that were growing stevia. And that’s pretty much where—I mean, the statistics vary, but 70 to 80% of stevia is grown in China. And again, it’s done by very, very small farming operations with individual farmers.

The stevia plant is also grown—it originated in Paraguay— in Paraguay, Thailand, Indonesia and Kenya. I can’t say for a fact because we haven’t monitored it, but we believe that there are probably larger organizations in those countries that are looking at growing it on a larger scale—but to the best of our knowledge, it is, by California standards, grown on a very small scale.

Dodi Handy

Okay. Let’s talk about PureCircle and your new relationship with them.

Grover Wickersham

Okay. What would you like to know?

Dodi Handy

Well, first, tell us who PureCircle is and why you have elected to partner with them.

Grover Wickersham

PureCircle is really the Rolls-Royce or the Mercedes of the stevia industry, in our view. I mean, they’ve really pioneered it. They’re the world’s leading producer and the leading marketer of high-purity stevia products and they’ve become the stevia supplier of choice for leading global food and beverage manufacturers. They also have a vertically integrated supply chain, and they’re also doing some very innovative work with Michigan State University to improve stevia. They’ve also created the Global Stevia Institute and—so I think it’s safe to say everyone agrees that they’re in a leadership position.

They are a public company—they trade on the London Stock Exchange under the symbol PURE—P-U-R-E. I checked on the capitalization this morning—it’s about a half billion dollar. Their earnings in 2009 were about $11 million on $60 million in sales. They are a significant company and they’re very well backed. Olam is one of their largest shareholders. Olam is similar to Archer Daniels Midland of Asia, if you will. It’s traded on the Singapore Stock Exchange and has $120 million invested in PureCircle.

So, PureCircle is a real quality company with very high-quality backing. And we approached them with the idea that there was strategic value to producing stevia in the United States and that California was the place to produce it. They were in the process of reaching that conclusion themselves, so the timing was excellent and we’re real happy to be teaming with them.

Dodi Handy

Can you share with us some food and beverage products that PureCircle is currently supplying the stevia-Reb A to – some companies that we may recognize?

Grover Wickersham

PureCircle has about 150 new products being launched globally in 2010 alone, and their stevia is already in a lot of products. One of the good things about stevia is you can use it to naturally sweeten a lot of different products — it can be used as a tabletop sweetener, and in yogurts, beverages, that sort of thing. But unlike other competitive sweeteners, there are not the same problems with heat so you can put it into baked goods.

As far as the actual products, there’s zero-calorie SoBe Lifewater, which is kind of like a vitamin water, and there’s Tropicana 50—or it’s Tropicana 50/50 or Tropicana 50—which is—again, it’s all-natural. Odwalla has got some products with stevia in it. I mean, it’s a way that you can get calorie reduction but still stay natural, so—.

Dodi Handy

Okay. What stevia supply sources does PureCircle currently rely on, and do you envision that S&W could become a major supply source for them in the years ahead?

Grover Wickersham

Yes, we want to be. PureCircle has direct relationships with people all over the world. I think they came out with a press release today that talked about S&W, but also talked about Paraguay and Kenya. They’re in China, Thailand, Paraguay, Kenya, Indonesia, and I believe they have direct sourcing agreements with companies in the developing world. However, I believe we’re the only one in the United States and we’re hoping we can keep it that way.

As for stevia leaf consumption, I think they’re also buying a significant amount of stevia leaf on the market in China through middlemen. And so, that gives us a lot of comfort; if we can become a large-scale producer, as planned, we would then be able to supply PureCircle with all the stevia they require.

Dodi Handy

Okay. So, let’s talk a little bit about the actual mechanics of the relationship. I mean, what is actually going to happen? S&W is going to grow the stevia leaf, dry and process it, and then deliver it to PureCircle? And then they turn around and sell it to their customers—these food and beverage manufacturers?

Grover Wickersham

Yes, that’s correct. It’s very similar to the model that we use in our alfalfa business – or our wheat, or any other agricultural product that we elect to market. We find the finest varieties that we can, we develop them internally, in lots of cases, whatever the product. And then we have a grower base of 15 different farms and we contract with those farms to grow products for us. And we process the product and then sell it back into the marketplace. In this case, we would be selling to PureCircle.

