SUNWIN STEVIA INTERNATIONAL, INC. - Quarter Report: 2009 January (Form 10-Q)

suwn_10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly report ended January 31, 2009

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934

For the transition period from ________ to __________

Commission file number: 033-10456

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.

(Exact name of registrant as specified in charter)

NEVADA	56-2416925
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6 SHENGWANG AVE., QUFU, SHANDONG, CHINA	273100
(Address of principal executive offices)	(Zip Code)

(86) 537-4424999

(Registrant's telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [X]

(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X].

Indicate the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: As of March 12, 2009 there were 127,679,916 shares of the registrant's common stock issued and outstanding.

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

FORM 10-Q

QUARTERLY PERIOD ENDED January 31, 2009

INDEX

	Page
PART I-FINANCIAL INFORMATION

Item 1. Financial Statements	2

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3. Quantitative and Qualitative Disclosures About Market Risk	32

Item 4T. Controls and Procedures	32

PART II-OTHER INFORMATION
Item 1. Legal Proceedings	33

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3. Defaults Upon Senior Securities	33

Item 4. Submission of Matters to a Vote of Security Holders	33

Item 5. Other Information	33

Item 6. Exhibits	34

- 1 -

Index

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	January 31, 2009		April 30, 2008
	(Unaudited)		(Restated)
ASSETS

CURRENT ASSETS:
Cash	$	6,957,805	$	6,811,136
Accounts receivable, net of allowance for doubtful accounts of $498,422 and $467,415,
respectively		3,794,751		4,163,839
Inventories, net		7,930,095		4,707,044
Taxes receivable		24,385		-
Prepaid expenses and other assets		414,729		264,576
Total Current Assets		19,121,765		15,946,595

PROPERTY AND EQUIPMENT, net		16,894,517		14,151,293
LAND USE RIGHT		2,326,401		-
Total Assets	$	38,342,683	$	30,097,888

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	2,471,898	$	2,649,818
Loans payable		180,000		-
Advances from customers		-		12,726
Taxes payable		162,204		401,808
Due to related party		58,574		431,443
Total Current Liabilities		2,872,676		3,495,795

OTHER PAYABLES		157,496		154,207
Total Liabilities		3,030,172		3,650,002

MINORITY INTEREST		2,755,354		-

STOCKHOLDERS' EQUITY:
Common stock ($.001 Par Value; 200,000,000 shares authorized;		106,182		87,007
106,182,416 and 87,006,936 shares issued and outstanding at January 31, 2009 and
April 30, 2008, respectively)
Additional paid-in capital		21,646,893		17,218,066
Retained earnings		7,049,656		6,325,919
Deferred compensation
Subscription receivable		-		(372,900	)
Other comprehensive income - foreign currency		3,754,426		3,189,794
Total Stockholders' Equity		32,557,157		26,447,886

Total Liabilities and Stockholders' Equity	$	38,342,683	$	30,097,888

See notes to unaudited consolidated condensed financial statements

- 2 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months					For the Nine Months
	Ended January 31,					Ended January 31,
	2009			2008		2009			2008
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)

NET REVENUES	$	5,019,760		$	6,612,487	$	17,807,544		$	16,513,913
COST OF REVENUES		3,803,161			4,841,829		13,433,172			11,936,500
GROSS PROFIT		1,216,599			1,770,658		4,374,372			4,577,413

OPERATING EXPENSES:
Stock-based consulting expense		102,551			123,748		350,047			371,244
Selling expenses		477,020			627,361		1,399,375			2,026,164
General and administrative		569,590			399,656		1,696,560			1,105,442
Total Operating Expenses		1,149,161			1,150,765		3,445,982			3,502,850

INCOME FROM OPERATIONS		67,438			619,893		928,390			1,074,563

OTHER INCOME :
Other income (expense)		(365	)		60		417			1,126
Interest income		13,136			12,993		36,855			44,768
Total Other Income		12,771			13,053		37,272			45,894

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST		80,209			632,946		965,662			1,120,457

INCOME TAXES		(51,941	)		-		(218,541	)		-

INCOME BEFORE MINORITY INTEREST		28,268			632,946		747,121			1,120,457

MINORITY INTEREST IN INCOME OF SUBSIDIARIES		(19,996	)		-		(23,384	)		-

NET INCOME		8,272			632,946		723,737			1,120,457

OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain		69,335			958,207		564,632			1,677,527

COMPREHENSIVE INCOME	$	77,607		$	1,591,153	$	1,288,369		$	2,797,984

NET INCOME PER COMMON SHARE - BASIC AND DILUTED:
Net income per common share - basic	$	0.00		$	0.02	$	0.01		$	0.03
Net income per common share - diluted	$	0.00		$	0.02	$	0.01		$	0.03

Weighted Common Shares Outstanding - basic		98,907,210			87,006,936		90,984,845			86,845,567
Weighted Common Shares Outstanding - diluted		98,907,210			87,006,936		90,984,845			86,845,567

See notes to unaudited consolidated condensed financial statements

- 3 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months
	Ended January 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	723,737		$	1,120,457
Adjustments to reconcile net income to net cash (used in) operations:
Depreciation		1,197,515			774,154
Amortization of land use rights		21,495			-
Stock based consulting and fees		350,047			371,244
Minority interest		23,384			-
Allowance for doubtful accounts		20,964			(133,838	)
Changes in assets and liabilities:
Accounts receivable		446,076			(567,802	)
Inventories		(2,318,340	)		(3,075,086	)
Prepaid expenses and other current assets		(143,614	)		(126,443	)
Accounts payable and accrued expenses		(412,526	)		(929,531	)
Taxes payable		(233,234	)		-
Advances from customers		(12,952	)		26,161

NET CASH (USED IN) OPERATING ACTIVITIES		(337,448	)		(2,540,684	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in acquisition		410,704			-
Capital expenditures		(242,875	)		(593,303	)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		167,829			(593,303	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock option/warrants		-			713,153
Proceeds from short term loan		80,000			-
Proceeds from short term loan -- related party		100,000			150,000
Proceeds from related party advances		-			441,620
Payments on short term loan		-			(150,000	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		180,000			1,154,773

EFFECT OF EXCHANGE RATE ON CASH		136,288			730,725

NET INCREASE (DECREASE) IN CASH		146,669			(1,248,489	)

CASH - beginning of fiscal year		6,811,136			6,687,222

CASH - end of period	$	6,957,805		$	5,438,733

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	6,900		$	-

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING FINANCING ACTIVITIES
Issuance of common stock in connection with acquisition based on final purchase price	$	4,026,851		$	-
Issuance of common stock in connection with acquisition but cancelled based on final purchase price	$	2,173,562		$	-
Repayment of subscription receivable offset by forgiveness of liability	$	372,900		$	-

See notes to unaudited consolidated condensed financial statements.

- 4 -

Index

SUNWIN INTERNATIONAL NE UTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Sunwin International Neutraceuticals, Inc. ("we", "us", "our" and the "Company") was incorporated in 1987 in the State of Nevada. Substantially all of our business operations are conducted through our wholly owned subsidiaries; Qufu Natural Green Engineering Co., Ltd. a Chinese limited liability company and its subsidiaries ("Qufu Natural Green"), and Sunwin Stevia International Corp., a Florida corporation ("Sunwin Stevia").

Through Qufu Natural Green, with its principal offices located in Qufu, China we are engaged in the manufacture and sale of natural sweeteners (stevioside), traditional Chinese medicines, organic herbal medicines, other neutraceutical products and veterinary medicines prepared from organic herbal ingredients.

Qufu Natural Green was founded in 1999 and was re-registered in 2004 to amend its capital structure. Qufu Natural Green has three wholly owned subsidiaries also located in the PRC:

	·	Shengya Veterinary Medicine Co., Ltd.;
	·	Shengyuan Herb Extraction Co., Ltd.;
	·	Qufu Chinese Medicine Factory;

In addition in September 2008, Qufu Natural Green acquired a 60% interest in Qufu Shengwang Stevia Biology and Science Co., Ltd., (“Qufu Shengwang”) from Shandong Shengwang Group Co., Ltd., a Chinese limited liability (“Shandong Group”). Qufu Shengwang manufactures, sells and distributes stevioside based animal feed additives and fertilizers. Stevioside is a 100% natural sweetener extracted from the leaves of the stevia rebaudiana plant, a green herb plant of the Aster/Chrysanthemum family. Qufu Shengwang sells products in the provinces of Shandong, Heilongjiang, and Liaoning in China to farmers of vegetables, fruits, flowers, and livestock.

Under the terms of the acquisition, Qufu Natural Green acquired Shandong Group's 60% interest in Qufu Shengwang for $4,026,851. The purchase price represents 60% of the revised value of the net assets of Qufu Shengwang of $6,711,418 as of April 30, 2008. The net assets of Qufu Shengwang were further revised to account for a $698,115 decrease in the value of inventory and a $2,924,489 decrease in the value of intangible assets as of April 30, 2008.

Pursuant to the acquisition of Qufu Shengwang, the Company entered into a Stock Sale Agreement with Shandong Group purchased 19,175,480 shares of common stock for $4,026,851.

In addition to Qufu Natural Green, we also operate through two North American subsidiaries, which are active in marketing Qufu Natural Green's products in North America:

	·	Sunwin Stevia International Corp. (“Sunwin Stevia”); and
	·	Sunwin (Canada) Pharmaceutical, Ltd. (“Sunwin Canada”).

