Baywood Reports Results for First Quarter 2004

SCOTTSDALE, Ariz., May 12, 2004 /PRNewswire-FirstCall via COMTEX/ -- Baywood International, Inc. ("Baywood") (BYWD) , a nutraceutical company specializing in the development, marketing and distribution of its own brands into retail channels, today reported unaudited financial results for the three months ended March 31, 2004.

Net sales for the three months ended March 31, 2004 were $527,443 compared to $544,392 for the same period last year, a decrease of $16,949 or 3.1%. While the Company experienced a decrease in sales in the first quarter of 2004 due to the lingering effect of reduced consumer spending during 2003, the Company is now seeing a marked improvement in the second and subsequent quarters of 2004. Along with the successful repositioning of specific products within the Company's Complete La Femme(R) line, this is attributable to increased demand for the Company's products in the domestic market as well as the introduction of new products into international markets, particularly through the Company's exclusive distributor, Hong Kong Trustful Pharmaceutical Company Limited.

The Company's gross profit for the three months ended March 31, 2004 was $250,820, or 47.6%, compared to $274,001, or 50.3%, for the same period last year. The decrease of 2.7% in gross profit margin for the three month period ending March 31, 2004 is primarily due to the slightly higher mix of sales in the three months ended March 31, 2004 into the international market where margins are typically lower. In any particular quarter, variation in sales mix of higher margin products into the domestic market as opposed to a sales mix of international sales where margins are typically lower, may affect margins, but are not, in management's belief, indicative of general pricing pressure on the Company's brands in the marketplace.

Selling, general and administrative expenses for the three months ended March 31, 2004 were $353,397 compared to $376,509 for the same period last year, a decrease of $23,112 or 6.1% for the three months. The decrease in general and administrative expenses is mainly attributable to the reduction in certain corporate expenditures resulting from further cost efficiencies implemented throughout the Company.

Net loss for the three months ended March 31, 2004 was $(118,208), or less than $(.01) per share, compared to a net loss of $(116,620), or less than $(.01) per share, for the same period last year.

Neil Reithinger, Baywood Chairman, President & C.E.O., commented, "As we head into the second quarter of this year, we are pleased to see the demand for our products improving so that we can affirm our expectation of solid growth for 2004. While it continues to be essential that we fulfill the growth potential of our products into the marketplace, we are particularly pleased that we have achieved a scalable operational environment that will be able to support increasing levels of sales without further operational spending."

About Baywood:

Baywood International, Inc. is a nutraceutical company specializing in the development, marketing and distribution of its own proprietary brands under the names Baywood PURECHOICE(R), Baywood SOLUTIONS(R) and Complete La Femme(R). The Company's products are distributed through independent and chain health food stores, pharmacies, grocery stores, and other direct-to-consumer channels both internationally and domestically. Contact Baywood International, Inc. at 1-888-350-0799 or for more information visit www.bywd.com.

This press release may contain forward-looking statements, made in reliance upon Section 21D of the Exchange Act of 1934, which involve known and unknown risks, uncertainties or other factors that could cause actual results to differ materially from the results, performance, or expectations implied by these forward-looking statements. The Issuer's expectations hi len among other things are dependent upon general economic conditions, continued demand for its products, the availability of raw materials, retention of its key management and operating personnel, as well as other uncontrollable or unknown factors which are more fully disclosed in the Company's Form 10-KSB's and 10-QSB's on file with the United States Securities and Exchange Commission.

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