Dodi Handy

Okay. Can you share any details relating to the actual revenue that is expected to result from this five-year agreement? Because you noted in the release that you expect to deliver up to—I believe it was 1,000 metric tons of dried stevia leaf to PureCircle in just the first two years. So, can you quantify that in terms of the actual revenue?

Grover Wickersham

As you might imagine, there’s a lot of commercial sensitivity and competitive sensitivity on that information and we’re applying for a confidentiality request on some of the terms of the contract. It’s important to note that the pound figures that we reported in the release, and the ton figures that we used are minimums. There is no contractual limitation on how much we produce. We see this as a growing market. If we can commercially produce stevia on the volume basis that we think we can, then we will ramp up as quickly as possible.

I think we’re able to do that because right now we’re running trial programs with one of our big growers and we’re identifying the best varieties. When we get to the point where we can go out to our other growers on a large scale – they have a lot of real estate that’s available for farming – so we should be able to ramp up quickly. But it’s really premature for us to give any guidance as to the amount of actual pounds that we expect to be producing.

Dodi Handy

Okay. Now, I know that when you were roadshowing for your initial public offering this past spring, there was some discussion regarding entering the stevia business, but it was further out than now, wasn’t it?

Grover Wickersham

Yes. Actually, it’s a point of a lot of personal satisfaction for me because, you know, on the roadshow there’s usually someone in the audience who specializes in being a Doubting Thomas. So, one of the comments I constantly received regarding stevia was that it seemed to be more a pie in the sky opportunity. My response to that was always, yes, it’s a big pie in the sky. And there was a lot of comments about, you know, if you grow it, will they come? And so, it’s very gratifying to me that, this early in the game, we actually have the largest industry player in the world, and the most respected, that is putting advance orders in for the stevia leaf that we are growing.

So, I think that in terms of being ahead of schedule, we’ve always felt that it’s better to underpromise and exceed your promises—or underpredict. I’m very gratified that we’re able to announce this major contract as early as we are.

Dodi Handy

Okay, Grover. Well, that completes all of my questions.

Why don’t we have Alicia give our call participants the instructions again on how they can ask you some questions of their own? Alicia?

Question-and-Answer Session

Operator

Thank you, ma’am. We will now begin the question and answer session. As a reminder, if you have a question, please press the star followed by the one on your touchtone phone. If you would like to withdraw your question, press the star followed by the two. And if you’re using speaker equipment, you will need to lift the handset before making your selection.

And our first question comes from the line of Ron Tracy with Paulson Investment Company. Please go ahead.

Ron Tracy - Paulson Investment Company

Yes. Hi, Grover.

Grover Wickersham

Hey, Ron.

Ron Tracy - Paulson Investment Company

My question is how does it compare to agave—A-G-A-V-E?

Grover Wickersham

Well, that’s also a natural sweetener like sugar but it’s, on a calorie basis—I don’t know the exact comparison to sugar—but it’s—as I understand it, very close to cane sugar in terms of calories. You’re asking the wrong person on that. Nonetheless, I believe that agave is not a non-calorie sweetener.

Ron Tracy - Paulson Investment Company

Yes, and it’s only 25% sweeter than sugar. I think what you need to really emphasize in here—and you’ll notice it on a lot of—Post, Kellogg has been announcing it on their raisin bran, which I picked up over the weekend—says it contains no high-fructose corn syrup. And I think what people have to realize is that that’s the cheapest sweetener we know of, and the problem is it raises your blood sugar so damn high, and that’s where you get all the problems with the body, when you have these spikes, and it affects everything.

Grover Wickersham

Oh, yes. And I’d just add to that is that it’s recommended, because of the glycemic index, with stevia—I mean, it’s recommended for diabetics, and we see that as a highly attractive area for the product.

Ron Tracy - Paulson Investment Company

Well, people that are in the know and worry about their health, everyone’s trying to get away from high fructose and stevia is certainly a great substitute for that. And I think that’s going to increase the market and it’s going to be much healthier for people, so—.