In December 2007, as a cost cutting measure, we dissolved Sunwin California, Inc., our wholly-owned subsidiary, with their marketing efforts being absorbed by Sunwin Stevia.

On February 5, 2009, the Company entered into a Securities Purchase Agreement with Wild Flavors, Inc. (“Wild Flavors”) to purchase 20,000,000 shares of the Company’s common stock at a price of $.15 per share (the “Wild Flavors Stock”) together with five-year warrants to purchase 26,666,666 shares of common stock with an exercise price of $0.35 per share. Upon completion of the sale of the shares and other transactions agreed to in connection with the Securities Purchase Agreement, Wild Flavors now owns approximately 15.7% of the issued and outstanding common stock of the Company. Please see Note 13 below.

- 5 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The accompanying consolidated financial statements for the interim periods presented are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the periods presented.

The consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. These consolidated interim financial statements should be read in conjunction with the financial statements for the year ended April 30, 2008 and notes thereto contained on Form 10-K/A of the Company as filed with the SEC. The result of operations and cash flows for the three and nine months ended January 31, 2009, are not necessarily indicative of the results of operations or cash flows which may be reported for future periods or the full fiscal year.

RESTATEMENT OF FINANCIAL STATEMENTS

The financial statements for the fiscal year ended April 30, 2008 have been restated to correct for a classification error with regards to the liability of advances from customers, which was overstated by $570,090. The advance was, in fact, an advance from one of the Company's subsidiaries to another Company subsidiary, that had it been accounted for correctly, would have been eliminated in consolidation. Following the correction, the statement of cash flows for the fiscal year ended April 30, 2008 reflected an increase in net cash used in operating activities and an increase in the effect on exchange rate on cash. The correction of this error did not impact any previous quarterly reports filed by us. Components of the restatement are detailed as follows:

			Adjustment
	As filed		to Restated			Restated

Advances from customers	$	582,816	$	(570,090	)	$	12,726

Other comprehensive income -
Foreign currency translation		2,619,704		570,090			3,189,794

Net (loss) income per common share -
basic		0.00		0.00			0.00

Net (loss) income per common share -
diluted	$	0.00	$	0.00		$	0.00

ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods presented. Actual results could differ from those estimates. Significant estimates for the three and nine months ended January 31, 2009 and 2008 include the allowance for doubtful accounts, the reserve for obsolete inventory, assumptions associated with the recognition of stock based compensation and the useful life of property, plant and equipment.

- 6 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, we consider all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The carrying value of these instruments approximates their fair value.

ACCOUNTS RECEIVABLE

Accounts receivable are reported at net realizable value. The Company has established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written off when it is determined that the amounts are uncollectible. At January 31, 2009 and April 30, 2008, the allowances for doubtful accounts were $498,422 and $467,415, respectively.

INVENTORIES

Inventories, consisting of raw materials and finished goods related to our products, are stated at the lower of cost or market (estimated net realizable value) utilizing the weighted average method. Due to short production cycle of our natural products, we do not maintain a work-in-process inventory.

NOTE (LOAN) PAYABLE

On July 1, 2008, the Company and Mr. Laiwang Zhang, our president and chairman, entered into a $100,000 note payable agreement with China Direct Investments, Inc., a consultant to the Company. The note bears interest at 6% per annum, and is secured by 400,000 shares of our common stock held by Mr. Laiwang Zhang and is due with all related accrued interest on July 1, 2009.

During the three months ended January 31, 2009 the Company received $80,000 from a unaffiliated third party, the short-term loan bears no interest and the borrower satisfied the loan on March 5, 2009.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate the value. For the purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable and accrued expenses, note payable, advances from customers and amounts due to related parties approximate their fair market value based on the short-term maturity of these instruments.

INCOME TAXES

The Company files federal and state income tax returns in the United States for its domestic operations, and files separate foreign tax returns for our Chinese subsidiaries. We account for income taxes under the provisions of SFAS No. 109, "Accounting for Income Taxes", as clarified by the Financial Accounting Standard Board ("FASB") interpretation No. 48, "Accounting for Uncertainty in Income Taxes", which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns.

INCOME PER SHARE

Net income per common share for the three and nine months ended January 31, 2009 and 2008 are based upon the weighted average common shares and dilutive common stock equivalents, if any, outstanding during the periods presented as defined by SFAS No. 128, "Earnings Per Share". The effect of outstanding warrants to purchase common stock, which could result in the issuance of 9,696,590 additional common shares at January 31, 2008, is anti-dilutive as the exercise price of the warrants exceeds the average market price of our stock and, accordingly, has not been included in the earnings per share calculation for that period. We had no stock options outstanding at January 31, 2009 or 2008, respectively.

- 7 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization are provided using the straight line method over the estimated economic lives of the assets, which range from five to twenty years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", we examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Accumulated depreciation on property and equipment totaled $5,393,858 and $3,964,662 at January 31, 2009 and April 30, 2008, respectively.

FOREIGN CURRENCY TRANSLATION

Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance with SFAS No. 52, "Foreign Currency Translation" and are included in determining net income or loss.

The reporting currency for the Company is the U.S. dollar. The functional currency of our Chinese subsidiaries is the local currency; the Chinese dollar or Renminbi ("RMB"). The financial statements of the subsidiaries are translated into United States dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income or loss. The cumulative translation adjustments and effect of exchange rate changes on cash at January 31, 2009 and 2008 were $136,287 and $730,725, respectively.

COMPREHENSIVE INCOME

We report comprehensive income in accordance with the provisions of SFAS No. 130, "Reporting Comprehensive Income". Comprehensive income is comprised of net income and all changes to the statements of stockholders' equity, except those due to investments by stockholders', changes in paid-in capital and distributions to stockholders. Comprehensive income for the three and nine months ended January 31, 2009 was $77,607 and $1,288,369, respectively. Comprehensive income for the three and nine months ended January 31, 2008 was $1,591,153 and $2,797,984, respectively. Comprehensive income for the periods included net income and foreign currency translation adjustments.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and trade accounts receivable. We place our cash with high credit quality financial institutions in the United States and China. At January 31, 2009, we had $6,912,478 on deposit in China, which is not insured. We have not experienced any losses in such accounts through January 31, 2009.

Almost all of the Company's sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, we believe concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. We also perform ongoing credit evaluations of its customers to help further reduce potential credit risk.

STOCK BASED COMPENSATION

The Company accounts for stock options issued to employees in accordance with SFAS No. 123R, "Share-Based Payment, An Amendment to FASB Statement No. 123". SFAS 123R requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees as an expense in our statements of operations over the service periods of each award.

- 8 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

REVENUE RECOGNITION

The Company follows the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin ("SAB") No. 104 and SAB Topic 13 for revenue recognition. In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the requirements of SFAS 161 and the impact of adoption on our consolidated financial statements.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement. FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants. Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We will adopt FSP APB 14-1 beginning in the first quarter of fiscal 2009, and this standard must be applied on a retrospective basis. We are evaluating the impact the adoption of FSP APB 14-1 will have on our consolidated financial position and results of operations.

In May 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 162, The Hierarchy of Generally Accepted Accounting Principles. This standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with generally accepted accounting principles in the United States for non-governmental entities. SFAS No. 162 is effective 60 days following approval by the U.S. Securities and Exchange Commission (“SEC”) of the Public Company Accounting Oversight Board’s amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. We do not expect SFAS No. 162 to have a material impact on the preparation of our consolidated financial statements.

On September 16, 2008, the FASB issued final Staff Position (FSP) No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” to address the question of whether instruments granted in share-based payment transactions are participating securities prior to vesting. The FSP determines that unvested share-based payment awards that contain rights to dividend payments should be included in earnings per share calculations. The guidance will be effective for fiscal years beginning after December 15, 2008. We are currently evaluating the requirements of (FSP) No. EITF 03-6-1, as well as the impact of the adoption on our consolidated financial statements.

On October 10, 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active. This FASB Staff Position (FSP) clarifies the application of FASB Statement No. 157, Fair Value Measurements, in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. Statement 157 was issued in September 2006, and is effective for financial assets and financial liabilities for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We have adopted SFAS 157-3 and determined that it had no impact as of December 31, 2008, and we will continue to evaluate the impact, if any, of SFAS 157-3 on our financial statements.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements.

- 9 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

NOTE 2 - INVENTORIES

At January 31, 2009 and April 30, 2008, inventories consisted of the following:

	January 31, 2009			April 30, 2008
	(unaudited)

Raw materials	$	4,315,530		$	2,768,310
Finished goods		3,688,745			2,011,365

		8,004,275			4,779,675
Less: reserve for obsolete inventory		(74,180	)		(72,631	)

	$	7,930,095		$	4,707,044

Due to the short duration inherent in the manufacture of our natural products, we do not maintain a work-in-process inventory.

NOTE 3 - PROPERTY AND EQUIPMENT

At January 31, 2009 and April 30, 2008, property and equipment consisted of the following:

	Estimated Life	January 31, 2009			April 30, 2008
		(unaudited)

Office Furniture	5 - 7 years	$	3,622		$	3,547
Autos and Trucks	5 - 10 years		58,958			19,901
Manufacturing Equipments	5 - 20 years		15,725,326			13,265,656
Buildings	10 - 30 years		6,390,281			4,730,037
Office Equipment	5 - 10 years		110,188			70,374
Construction in Process			-			26,440

			22,288,375			18,115,955

Less: Accumulated Depreciation			(5,393,858	)		(3,964,662	)
		$	16,894,517		$	14,151,293

For the nine months ended January 31, 2009 and 2008, depreciation expense totaled $1,197,515 and $774,154, respectively. The increase in property and equipment was significantly due to the acquisition of Qufu Shengwang.

- 10 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

NOTE 4-INTANGIBLE ASSETS

Intangible assets consisted of the following:

	Estimated Life	January 31, 2009			April 30, 2008
		(unaudited)

Land Use Right	46 years	$	2,347,896		$	-

Less: Accumulated Amortization			(21,495	)		-
		$	2,326,401		$	-

Due to the Company’s acquisition of Qufu Shengwang, the Company acquired land use rights to use certain properties located in China until March 14, 2054. For the nine month period ended January 31, 2009, amortization expense amounted to $21,495.

NOTE 5 - RELATED PARTY TRANSACTIONS

The Company pays management fees to Shandong Shengwang Pharmaceutical Co., Ltd., a limited liability company organized under the laws of the PRC ("Pharmaceutical Corporation"), in which Mr. Laiwang Zhang, our president and chairman holds a majority interest. The management fees, which are included in general and administrative expenses, totaled $347,274 and $144,337 for the nine months ended January 31, 2009 and 2008, respectively. At January 31, 2009, the Company owed Shengwang Group Corporation $1,478 for management fees. See Note 13 below.

At October 31, 2008, the Company recorded $2,173,562 due from Shandong Group related to an amendment to the acquisition of a 60% interest of Qufu Shengwang. The $2,173,562 due from Shandong Group represents the fair value of the 10,350,296 shares which are to be cancelled pursuant to the amendment. The shares were cancelled on December 10, 2008.

In February 2006 we granted options to five employees and, upon exercise, the option holders tendered to us non-interest bearing promissory notes representing the exercise price of the options. Included in this transaction were options to purchase 800,000 shares of our common stock with an exercise price of $0.90 granted to Ms. Fanjan Wu, our Chief Financial Officer. Upon exercise of these options, Ms. Wu delivered to us a non-interest bearing promissory note in the amount of $720,000. While the grant of the options and the delivery of the note were disclosed and accounted for within our financial statements in prior periods, our disclosure of these transactions failed to disclose that Ms. Wu was the recipient of an option grant, nor did we disclose that she had exercised the option by delivery of the promissory note.

Section 402 of the Sarbanes Oxley Act of 2002 prohibits granting credit in the form of a personal loan to a director or executive officer of a public company. The delivery by Ms. Wu to us of a promissory note as consideration for the payment of the exercise price of the options was considered the extension of credit to her and, accordingly, in violation of Section 402 of the Sarbanes Oxley Act of 2002.

As set forth above, in February 2006 we granted options to five employees and, upon exercise, the option holders tendered to us non-interest bearing promissory notes representing the exercise price of the options. At January 31, 2009 and April 30, 2008 the amount outstanding under those notes was $0 and $372,900, respectively, and is reflected on our balance sheet as a subscription receivable. In addition, on September 24, 2007, our subsidiary, Sunwin Canada, borrowed $430,000 from an unaffiliated party associated with the Chairman of our company. The loan bears no interest, is unsecured and is due on demand. On September 5, 2008, the three employees who collectively represented the amount of subscription receivable due us, which included Ms. Wu our Chief Financial Officer, agreed to pay the amounts of the subscription receivables owned by each of them directly to the lender in satisfaction of $372,900 of the amount owned by our company and lender agreed to accept in partial payment of amounts due him, payment by three employees of our company. As a result of this transaction, monies due us in the amount of $372,900, carried as a subscription receivable, were satisfied and the balance due to related parties was reduced by a similar amount.

- 11 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

On July 1, 2008, we borrowed $100,000 from China Direct Investments, Inc., a consultant to our company. We used the proceeds for general working capital purposes to our North America locations. Pursuant to this loan, we and Mr. Laiwang Zhang, our president and chairman, delivered a secured promissory note under which we are jointly and severally liable. The note, which bears interest at 6% per annum, is secured by 400,000 shares of our common stock held by Mr. Laiwang Zhang, and the principal and all accrued but unpaid interests is due on July 1, 2009.

NOTE 6 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets at January 31, 2008 and April 30, 2008 totaled $414,729 and $264,576, respectively, and includes prepayments to suppliers for merchandise that had not yet been shipped to us, as well as services that had not yet been provided to us including employee advances. We recognize prepayments as inventory or expense as suppliers make delivery of goods or provide services for which we have paid.

NOTE 7 - INCOME TAXES

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income Taxes". SFAS 109 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. SFAS 109 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

Our subsidiaries in China are governed by the Income Tax Law of the People's Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises and local income tax laws (the "PRC Income Tax Law"). Under the PRC Income Tax Law, beginning in January 2008, wholly-owned foreign enterprises are subject a maximum of 25%, inclusive of state and local income taxes.

NOTE 8 - STOCKHOLDERS' EQUITY

PREFERRED STOCK

The Company is authorized to issue 1,000,000 shares of preferred stock, par value $.001, with such designations, rights and preferences as may be determined from time to time by the Board of Directors. At January 31, 2008 and April 30, 2008, there were no shares of preferred stock issued or outstanding.

COMMON STOCK

During the three months ended October 31, 2008, the company completed its acquisition of its 60% interest in Qufu Shengwang. As a result of the amendment to the acquisition agreement, on November 18, 2008 the Company entered into an amendment to the stock sale agreement to reduce the total number of Shares to be purchased by Shandong Group from 29,525,776 to 19,175,480 at a price of $.21 per share (the “Second Amendment to Stock Sale Agreement”). As a result of this amendment, on December 10, 2008, the Company cancelled 10,350,296 shares issued to Shandong Group and refund to Shandong Group $2,173,562 reflecting the difference between the purchase price of $6,200,413 under the amendment and the purchase price of $4,026,851 for the Shares under the amendment to the stock sale agreement. The 19,175,480 shares of Common Stock purchased by Shandong Group represents approximately 22% of the issued and outstanding shares of common stock of the Company prior to the transaction.

- 12 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

STOCK OPTIONS

On March 23, 2005, our Board of Directors authorized and adopted the 2005 Equity Compensation Plan (the "2005 Plan"). The 2005 Plan reserved 5,000,000 of its authorized, but unissued shares of common stock for issuance. On February 7, 2006, our Board of Directors authorized and adopted the 2006 Equity Compensation Plan (the "2006 Plan"). The Company reserved 6,200,000 of its authorized but unissued shares of common stock for issuance under the 2006 Plan. The number of shares authorized under both the 2005 or 2006 Plan, may be amended (subject to adjustment in the event of certain changes in our capitalization) without further action by the Board of Directors and stockholders, as required.

As of January 31, 2009 or April 30, 2008, no options were outstanding under either the 2005 Plan or 2006 Plan.

COMMON STOCK PURCHASE WARRANTS

In connection with an offering of securities completed in March 2007, the Company issued 9,812,500 shares of common stock at $0.42 per share and granted 9,812,500 common stock purchase warrants to investors. Gross proceeds of the offering totaled $4,121,500. The warrants are exercisable at $0.65 per share for five years from the date of issuance. In connection with this offering, the Company also issued an additional 981,250 warrants, exercisable under the same terms and conditions as the investor warrants, to finders and consultants in the transaction, including 38,000 to Skyebanc, Inc. who served as a placement agent and 225,000 warrants to China Direct Investments, Inc. who served as a consultant in the transaction, and 718,250 common stock purchase warrants to certain advisors for due diligence fees.

A summary of the changes of the Company's outstanding common stock purchase warrants granted during the nine month period ended January 31, 2009 is as follows:

			WEIGHTED AVERAGE
	SHARES		EXERCISE PRICE

Outstanding at April 30, 2008		9,696,590	$	0.65
Granted		-		-
Exercised		-		-
Forfeited		-		-

Outstanding at January 31, 2009		9,696,590	$	0.65

Warrants exercisable at end of period		9,696,590	$	0.65

The following information applies to all warrants outstanding at January 31, 2009:

Warrants Outstanding					Warrants Exercisable
			Weighted
			Average	Weighted		Weighted
Range of			Remaining	Average		Average
Exercise			Contractual	Exercise		Exercise
Prices		Shares	Life	Price	Shares	Price

$	0.65	9,696,590	3.17	$0.65	9,696,590	$0.65

- 13 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

NOTE 9 - CONSULTING AGREEMENTS AND COMMITMENTS

CONSULTING AGREEMENTS

On April 24, 2007 the Company entered into a consulting agreement with CDI Shanghai Management Co., Ltd. In connection with this agreement, we issued 1,200,000 shares of our common stock, with a fair value of $600,000, to be earned over the term of the agreement which expired on April 30, 2008. The agreement further provided the company would pay Capital One Resources Co., Ltd. and/or its designee's discretionary award fees payable in cash or marketable securities. In April 2007, under the terms of this agreement, we paid an additional award fee of 305,000 shares of our common stock with a fair value of $152,500.

For the nine months ended January 31, 2009 and 2008, amortization of deferred consulting expenses amounted to $350,047 and $371,244, respectively.