Grover Wickersham

Well, there are people—in fact, PureCircle was recently in Chicago for a big industry conference. They announced some products that have combined cane sugar and stevia that would be used by manufacturers in baked goods and in beverages. And a lot of them like the idea that you can combine cane sugar with stevia if you’re working on the flavor of a product; or sometimes sugar is needed in a product as a binder—but stevia is all-natural and you don’t have the corn syrup problem.

Ron Tracy - Paulson Investment Company

Okay. Where is it on price points and margins in comparison to—?

Grover Wickersham

Well, I mean, that’s not really our business. Our business really is to grow the leaf as inexpensively as we can and sell it for the highest possible price. My understanding is that they have products that they’re developing that are price-competitive with sugar.

Ron Tracy - Paulson Investment Company

Well, that’s what it needs to be to, you know, to be successful on the numbers that they’re really hoping for. I mean—.

Grover Wickersham

Well, I think that’s the goal— to have a price competitive with sugar. I can’t tell you—I mean, you’re asking the wrong guy. Again, we’re at the bottom of the stevia food chain—the guys at the top know what the ultimate sales price is compared to sugar. But I do believe that they’re there or close to there.

Ron Tracy - Paulson Investment Company

Okay. Excellent. Thank you.

Dodi Handy

Thank you, Ron.

Operator

Thank you. Our next question comes from the line of Ian Gilson with Zacks Investment Research. Please go ahead.

Ian Gilson - Zacks Investment Research

Good afternoon. I actually have six questions, all of which are related. So, I can ask them one at a time, or all six, and you can answer them one at a time.

Grover Wickersham

If I get all six, Ian, do I get a bonus question?

Ian Gilson - Zacks Investment Research

Well, five and you get a bonus question.

Grover Wickersham

Okay. Well, I’m fine with all six unless we have a lot of people queued up, but—.

Ian Gilson - Zacks Investment Research

Okay. When you talk about the first two years of the agreement, what is that year? Is that a fiscal year? A calendar year? Or if the contract was signed in July, is it a July-to-July year?

Grover Wickersham

Calendar.

Ian Gilson - Zacks Investment Research

Calendar year. Okay.

Grover Wickersham

And Matt, you’re on the line if I make a mistake on any of this. Or Debbie—.

Dodi Handy

No, Matt’s not conferenced in with us.

Grover Wickersham

Is Debbie on the line?

Dodi Handy

No, she’s just listening as well.

Grover Wickersham

Oh, okay. My understanding is it’s a calendar year.

Ian Gilson - Zacks Investment Research

Okay. Now, what is the planting schedule to meet the metric ton target?

Grover Wickersham

Well, we have stevia in the ground right now but not on a large scale. Stevia is planted in the spring and in the fall, so we would be looking to plant it fairly aggressively this fall.

Ian Gilson - Zacks Investment Research

How many acres will you require and will that require a large number of your farmers on the contract?

Grover Wickersham

Okay. That’s a good question. First of all, acreage is a function—acreage versus end product is totally a function of yield. And we’re at the stage right now where we’re trying to determine exactly how many pounds that we can produce per acre. But I can tell you that in China, from what we understand, the non-irrigated stevia is an annual. One of the reasons we like stevia in California is we think we can get five years out of one planting; because of the weather in China, they get one year. But out of one-year production, they get, I am told—and this information comes from PureCircle—around 4,000 pounds of leaf per acre. But that’s not irrigated, and our hope is to exceed that—greatly exceed that – in California. But again, I’d caution anyone on the call that we’re still trying to determine exactly what our production would be.

We do have a history with other people who have grown stevia that our people have worked with, and we also have Dr. Shock, the leading scientist in the world on stevia—as far as stevia in California is concerned, as our advisor. But whether we get 5,000 pounds or 6000 or more, I don’t know, we’ll have to see. But you can kind of work back from those acreage numbers, the yield numbers and—.

Ian Gilson - Zacks Investment Research

Okay, but is that 4,000 pounds per acre of dried leaf?