On April 30, 2007, the Company and its wholly owned subsidiary Sunwin Stevia International Corporation entered into an agreement with China Direct Inc. Under the terms of the agreement China Direct Inc., shall assist with the business development efforts related to Sunwin Stevia International Corp. including but not limited to efforts related to the OnlySweet line of products. As consideration for these services China Direct Inc. was entitled to receive an annual fee, in perpetuity, equal to four percent (4%) of the annual gross sales revenue generated by Sunwin Stevia International Corp. and/or its proprietary line of products (the "Annual Fee"). The Annual Fee is to be calculated after each fiscal year end and shall be paid quarterly in four (4) equal installments over the following fiscal year on March 31st, June 30th, September 30th and December 31st. This Annual Fee is to continue in perpetuity and survive any termination of consulting services rendered by China Direct Inc. to the Company. In the event of any sale, merger, transfer of rights or disposition of assets of Sunwin Stevia International, the Annual Fee shall survive and continue to be paid by the acquirer(s). During the fiscal year ended April 30, 2008, this agreement was modified to waive payment and accrual of this fee until a later date to be mutually agreed upon by the parties. This waiver has remained in effect subsequent to the Wild Flavors transaction described in Note 1. No expense has been recognized under this agreement for the nine months period ended January 31, 2009 or 2008, respectively.

NOTE 10 - LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings. To the best of the Company's knowledge, they believe no federal, state or local governmental agency is presently contemplating any proceeding against the Company.

NOTE 11 - SEGMENT INFORMATION

The following information is presented in accordance with SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information". For the nine months ended January 31, 2009 and 2008, the Company operated in two reportable business segments - (1) sale of natural sweetener (stevioside) and stevia fertilizer and (2) the sale of traditional Chinese medicines, organic herbal medicine, neutraceutical products, and animal medicines prepared from organic herbal ingredients. The Company's reportable segments are strategic business units that offer different products and are managed separately based on the fundamental differences in their operations.

- 14 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

Condensed information with respect to these reportable business segments for the three and nine months period ended January 31, 2009 and 2008 is as follows:

	Natural Sweetner			Chinese and Veterinary			Corporate and
Three Months Ended January 31, 2009	(Stevioside)			Medicines			Other				Consolidated

Net Revenues		$	3,428,180		$	1,591,580		$	-			$	5,019,760
Interest (Expense) Income			4,357			15,009			(6,230	)			13,136
Depreciation and amortization			367,592			76,100			-				443,692
Net Income			68,709			109,037			(169,474	)			8,272
Long Lived Asset Expenditures			41,141			20,264			-				61,405
Segment Assets		$	25,433,966		$	12,898,246		$	10,471			$	38,342,683


	Natural Sweetner			Chinese and Veterinary			Corporate and
Nine Months Ended January 31, 2009	(Stevioside)			Medicines			Other				Consolidated

Net Revenues		$	11,089,248		$	6,718,296		$	-			$	17,807,544
Interest (Expense) Income			3,108			39,977			(6,230	)			36,855
Depreciation and amortization			993,293			225,717			-				1,219,010
Net Income			602,465			590,354			(469,082	)			723,737
Long Lived Asset Expenditures			153,419			89,456			-				242,875
Segment Assets		$	25,433,966		$	12,898,246		$	10,471			$	38,342,683

	Natural Sweetner			Chinese and Veterinary				Corporate and
Three Months Ended January 31, 2008	(Stevioside)			Medicines				Other				Consolidated

Net Revenues		$	3,740,733		$	2,871,754			$	-			$	6,612,487
Interest (Expense) Income			19,931			(32,922	)			(2	)			(12,993	)
Depreciation and amortization			181,196			125,077				-				306,273
Net Income			313,768			491,496				(172,318	)			632,946
Long Lived Asset Expenditures			-			-				-				-
Segment Assets		$	18,560,662		$	10,866,056			$	323,546			$	29,750,264

	Natural Sweetner			Chinese and Veterinary				Corporate and
Nine Months Ended January 31, 2008	(Stevioside)			Medicines				Other				Consolidated

Net Revenues		$	9,323,348		$	7,190,565			$	-			$	16,513,913
Interest (Expense) Income			36,151			(80,561	)			(358	)			(44,768	)
Depreciation and amortization			394,837			379,318				-				774,155
Net Income			394,572			1,315,517				(589,632	)			1,120,457
Long Lived Asset Expenditures			-			593,303				-				593,303
Segment Assets		$	18,560,662		$	10,866,056			$	323,546			$	29,750,264

- 15 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

NOTE 12 – PRO FORMA FINANCIAL INFORMATION OF ACQUISITIONS (UNAUDITED)

Acquisition of a 60% interest in Qufu Shengwang

The unaudited pro forma Combined financial statements are presented to illustrate the estimated effects of Sunwin International Neutraceuticals, Inc. having entered into a purchase agreement with Qufu Shengwang. On June 30, 2008, QuFu Natural Green Engineering Co., Ltd., a wholly owned subsidiary of the Company, entered into an Acquisition Agreement with Qufu Shengwang and its shareholder Shandong Shengwang Group Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China. Under the terms of the Agreement, Qufu Natural Green agreed to acquire Shandong Group’s 60% interest in Qufu Shengwang for a price of $7,016,200 payable in cash at closing. Shandong Group is owned by Laiwang Zhang, the Company’s president and its chairman of the board of directors. The purchase price under the Agreement represents 60% of the value of the net tangible assets of Qufu Shengwang of $11,693,666, as of October 31, 2008.

Amendment to Acquisition Agreement

On September 2, 2008, Qufu Natural Green amended its June 30, 2008 acquisition agreement with Qufu Shengwang and its 60% shareholder, Shandong Group. Under the terms of the Amendment to Acquisition Agreement, Qufu Natural Green agreed to acquire Shandong Group's 60% interest in Qufu Shengwang for $6,200,413 payable in cash at closing. The purchase price represents 60% of the revised value of the net tangible assets of Qufu Shengwang of $10,334,022 as of April 30, 2008. Qufu Shengwang's net assets were reduced from $11,693,666 to $10,334,022 as a result of the application of generally accepted accounting principles in the United States (“U.S. GAAP”) which required the elimination of the difference between the fair market value and cost basis of the land use rights recorded by Qufu Shengwang in its financial statements prior to completion of an audit of its financial statements as of April 30, 2008.

Second Amendment to Acquisition Agreement

On November 18, 2008, Qufu Natural Green amended the June 30, 2008 acquisition agreement with Qufu Shengwang and its shareholder, Shandong Group. Under the terms of the Second Amendment to Acquisition Agreement, Qufu Natural Green agreed to acquire Shandong Group's 60% interest in Qufu Shengwang for $4,026,851. The purchase price represents 60% of the revised value of the net assets of Qufu Shengwang of $6,711,418 as of April 30, 2008. The net assets of Qufu Shengwang were revised to account for a $698,115 decrease in the value of inventory and a $2,924,489 decrease in the value of intangible assets as of April 30, 2008.

Stock Sale Agreement

On June 30, 2008, the Company entered into a Stock Sale and Purchase Agreement with Shandong Group to purchase up to 29,000,000 shares of the Company’s common stock, $0.001 par value per share at a price of $.25 per share upon completion of the Qufu Shengwang acquisition.

Amendment to Stock Sale Agreement

As a result of the Amendment to Acquisition Agreement, on September 2, 2008, the Company entered into an Amendment to the Stock Sale agreement to sell up to 29,525,776 shares of the Company’s Common Stock to Shandong Group at a price of $.21 per share upon completion of the Qufu Shengwang acquisition. In addition, the Amendment to Stock Sale Agreement provides that in the event Qufu Shengwang does not earn a minimum of $5,000,000 in net income as determined in accordance with U.S. GAAP (the "Target Amount") over a period of 36 consecutive months beginning the first day of the month following the closing of the stock purchase (the "Earnings Target Period"), Shandong Group shall be obligated to return a number of shares of common stock equal to an amount computed by multiplying (i) a fraction, the numerator of which is the Target Amount less the amount of Qufu Shengwang's net income earned over the Earnings Target Period and the denominator is the Target Amount; by (ii) the number of shares of Common Stock purchased by Shandong Group under the Stock Sale Agreement.

- 16 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

Second Amendment to Stock Sale Agreement

As a result of the second amendment to acquisition agreement, on November 18, 2008 the Company entered into a second amendment to the Stock Sale Agreement to reduce the total number of shares of the Company’s Common Stock to be purchased by Shandong Group from 29,525,776 to 19,175,480 at a price of $.21 per share. As a result of the Second Amendment to Stock Sale Agreement, the Company canceled 10,350,296 shares of its Common Stock issued to Shandong Shengwang on December 10, 2008 and refunded from Shandong Shengwang $2,173,562 reflecting the difference between the purchase price of $6,200,413 under the Amendment to Stock Sale Agreement and the purchase price of $4,026,851 for the shares of Common Stock under the Second Amendment to the Stock Sale Agreement. The 19,175,480 shares of Common Stock purchased by Shandong Group represents approximately 22% of the issued and outstanding shares of common stock of the Company prior to the transaction.

Qufu Shengwang is a Chinese limited liability company formed in August 2007 as a foreign invested entity by Shandong Group and Korea Stevia Co., Ltd. (“Korea Stevia”). Qufu Shengwang manufactures, sells and distributes stevioside based animal feed additives and fertilizers. Stevioside is a 100% natural sweetener extracted from the leaves of the stevia rebaudiana plant, a green herb plant of the Aster/Chrysanthemum family. Qufu Shengwang sells products in the provinces of Shandong, Heilongjia, and Liaoning in China to farmers of vegetables, fruits, flowers, and livestock.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred had the acquisition of Qufu Shengwang by the Company occurred as of the periods presented, or during the operational periods presented, nor is it necessarily indicative of the future financial position or operating results.

These pro forma financial statements should be read in conjunction with the audited historical financial statements of the Company, and the related financial statements for Qufu Shengwang included in the Form 8-K/A filed on November 26, 2008.

An allocation of the purchase price has been made to major categories of assets and liabilities in the accompanying pro forma financial statements based on available information. The actual allocation of purchase price and the resulting effect on income from operations may differ significantly from the pro forma amounts included herein. These pro forma adjustments represent the Company’s preliminary determination of purchase accounting adjustments and are based upon available information and certain assumptions that the Company believes to be reasonable. Consequently, the amounts reflected in the pro forma financial statements are subject to change, and the final amounts may differ substantially.

The accompanying unaudited pro forma combined financial statements do not give effect to any cost savings, revenue synergies or restructuring costs which may result from the integration of the Company and the operations of Qufu Shengwang. Further, actual results may be different from these unaudited pro forma combined financial statements.

The following pro forma combined financial information presented below, gives effect to the acquisitions, in 2008, of Qufu Shenwang. This acquisition was accounted for under the purchase method of accounting prescribed by SFAS 141. The below presentation is prepared as if the acquisition had occurred as of the beginning of the fiscal year of acquisition.

Qufu Shengwang was established on August 20, 2007. The operations from its date of inception through January 31, 2008 have been minimal, accordingly, no pro-forma financial information is presented for the three and six months ended January 31, 2008.

- 17 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

PRO-FORMA STATEMENTS OF OPERATIONS

	For the Three months ended
	January 31, 2009
							Sunwin
	Sunwin		Qufu		Pro forma		International
	International		Shengwang		Adjustments		Pro-forma
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
NET REVENUES	$	4,872,900	$	146,938		-	$	5,019,838
COST OF REVENUES		3,691,763		111,452				3,803,215
GROSS PROFIT		1,181,137		35,486		-		1,216,623

OPERATING EXPENSES:
Stock-based consulting expense		102,551		-		-		102,551
Selling expenses		463,531		13,535		-		477,066
General and administrative		480,037		89,658		-		569,695
Total Operating Expenses		1,046,119		103,193		-		1,149,312

INCOME (LOSS) FROM OPERATIONS		135,018		(67,707)		-		67,311

OTHER INCOME :
Other income		(365)		-		-		(365)
Interest income		12,355		781		-		13,136
Total Other Income		11,990		781		-		12,771

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		147,008		(66,926)		-		80,082

INCOME TAXES		51,941		-		-		51,941

INCOME (LOSS) BEFORE MINORITY INTEREST		95,067		(66,926)		-		28,141

MINORITY INTEREST OF LOSS		-		-		26,770		26,770

NET INCOME (LOSS)	$	95,067	$	(66,926)	$	26,770	$	54,911

OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain		46,668		22,667		-		69,335


COMPREHENSIVE INCOME	$	141,735	$	(44,259)	$	26,770	$	124,246

NET INCOME PER COMMON SHARE - BASIC AND DILUTED
Net income per common share - basic	$	0.00					$	0.00
Net income per common share - diluted	$	0.00					$	0.00

Weighted Common Shares Outstanding - basic		98,907,210						98,907,210
Weighted Common Shares Outstanding - diluted		98,907,210						98,907,210

- 18 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

PRO-FORMA STATEMENTS OF OPERATIONS

	For the Nine months ended
	January 31, 2009
							Sunwin
	Sunwin		Qufu		Pro forma		International
	International		Shengwang		Adjustments		Pro-forma
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
NET REVENUES	$	17,511,385	$	443,585		-	$	17,954,970
COST OF REVENUES		13,216,666		314,136				13,530,802
GROSS PROFIT		4,294,719		129,449		-		4,424,168

OPERATING EXPENSES:
Stock-based consulting expense		350,047		-		-		350,047
Selling expenses		1,378,012		32,215		-		1,410,227
General and administrative		1,578,350		182,952		-		1,761,302
Total Operating Expenses		3,306,409		215,167		-		3,521,576

INCOME (LOSS) FROM OPERATIONS		988,310		(85,718)		-		902,592

OTHER INCOME :
Other income		417		-		-		417
Interest income		35,265		2,618		-		37,883
Total Other Income		35,682		2,618		-		38,300

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		1,023,992		(83,100)		-		940,892

INCOME TAXES		218,541		-		-		218,541

INCOME (LOSS) BEFORE MINORITY INTEREST		805,451		(83,100)		-		722,351

MINORITY INTEREST OF LOSS		-		-		33,240		33,240

NET INCOME (LOSS)	$	805,451	$	(83,100)	$	33,240	$	755,591

OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain		517,427		47,205		-		564,632


COMPREHENSIVE INCOME	$	1,322,878	$	-35,895	$	33,240	$	1,320,223

NET INCOME PER COMMON SHARE - BASIC AND DILUTED
Net income per common share - basic	$	0.01					$	0.01
Net income per common share - diluted	$	0.01					$	0.01

Weighted Common Shares Outstanding - basic		90,984,845						90,984,845
Weighted Common Shares Outstanding - diluted		90,984,845						90,984,845

- 19 -

Index

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

(UNAUDITED)

NOTE 13 - SUBSEQUENT EVENTS

On February 5, 2009, the Company entered into a Securities Purchase Agreement with Wild Flavors to purchase 20,000,000 shares of the Company’s common stock at a price of $.15 per share together with five year warrants to purchase 26,666,666 shares of common stock with an exercise price of $0.35 per share. Upon completion of the sale of the Shares and other transactions agreed to in connection with the Securities Purchase Agreement, Wild Flavors owns approximately 15.7% of the issued and outstanding common stock of the Company. The Company paid fees in connection with the Securities Purchase Agreement to Mr. Jeffrey Reynolds, CEO of Sunwin Stevia, of $100,000 in cash and issued Mr. Reynolds 1,000,000 shares of its Common Stock which will be valued at the fair market value. In addition, the Company paid legal fees to its counsel associated with the Securities Purchase Agreement. After payment of these fees and costs associated with the Wild Flavors Offering, the Company received net proceed of approximately $2,885,000. The net proceeds of this offering will be used for expansion of the Company's Stevia production facilities in China and general corporate purposes.

Pursuant to the terms of the Securities Purchase Agreement, the Company converted its wholly owned subsidiary, Sunwin Stevia, into a Delaware limited liability company. In exchange for its contribution of Sunwin Stevia’s current capital, the Company received 5,500 membership units in Sunwin Stevia, a 55% interest after giving effect to the issuance of membership units to Wild Flavors. In addition, the Company issued to Wild Flavors 4,500 membership units (a 45% interest) in Sunwin Stevia in exchange for Wild Flavors’ agreement to provide sales, marketing, logistics and supply chain management, product development and regulatory services to Sunwin Stevia over a period of two years beginning on February 5, 2009 (the “Services”). The Company and Wild Flavors agreed that the value of the Services is $1,000,000. In addition, Wild Flavors agreed to act as the sole manager of Sunwin Stevia and will be responsible for all of its business and affairs as provided for in the proposed form of the Operating Agreement to be entered into between Wild Flavors and the Company. In addition, Wild Flavors has the right of first refusal to purchase additional membership units in Sunwin Stevia at $222.22 per unit to provide any additional capital required by Sunwin Stevia as jointly determined by the Company and Wild Flavors.

Under the terms of the Securities Purchase Agreement, Wild Flavors has the option to exchange its 45% interest in Sunwin Stevia into 6,666,666 shares of the Company’s common stock at any time until December 31, 2010 (the “Exchange Option”). Wild Flavors is also entitled to a bonus option which would entitle it to receive the greater of 6% of the issued and outstanding membership units of Sunwin Stevia or the number of membership units of Sunwin Stevia necessary to get Wild Flavor’s ownership interest to 51% if (i) Sunwin Stevia achieves cumulative pre-tax profits of $3,000,000 on or before December 31, 2011 computed in accordance with U.S. GAAP exclusive of the cost of product liability insurance and (ii) Wild Flavors has not exercised its Exchange Option (the “Bonus Option”). Upon exercise of the Bonus Option, Wild Flavors is obligated to pay Sunwin Stevia an aggregate exercise price of $1,000.00. The Bonus Option expires upon the earlier of the date when one of the above conditions can no longer be satisfied and July 1, 2012.

Pharmaceutical Corporation has orally agreed to waive the management fees it charges the Company related to Sunwin Stevia's operations beginning in February 2009. In addition, Pharmaceutical Corporation has agreed that starting January 2010, the maximum consulting fee that will be charged to the Company by Pharmaceutical Corporation will be approximately $175,508 (RMB1,200,000) per year.

On February 5, 2009, the Company entered into a Distributorship Agreement with its subsidiary, Sunwin Stevia and Wild Flavors for the worldwide distribution of the Company’s Stevia sweetener products. The Distributorship Agreement is for an initial term of 60 months with automatic renewal terms of 12 successive 36 month renewal periods.

As part of the Securities Purchase Agreement, the Company, Wild Flavors and certain shareholders of the Company owning approximately 34.12% of the Company’s common stock (the “Sunwin Shareholders”) entered into a Stockholders Agreement dated February 5, 2009. The Stockholders Agreement provides that so long as Wild Flavors owns at least 4,000,000 shares of the Company’s common stock, the parties will vote or cause their shares of the common stock to be voted to elect two members of the Company’s board of directors designated by Wild Flavors and three members designated by the Sunwin Shareholders.