Grover Wickersham

That’s correct. You actually get—it’s about a three-to-one ratio. To get 3,000 pounds of leaf, you need around 9,000 pounds raw—at least in the varieties that we’re familiar with. When I told you that the production in China is 4,000 pounds per acre, I was referring just to the leaf. That would equate to about 12,000 pounds of plant material.

Ian Gilson - Zacks Investment Research

Okay. You have mentioned in the prospectus the fact that going into the stevia production would increase your cost structure somewhat in the early years. Will you be needing to make any capital expenditures to meet the targets for PureCircle?

Grover Wickersham

Well, our costs, really, are similar to the breeding programs that we’ve got with alfalfa seed where you have to hire the best people you can find; you have to get some experience in the ground and develop your best selection of varieties where you get your highest possible production. And that’s all upfront, so that is an upfront cost. And, to a certain extent, the faster you want to expand, the more cost you incur. We’re not issuing any projections, but I can confirm that we are making an upfront investment in that regard, as noted in the prospectus.

As far as capital, there is some processing equipment that’s required for us to get the leaf into the form that PureCircle wants it—you know, dried and packaged. We’ve got the processing facility at Five Points and so we’re starting ahead of the game in that regard. But there’s also specialized harvesting equipment, so there would be some capital costs there. But again, we haven’t quantified that, yet.

Ian Gilson - Zacks Investment Research

Okay.

Dodi Handy

Publicly, you mean.

Ian Gilson - Zacks Investment Research

When would you expect to harvest in quantity?

Grover Wickersham

Well, we’re working with different varieties. I mean, we’ve scoured the world. Again, we’re trying to be PureCircle’s new best friend because we view them as the lead industry player, and we like the guys personally there a lot, we like working with them. And so, our guys have traveled all over the world with them looking at varieties—in Paraguay, and we’ve spent some time in India and gone to a few exotic places like Michigan (laugh)— we’re really trying to identify the best varieties.

Now, in terms of number of cuttings, which I think is really the question—it looks like alfalfa – basically alfalfa that’s being grown for seed. The stevia plants get up to that same height. Hopefully in two or three years we’ll get a lot more leaf material than others are getting with just one season. But each variety is slightly different. I mean, there’s some varieties that you harvest once a year and there are others that you harvest once a month. I think the ones that we’re looking at with PureCircle, will require two to four cuttings per year.

Ian Gilson - Zacks Investment Research

I understand that the concentrations are—they increase over time. So, if you were cutting four times a year, would that not be a lower concentration of Reb-A in plant leaf?

Grover Wickersham

No, it really depends—again, variety, variety. I haven’t really heard that it increases over time. In fact, it’s sort of tricky. It’s not tricky like alfalfa seed, which is an amazingly hard product to grow, but there are certain things that would have to be done in order to preserve the Reb-A. For instance, you’ve got to avoid the plants drying out too much right when you harvest them. I believe our agronomist is listening in on the call, but I’m not sure I want to take everybody’s time on that question. We can answer some questions. As long as we’re not giving away competitive secrets, we’re glad to discuss general agronomy on stevia.

But I think, you know, the key thing there, Ian, is that if we can get the right balance between high production of leaf and high concentration of Reb-A, then that’s where, as a grower, you hit the sweet spot. And then if we can go to all of our farmers and lay it out to them, provide them with the plants to grow where they are—then we do hit that sweet spot—that’s our goal.

Ian Gilson - Zacks Investment Research

Okay. And for your bonus question, you’re actually underestimating the number of pounds? Because there’s 2,205 pounds per metric ton.

Grover Wickersham

Okay—2,205—okay, great. Well, I appreciate that.

Ian Gilson - Zacks Investment Research

You're welcome. Thank you.

Grover Wickersham

Well, thank you, Ian. Good to talk to you.

Operator

Ladies and gentlemen, if there are additional questions at this time, please press the star followed by the one on your touchtone phone. As a reminder, if you are using speaker equipment today, you will need to lift the handset before making your selection.

And our next question comes from the line of Jim Wasserman with The Sacramento Bee. Please go ahead.

Jim Wasserman - The Sacramento Bee

I just wanted to touch base on the national figure here for—I think I saw it reported somewhere that, like, 10% of the market is now using stevia as a sweetener—10% of the food and beverage industry? Does that ring roughly correct?