In March 2007 as a component of a unit equity capital raise, the Company issued five-year common stock purchase warrants to purchase an aggregate of 10,793,750 shares of its common stock at an initial exercise price of $0.65 per share. There are an aggregate of 9,696,590 of the warrants that remain issued and outstanding. The shares of common stock issuable upon the exercise of the warrants are covered by an effective registration statement. On February 20, 2009, the Board of Directors of the Company approved the permanent reduction in the exercise price of the warrants to $0.15 per share. The last sale price of the Company’s common stock on February 20, 2009 as reported on the OTC Bulletin Board was $0.30. Other than the reduction in the exercise price, all of terms and conditions of the warrants remain unchanged.

- 20 -

Index

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, global competition, and other factors as they relate to our doing business solely within the People's Republic of China ("PRC"). Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

We are on an April 30 fiscal year. The coming fiscal year ending April 30, 2009 is referred to as “fiscal 2009”, the fiscal year ended April 30, 2008 is referred to as “fiscal 2008”. The nine month period ending January 31, 2009 is the third quarter of fiscal 2009, while the nine month period ended January 31, 2008 was the third quarter of fiscal 2008.

OVERVIEW

Through our subsidiaries located in the PRC, we manufacture and sell neutraceutical products. Our focus is to provide our customers with naturally produced nutritional food additives and nutritional supplements for both human and veterinary consumption. Our product lines can be classified into three distinct product groups:

	·	Stevioside, a 100% natural sweetener derived from the leaves of the stevia plant;

	·	Traditional Chinese medicines and formula extracts; and

	·	Natural veterinary medicines and animal food additives.

For accounting purposes, due to similarities in the processing and reporting of naturally processed Chinese medicines and natural veterinary medicines, we combine these two product groups into one segment. Accordingly we report our operations in two segments:

	·	Natural Sweetener (Stevioside); and

	·	Chinese and Veterinary medicines

Approximately 62% of our total net revenues in the first nine months of fiscal 2009 were derived from our Natural Sweetener (Stevioside) segment. Our principal customers for this segment are located in Asia, primarily China and Japan where stevioside is approved for use as both a food additive as well as a nutritional supplement. China has emerged as the world's largest producer of stevioside.

We also manufacture and sell traditional Chinese medicines and formula which are utilized in more than 200 different veterinary products.

- 21 -

Index

Our ability to significantly increase our revenues in any of these groups faces a number of challenges. In addition to the existing laws which limit the sale of stevioside in Western countries, we face competition in the PRC in the manufacture and sale of stevioside. There are approximately 30 stevioside manufacturers in China. In an effort to increase our competitive position in the PRC, in December 2005, we completed the upgrade of our existing stevioside production facility. This facility now has a production capacity of 300 tons of stevioside per year. In March 2007, we completed the construction of an additional stevioside manufacturing facility. The new facility is located in Shuyuan Economic Zone of Qufu City, Shangdong Province. Through January 2008, we invested approximately $10,324,000 in buildings and equipment for the new facility. The construction of the facility commenced in August 2006 and became fully operational in July 2007. Our new stevioside manufacturing facility is capable of producing an additional 200 tons of stevioside per year, increasing our total annual production capacity to 500 tons. The additional production is being marketed to consumers in China, Japan, South Korea, and other Far Eastern countries such as Singapore, Malaysia, Thailand, and India.

Both of our operating segments are dependent upon raw materials which are harvested and farmed. Our ability to produce our products and compete in our markets is also subject to risks inherent in farming including weather and similar events which may reduce the amount of raw materials we are able to purchase or at what prices these materials are available. Further, our ability to expand our revenues from the sale of stevioside, including our OnlySweet product, is limited as the product is not approved for use as a food additive in most Western countries, including the United States, Canada and the European Union. In these countries forms of stevioside may, however, be marketed and sold as a nutritional supplement.

All of our product groups operate in highly competitive environments. We estimate there are more than 200 companies in China that produce traditional Chinese medicines and extracts and refined chemical products and 5,000 companies in China selling veterinary medicines. The sale of our products in these two product groups is concentrated on domestic customers; therefore, our ability to expand our revenues in these product groups is limited to, and to a certain extent dependent upon, economic conditions in the PRC.

While we are a U.S. company, substantially all of our operations are located in the PRC, and accordingly, we face certain risks associated with doing business in that country. These risks include risks associated with the ongoing transition from state business ownership to privatization, operating in a cash-based economy, various government policies, unexpected changes in regulatory requirements, export restrictions, tariffs and other trade barriers, challenges in staffing and managing operations in a Communist country, differences in technology standards, employment laws and business practices, longer payment cycles, and changes in currency exchange rates and currency exchange controls. We are unable to control the vast majority of these risks associated both with our operations and the country in which they are located and these risks could result in significant declines in our operating results.

During fiscal 2009 we have closed two transactions which we believe will have a positive impact on our business in future periods. In September 2008, our subsidiary Qufu Natural Green acquired a 60% interest in Qufu Shengwang Stevia Biology and Science Co., Ltd., (“Qufu Shengwang”) from Shandong Shengwang Group Co., Ltd., a Chinese limited liability (“Shandong Group”). Qufu Shengwang manufactures, sells and distributes stevioside based animal feed additives and fertilizers Qufu Shengwang sells products in the provinces of Shandong, Heilongjia, and Liaoning in China to farmers of vegetables, fruits, flowers, and livestock.

In February 2009 we entered into a series of transactions with Wild Flavors, including:

	·	we sold it 20,000,000 shares of our common stock at a purchase price of $0.15 per share and issued it five year warrants to purchase an additional 26,666,666 shares of our common stock with an exercise price of $0.35 per share resulting in proceeds to us of $3,000,000;

	·	we agreed to convert our Sunwin Stevia subsidiary, into a Delaware limited liability company. In exchange for our contribution of Sunwin Stevia’s current capital, we received a 55% interest and Wild Flavors received a 45% interest in exchange for Wild Flavors’ agreement to provide sales, marketing, logistics and supply chain management, product development and regulatory services to Sunwin Stevia over a period of two years. Wild Flavors will act as the sole manager of Sunwin Stevia and will be responsible for all of its business and affairs; and.

	·	we entered into a Distributorship Agreement with Sunwin Stevia and Wild Flavors for the worldwide distribution of the our Stevia sweetener products. The Distributorship Agreement is for an initial term of 60 months with automatic renewal terms of 12 successive 36 month renewal periods.

- 22 -

Index

We intend to partner with Wild Flavors to obtain U.S. Food and Drug Administration GRAS (Generally Recognized as Safe) status for our stevia extracts. Wild Flavors expects to quickly commercialize many new and innovative product concepts and offerings with current customers for immediate entry in the market and opening doors to new clients for access to zero-calorie, natural sweetening systems. We are committed to sustainable production and supply of the highest quality stevia extracts available. The companies expect that the technological synergies between our production knowledge, and Wild Flavors’ management systems and product development techniques, will result in volume growth and opportunity through new routes to market and ensure the highest quality and best tasting products available.

FOREIGN EXCHANGE CONSIDERATIONS

As revenues from our operations in the PRC accounted for substantially all of our net revenues for the nine months ended January 31, 2009 and 2008, how we report net revenues from our PRC based operations is of particular importance to understanding our financial statements. Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance with Statement of Financial Accounting Standards (SFAS) No. 52,"Foreign Currency Translation".

The functional currency of our Chinese subsidiaries is the local currency, the Renminbi (“RMB”). The financial statements of our subsidiaries are translated to U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the periods presented for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income or loss. The translation adjustment and effect of exchange rate changes on cash for the nine months ended January 31, 2009 and 2008 were $136,286 and $730,725, respectively.

- 23 -

Index

If any increase in the value of the RMB were to occur in the future, our product sales in China and in other countries may be negatively affected.

The functional currency of our Canadian subsidiary is the Canadian Dollar. At January 31, 2009 we held cash of $10,344 in banks in Canada.

As a result of the currency translation adjustments, we reported unrealized gains on foreign currency translation of $69,335 and $564,632 for the three and nine months ended January 31, 2009, respectively compared to $958,207 and $1,677,527, for the three and nine months ended January 31, 2008, respectively. This non-cash item had the effect of significantly increasing our comprehensive income for both periods presented.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following policies as well as the Basis of Presentation included in Note 1 to the Consolidated Financial Statements (unaudited) appearing elsewhere in this quarterly report are important to understanding and evaluating our reported financial results.

PROPERTY AND EQUIPMENT

We record property and equipment at cost. Depreciation and amortization are recognized using the straight-line method over the estimated economic lives of the assets, which are from five to twenty years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. We review the carrying value of long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.

SHARE-BASED COMPENSATION

We account for stock options issued to employees in accordance with the Financial Accounting Standards Board ("FASB") Statement 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123 " ("FAS 123R"). FAS 123R requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees as an expense in our statements of operations over the service period of each award.

REVENUE RECOGNITION

We follow the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin 104 and SAB Topic 13 for revenue recognition. In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities ” (“SFAS 161”). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the requirements of SFAS 161 and the impact of adoption on our consolidated financial statements.

- 24 -

Index

RESULTS OF OPERATIONS

Overall

Our revenues have increased approximately 7.8% for the nine months ended January 31, 2009 from the comparable period in fiscal 2008; however, our revenues for the third quarter of fiscal 2009 decreased approximately 24.1% as compared to the three months ended January 31, 2008. The year to date increase reflects increases in sales in our Natural Sweetener (Stevioside) segment. Our acquisition of Qufu Shengwang which was concluded on September 2, 2008 contributed $296,159 of net revenues during the year. We attribute the overall increase to improved reception and demand for natural or "green" products for both human and animal consumption as well as increased recognition in the benefits of herbal medicines for many health related indications. The decrease during the fiscal 2009 quarter as compared to the first 2008 quarter reflects both an approximate 45% decrease in sales of our Chinese and Veterinary medicine segment together with a decrease of approximately 8% in sales of our Natural Sweetener (Stevioside) segment. The decreases in revenues are due to a decrease in sales orders as vendors reduced inventory ahead of the Chinese New Year in February 2009 and as well a result of the global economic slowdown

For the three and nine months ended January 31, 2009, cost of revenues as a percentage of net revenues were approximately 75.8% and 75.4%, respectively compared to 73.2% and 72.3%, respectively, for the comparable periods in fiscal 2008. The slight increase is primarily due to an increase in coal prices in the PRC between the periods reported. This increase affects our costs both directly through our own energy costs as well as indirectly through related increases in PRC sourced raw materials on which we are dependant. Despite the decrease in our gross profit percentage relative to sales, our total gross profit increased approximately 7.3% year to date over the comparable period in fiscal 2008; due to an increase in overall sales levels.

- 25 -

Index

For the three and nine month periods ended January 31, 2009, total operating expenses remained relatively constant compared to the three and nine months ended January 31, 2008, respectively. Components of operating expenses did however fluctuate. Selling expenses declined approximately 32% and approximately 45% for the three and nine months ended January 31, 2009 compared to fiscal 2008 due mainly to the reduction of marketing expenses. In Fiscal 2008 we completed our marketing program within our Natural Sweetener (Stevioside) segment related to the launch of our OnlySweet sweetener product in the U.S. This decrease in costs was largely offset by an increase in management fees, included in our general and administrative expenses, paid to Pharmaceutical Corporation, a company controlled by our Chairman, of $347,274 and $144,337 for the nine months ended January 31, 2009 and 2008, respectively. We pay Pharmaceutical Corporation management fees to Pharmaceutical Corporation for services including housing provided to certain of our non-management employees, government mandatory insurance for our employees and rent for our principal offices and the use of research and development facilities. Pharmaceutical Corporation is controlled by our President and Chairman, Mr. Laiwang Zhang. The amount of the management fee is discretionary, subject to increase at Mr. Zhang's discretion. Pursuant to the Wild Flavor agreement referenced in Note 13 above, beginning in February 2009 our President and Chairman, Mr. Laiwang Zhang has orally agreed to waive the management fees related to Sunwin Stevia's operations for the balance of the 2009 calendar year. Mr. Laiwang Zhang has also orally agreed that beginning January 2010, the maximum consulting fee that will be charged to the Company by Pharmaceutical Corporation will be approximately $175,508 (RMB 1,200,000) per year..

Income from operations for the three and nine months ended January 31, 2009 was $67,438 and $928,390, respectively. In comparison, income from operations for the three and nine months ended January 31, 2008 was $619,893 and $1,074,563, respectively. This represents a decrease annually of 13.6% which is mainly due to reduced sales generated during the second and third quarters of fiscal 2009.

The following table provides information on net revenues, cost of sales, gross profit, operating expenses, and operating income for each of our reporting segments for the three and nine months ended January 31, 2009 and 2008, respectively, as well as information related to our corporate operating expenses:

	Natural Sweetner						Chinese and Veterinary						Corporate and
Nine Months Ended	(Stevioside)						Medicines						Other								Consolidated
January 31,	2009			2008			2009			2008			2009				2008				2009			2008

Net Revenues		$	11,089,248		$	9,323,348		$	6,718,296		$	7,190,565		$	-			$	-			$	17,807,544		$	16,513,913
Cost of Revenues			8,711,072			7,291,253			4,722,100			4,645,247			-				-				13,433,172			11,936,500

Gross Profit			2,378,176			2,032,095			1,996,196			2,545,318			-				-				4,374,372			4,577,413

Total operating expenses			1,622,132			1,600,490			1,361,798			1,312,320			462,052				590,040				3,445,982			3,502,850

Income from operations		$	756,044		$	431,605		$	634,398		$	1,232,998		$	(462,052	)		$	(590,040	)		$	928,390		$	1,074,563

	Natural Sweetner						Chinese and Veterinary						Corporate and
Three Months Ended	(Stevioside)						Medicines						Other								Consolidated
January 31,	2009			2008			2009			2008			2009				2008				2009			2008

Net Revenues		$	3,428,180		$	3,740,733		$	1,591,580		$	2,871,754		$	-			$	-			$	5,019,760		$	6,612,487
Cost of Revenues			2,667,265			2,946,668			1,135,896			1,895,161			-				-				3,803,161			4,841,829

Gross Profit			760,915			794,065			455,684			976,593			-				-				1,216,599			1,770,658

Total operating expenses			640,223			460,329			345,694			518,117			163,244				172,319				1,149,161			1,150,765

Income from operations		$	120,692		$	333,736		$	109,990		$	458,476		$	(163,244	)		$	(172,319	)		$	67,438		$	619,893

- 26 -

Index

Natural Sweetener (Stevioside)

For the three and nine months ended January 31, 2009, net revenues from our Natural Sweetener (Stevioside) segment represented approximately 68.3% and 62.3%, respectively of our total net revenues as compared to approximately 56.6% and 56.5% for the same periods in the prior fiscal year. W e attribute the year to date increase in the net revenues from this segment to increased sales efforts in the PRC; sale of our OnlySweet line of products in North America generated $299,235 in revenues for the nine months ended January 31, 2009, while our recent acquisition of Qufu Shengwang contributed $296,159 of net revenues during the nine months ended January 31, 2009. We believe the market for stevioside will remain strong as consumers continue to seek alternative, more natural, sweeteners in their diets. In addition we are continuing our efforts to introduce stevioside as a food additive in those jurisdictions, such as Canada, where approval is limited to supplemental status only. Our management believes that the outlook for our Natural Sweetener segment is positive following the issuance by the U.S. FDA of a no objection letter to two entities for the use of its particular grade of Stevia as additives and / or sweetner, and in food and beverage products in the U.S. In January 2009, the Company submitted its application to the U.S. FDA for GRAS (Generally Recognized as Safe) status. Our management also anticipates that the partnership with Wild Flavors as described above will result in increased sales in our Natural Sweetener segment pursuant to our exclusive distribution agreement following our sale of a majority interest of our Sunwin Stevia subsidiary in February 2009..

During the three and nine months ended January 31, 2009, cost of sales as a percentage of sales related to our Natural Sweetener (Stevioside) segment was approximately 77.8% and 78.6%, respectively, remaining relatively constant when compared to the same periods of the prior fiscal year. We continue to witness increased production of stevia leaves from local farmers in response to growing demand. Due to the increased supply, we ceased our policy of contracting local farmers to grow stevia leaves for our designated production. While we believe this is a financially sound decision, our cost of sales in this segment may be subject to more volatile swings in raw material costs based on variables such as demand, farming related fuel costs, and farming conditions. In addition, our new stevioside production facility became operational in July 2007.

For the three and nine month periods ended January 31, 2009 operating expenses for our Natural Sweetener (Stevioside) segment were $640,223 and $1,622,132, respectively, compared to $460,329 and $1,600,490 for the three and nine months ended January 31, 2008, respectively. Operating expenses for our Natural Sweetener (Stevioside) segment increased approximately 39% and 1.4% for the three and nine months ended January 31, 2009, respectively, from the comparable periods in fiscal 2008. Total operating expenses as a percentage of net revenues for the three and nine months ended January 31, 2009 were approximately 19% and 15%, respectively, compared to 12% and 17% for the three and nine months ended January 31, 2008, respectively. Although our year to date operating expenses as percentage of revenues decreased approximately 3%, our quarter ended January 31, 2009 increased 6% due to the marketing efforts in our OnlySweet line of products in North America.

Chinese and Veterinary Medicines

For the three and nine months ended January 31, 2009, net revenues from our Chinese and Veterinary medicine segment decreased approximately 44.6% and approximately 6.6% over the same periods in fiscal 2008, respectively. During the three and nine months period, revenues from this segment represented approximately 31.7% and 37.7%, respectively of our total net revenues as compared to approximately 43.4% and 43.5% for the same periods in the prior fiscal year. This decrease in net revenues for the three and nine months ended January 31, 2009 was mainly due to the global economic slowdown in sales and productions and the Chinese new year in February that caused many customer to significantly decrease their inventory, therefore, causing a decrease in sales orders for the third quarter ended January 31, 2009. Due to the growing demand for natural or naturally produced medicinal products, we expect revenues from the segment to increase, however, we expect this segment, as a portion of our overall revenues, will continue to decrease as we continue to emphasize our stevioside segment.

For the three and nine months ended January 31, 2009, cost of sales within our Chinese and veterinary medicine segment represented approximately 71.4% and 70.3%, respectively of net revenues for this segment, as compared to 65.9% and 64.6%, respectively of net revenues during the same period in fiscal 2008. This increase was due in large part to an increase in coal price in the PRC between the periods reported. This increase affects our costs both directly, through our own energy and transportation costs as well as indirectly, through related increases in PRC sourced raw materials on which we are dependant.

During the three and nine months ended January 31, 2009, operating expenses associated with our Chinese and Veterinary totaled $345,694 and $1,361,798, respectively, which represents a decrease of approximately 33% and increased approximately 3.6%, compared to the three and nine months ended January 31, 2008. The 33% decrease between the quarters is due mainly to the 44.6% decrease in net revenues as the company has less operating expenses for the Chinese and Veterinary operations during the quarter. The slight year to date increase was primarily due to a bad debt recovery in 2008 of approximately $210,000. This recovery offset bad debt expense and was included in general and administrative expenses in the prior period. Absent this recovery, our year to date operating expenses would have decreased by approximately 11% between the periods. We expect operating expenses related to this segment to remain consistent with historical levels for the foreseeable future.