Grover Wickersham

You know, again, I’ve got to defer to PureCircle on that. I have heard that it’s anticipated to be 10% in 2010 by year-end. But, again, I don’t personally have any firsthand information on that, Jim.

Jim Wasserman - The Sacramento Bee

Okay. And just one quick follow up. It seems like you were kind of hedging on some of the—what you were calling competitive information. But I was just wondering, you know, in terms of price per pound, what farmers might receive for growing that? I mean, just sort of a ballpark range of—.

Grover Wickersham

Well, yes, see, that’s very, very tricky—I appreciate that’s a question everyone, including our competition, wants to know. Because if you take a yield estimate and then you can make estimates on what it’d cost to plant it, and then you end up with a profit forecast, and it’s very sensitive from a competitive standpoint. I understand that it’s in a 60 to 70—even maybe a bit higher—range on the market in China, but that’s just speculation.

Jim Wasserman - The Sacramento Bee

Per pound?

Grover Wickersham

Yes.

Jim Wasserman - The Sacramento Bee

Okay.

Grover Wickersham

I know it’s less than that in Paraguay, but in Paraguay the growers are supplied with plants and that’s a big part of the cost, so that doesn’t necessarily equate.

Jim Wasserman - The Sacramento Bee

Okay. Well, thanks.

Grover Wickersham

Let me say this, though, Jim. Our feeling is that the processors ought to pay a premium price for stevia grown in California. I mean, there’s a consumer perception that California is better because it’s much better regulated and there are lots of really positive things about the California name with agriculture. And the other aspect is that California is famous for taking—say, in cotton, taking varieties like pima and getting a premium price for them because they get the most they can out of the plant with the incredible California climate. We’re really excited about the opportunities for the California farmer with stevia.

I mean, this whole plan that we’ve got only works if we can demonstrate that this is a profitable crop to grow in California, and we’re excited about that. We think it’s very well suited to California because—it’s like the story of the three bears—China is too cold and they only get one growing season, and other places are actually too hot, where you don’t get the dormancy that you get in California—where you get a winter but it’s a very mild winter. It would take a very heavy frost to kill—that you normally don’t get in California—to kill the plant, so that the plants actually come back stronger due to the dormancy. So, it’s kind of like the best of all worlds, and that is true not just with stevia— that’s true with lots of crops grown in California, like almonds, for example—there are lots of crops where you look to California as basically the best place in the world to grow them.

Now, we do think that with the growing conditions in California, we can get California farmers—starting with our 14 farms that we have worked with for the last 30 years at S&W—jumping on the bandwagon. And there’s no reason why all the stevia used by PureCircle for its US production shouldn’t come from the United States. We believe we can do that. But, subject to all the disclaimers, we’re at the early stage. It is gratifying that we won over the support of PureCircle for this plan that we have developed.

Jim Wasserman - The Sacramento Bee

All right, thank you.

Dodi Handy

Thank you, Jim.

Operator

Our next question comes from the line of Ron Tracy with Paulson Investment Company. Please go ahead.

Ron Tracy - Paulson Investment Company

Hi, Grover. I just have a quick question. Your seeds aren’t geo-engineered at all? They’re all-natural, is that correct?

Grover Wickersham

No, we were recently joking that—because Roundup Ready alfalfa is kind of the big thing and a big controversy with Monsanto with alfalfa—we’d come up with Roundup Ready stevia. But no, none of it is GMO.

Ron Tracy - Paulson Investment Company

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Keith Gil with Paulson Investment Company. Please go ahead.

Keith Gil - Paulson Investment Company

Hi, Grover. Good afternoon. Congratulations on the news.

A couple of quick questions regarding Reb-A content. What would it be in the plants that you have and what would be the percent of Reb-A—the goal—of your breeders?

Grover Wickersham

Well, there’s a 6% minimum threshold that is generally considered industry-wide to be commercial. I believe that is the figure that’s out there internationally.

It would be premature to give you any numbers on what we are developing here in California with our breeding program, but we’d like to try to improve the plant, come out with improved varieties where we maximize the Reb-A.

You know, the interesting thing, too, though, Ron, is that they’re actually—.

Keith Gil - Paulson Investment Company

Keith.

Grover Wickersham

Looking at other ingredients like Reb-C, and I believe in Reb-D—I mean, I don’t know how many Rebs there are—but there’s something like 150 organic compounds in stevia. And so, PureCircle is really the leader in this—they’re looking at different compounds—and this has all been announced publicly—they’re looking at different compounds to improve the flavor profile.

So, I would say yes, we’re focused on Reb-A, but that could easily change. It could become a dual focus or there could be a focus on other ingredients. So, we try to stay on top of that as much as possible because we don’t want to have a whole lot of Reb-A in a Reb-C world. We want to know exactly where the market’s going and try to be there when it gets there.

Keith Gil - Paulson Investment Company

Thank you.

Operator

Thank you. Our next question comes from the line of Ian Gilson with Zacks Investment Research. Please go ahead.

Ian Gilson - Zacks Investment Research

Yes, a quick follow up. Where are you going to deliver the leaf to?

Grover Wickersham

Well, at this point, it’s ultimately going to China because that’s where—we technically probably deliver at the Port of Stockton, but it’s currently going to China because that’s where PureCircle has their processing.

Ian Gilson - Zacks Investment Research

And do you happen to know if they have plans to produce product and process the leaf in this country?

Grover Wickersham

Well, they haven’t let me in on their plans. They’re not in Europe yet—nobody’s in Europe except for in France; and the EU hasn’t opened up its markets to stevia, which is really interesting because that could represent a potential big upgrade in the amount of demand when that happens. But, currently, the largest single market is the United States. It would make sense to process it in the United States if they could grow it in the United States, I would think.

Ian Gilson - Zacks Investment Research

Thank you.

Operator

Thank you. Ladies and gentlemen, if there are any remaining questions, please press the star followed by the one on your touchtone phone at this time. As a reminder, if you are using speaker equipment, please lift your handset before making your selection. One moment, please.

And I show no further questions at this time. I’d like to turn the conference back to Ms. Handy for closing remarks.

Dodi Handy

Great. Thank you very much, Alicia.

Before we officially call it a day, Grover, would you like to make any closing comments?

Grover Wickersham

Well, I’d just like to thank everybody for their interest in S&W. The Company is doing what it can to perform on the business side and letting the stock go its own course. I did notice that PureCircle came out with a press release on stevia today, and I was quoted in the press release, and their stock traded two million shares today in London—that’s four times the three-month daily average—and the stock’s up 10%. So, when we announced this last week, our stock went down and we traded 400 shares.

So, I don’t know. I mean, I believe that there’s a disconnect here. I think at some point we’re going to get some of the spillover effect—it may be that we’re perceived primarily as an alfalfa seed company and there aren’t a lot of alfalfa seed industry analysts. We’re just going to do the best job we possibly can to use S&W as a platform for opportunities like stevia. Stevia’s what we’ve got on the front plate right now, as well as trying to maximize our long-term businesses – that being processing wheat, barley and other grains, and also producing alfalfa seed. We’re going to keep trying to grow our long-term base and focus on exciting opportunities like stevia, and just hope that we get more interest developing out there in the marketplace.

But anyway, thanks very much—I sure appreciate the fact that so many of you have taken time out today to join us. And feel free to call me or call Mark Grewal or Matt Szot if you’ve got any questions. And thanks again.

Dodi Handy

Thanks, Grover. I’d like to remind everyone, if you would like to receive ongoing information about S&W Seed Company, please call Elite’s offices. Our phone number is area code 407-585-1080, or you can reach us via e-mail at sanw@efcg.net.

So, with that, I’d like to wish everyone a great evening. Thank you, again, Grover. Thank you.

Grover Wickersham

Thank you. Bye.

Operator

Ladies and gentlemen, this concludes the S&W Seed Company conference call. This conference will be available for replay after 6:15 Eastern Time today through November 2nd at midnight. You may access the replay system at any time by dialing 1-800-406-7325 or international participants may dial 303-590-3030 and enter the access code of 4342252 followed by the pound sign. Thank you for your participation. You may now disconnect.

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