- 27 -

Index

Corporate and Other

We incur various operating expenses at the corporate level related to legal, auditing, and other professional resources. For the three and nine months ended January 31, 2009, these expenses decreased $9,075 and $127,988 from the comparable periods in fiscal 2008 as we become less dependent on outside resources and as well we scaled down the expenses related to our North American operations.

NET INCOME AND OTHER COMPREHENSIVE INCOME

Our net income for the three and nine months ended January 31, 2009 was $8,272 and $723,737, respectively, which is a decrease of approximately 98.7% and approximately 35.4% compared to the three and nine months ended from the comparable periods in fiscal 2008. These decreases in our net income reflects our decrease of 9% in net revenues in our natural sweetener segment and a decrease of 45% in net revenues within our Chinese and Veterinary Medicine segment during the quarter as discussed herein and an increase in general administration expenses primarily due to the overall increase in operational activities in our Stevioside segment.

For the three and nine months ended January 31, 2009, our other comprehensive income decreased $888,872 and $1,112,895 from the three and nine months ended January 31, 2008, respectively. Other comprehensive income represents unrealized gains and losses on foreign currency translation and is a non-cash item. As described elsewhere in this report, the functional currency of our Chinese subsidiaries is the RMB. The financial statements of our subsidiaries are translated into U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate adequate amounts of cash to meet the enterprise's needs for cash. The following table provides certain selected balance sheet comparisons between January 31, 2009 and April 30, 2008, respectively:

					$			%
	January 31, 2009		April 30, 2008		Difference			Difference
	(Unaudited)		(Restated)
Working Capital	$	16,249,089	$	12,450,800	$	3,798,289			31	%

Cash	$	6,957,805	$	6,811,136	$	146,669			2	%
Accounts receivable		3,794,751		4,163,839		(369,088	)		-9	%
Inventories, net		7,930,095		4,707,044		3,223,051			68	%
Total Current Assets		19,121,765		15,946,595		3,175,170			20	%
Property and Equipment		16,894,517		14,151,293		2,743,224			19	%
Land Use Rights		2,326,401		-		2,326,401			n/m
Total Assets		38,342,683		30,097,888		8,244,795			27	%

Accounts payable and accrued expenses		2,471,898		2,649,817		(177,919	)		-7	%
Total Current Liabilities		2,872,676		3,495,794		(623,118	)		-18	%
Total Liabilities	$	3,030,172		3,650,001		(619,829	)		-17	%

At January 31, 2009, we had working capital of $16,249,089 including cash of $6,957,805 as compared to working capital of $12,450,800 including cash of $6,811,136 at April 30, 2008.

- 28 -

Index

Our cash position by geographic area was as follows:

	January 31, 2009		April 30, 2008
Peoples Republic of China	$	6,912,478	$	6,653,884
United States		34,983		116,532
Canada		10,344		40,720

Total	$	6,957,805	$	6,811,136

We cannot be certain that we could have ready access to our cash should we wish to transfer it to bank accounts outside the PRC nor can we be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi, especially with respect to foreign exchange transactions.

Accounts receivable, net of allowance for doubtful accounts, at January 31, 2009 decreased approximately $369,088 from April 30, 2008. While our allowance for doubtful accounts increased $31,007 from April 30, 2008, we may, however, collect all or a portion of these doubtful accounts. This decrease in our accounts receivable at January 31, 2009 of approximately 9% was due primarily to increased collection efforts in both operational segments.

At January 31, 2009, inventories, net of reserve for obsolete inventory, increased $3,223,051 or approximately 68%, as compared to April 30, 2008. This increase was due mainly to an increase in stevia leaves inventories in an effort to meet the needs of our increased production capacity of stevioside. This increase includes $739,286 of inventory held at our recent acquisition, Qufu Shengwang.

Prepaid expenses and other current assets increased $150,153 or approximately 57% at January 31, 2009 as compared to April 30, 2008. This increase was mainly attributable to an increase in advances to suppliers in our veterinary medicine line of products that reflected deposits relating to the orders for inventory in the ordinary course of business which were subsequently received.

At January 31, 2009, we had property and equipment, net of accumulated depreciation, of $16,894,517 as compared to $14,151,293 at April 30, 2008. This increase reflects investments in buildings and equipment primarily related to our expansion in capacity in our stevioside production facilities and our recent acquisition of Qufu Shengwang which contributed approximately $3.5 million. We have no capital expenditures commitments in fiscal 2009.

At January 31, 2009, we reflected $2,471,898 of accounts payable and accrued expenses, a decrease of approximately $177,919 from April 30, 2008. This balance includes trade accounts payable and accrued expenses of $2,361,879 and accrued salaries and benefits of $110,019.

At January 31, 2009, we held cash of $6,957,805 as compared to cash of $6,811,136 at April 30, 2008, an increase of $146,670. While we did borrow $180,000 during the nine months ended January 31, 2009, the increase is primarily a result of collection efforts on outstanding receivables and timing differences in payments of liabilities and receipts of cash from sales.

Net cash used in operating activities

During the nine months ended January 31, 2009, we used $337,448 in operating activities , received $167,829 from investing activities, and realized $180,000 from by financing activities. The effect of prevailing exchange rate on cash was $136,288 as compared to $730,725 for the nine months ended January 31, 2009 and 2008, respectively.

Net cash used in operating activities decreased to $337,448 during the nine months ended January 31, 2009 as compared to cash used in operating activities of $2,540,684 for the prior period in fiscal 2008. For the nine months ended January 31, 2009, our material sources of cash included net income of $723,737, which included non-cash depreciation of $1,197,515, stock-based compensation of $350,047, and a $446,076 decrease in accounts receivables. These increases were offset by $2,318,340 used to stockpile inventory during the stevia leaves harvest season, a decrease in accounts payables and accrued expenses of $412,526, and taxes payable of $233,234. Comparatively, net cash used in operating activities for the nine months ended January 31, 2008 was $2,540,684. For the nine months ended January 31, 2008, we used $3,075,086 to fund increases in inventory, $929,531 to reduce accounts payable and accrued expenses and $567,802 in increased levels of accounts receivable.

- 29 -

Index

During the nine months ended January 31, 2009, net cash provided by investing activities totaled $167,829 which is comprised of $410,704 of cash acquired during our acquisition of Qufu Shengwang, offset by capital expenditures of $242,875 related to manufacturing equipment, as compared to $593,303 used in investment during the nine months ended January 31, 2008 comprised of the capital expenditures related to construction and completion of the new Stevia facility.

Net cash provided by financing activities totaled $180,000 during the nine months ended January 31, 2009 and was attributable to two loans during the period. On July 1, 2008, the Company and Mr. Laiwang Zhang, our President and Chairman, entered into a $100,000 note payable agreement with China Direct Investments, Inc., a consultant to the Company. The note bears interest at 6% per annum, and is secured by 400,000 shares of our common stock held by Mr. Laiwang Zhang, and is due with all related accrued interest on July 1, 2009. This loan was satisfied during the fourth quarter of 2009. In January 2009, the Company borrowed $80,000 from unrelated third parties for working capital. The short term loan bears no interest and the company satisfied the loan on of March 5, 2009. Net cash provided by financing activities was $1,154,773 for the nine months ended January 31, 2008, and was all attributable to the exercise of warrants.

Transactions with related parties

We pay Pharmaceutical Corporation management fees for services including housing provided to certain of our non-management employees, government mandatory insurance for our employees and rent for our principal offices and the use of research and development facilities. Pharmaceutical Corporation is controlled by our President and Chairman, Mr. Laiwang Zhang.

The amount of the management fee is discretionary, subject to increase at Mr. Zhang's discretion. For the nine months ended January 31, 2009 and 2008 this management fee was $347,274 and $144,337, respectively, which such amounts are included in our general and administrative expenses in the respective financial statements appearing elsewhere in this report. Pursuant to the Wild Flavors agreement referenced in Note 13 herein, beginning in February 2009 our President and Chairman, Mr. Laiwang Zhang has orally agreed to waive the management fees related to Sunwin Stevia's operations for the balance of the 2009 calendar year. Mr. Laiwang Zhang has also orally agreed that beginning January 2010, the maximum consulting fee that will be charged to the Company by Pharmaceutical Corporation will be approximately $175,508 (RMB 1,200,000) per year.

On September 5, 2008, a creditor of the Company agreed to accept $372,900 as partial payment of amounts due to them. The three employees of the Company, owed us $372,900 relating to the exercise of common stock options. As a result of this transaction, $372,900 due the Company, carried as a subscription receivable, was satisfied and the balance due to related parties was reduced by a similar amount.

On September 2, 2008, our wholly owned subsidiary, Qufu amended its June 30, 2008 Acquisition Agreement (the "Acquisition Agreement Amendment") with Qufu Shengwang and its shareholder Group Corporation.

On November 18, 2008, Qufu Natural Green amended the June 30, 2008 Agreement with Qufu Shengwang and its shareholder, Shandong Group (the “Second Amendment to Acquisition Agreement”). Under the terms of the Second Amendment to Acquisition Agreement, Qufu Natural Green agreed to acquire Shandong Group's 60% interest in Qufu Shengwang for $4,026,851. The purchase price represents 60% of the revised value of the net assets of Qufu Shengwang of $6,711,418 as of April 30, 2008. The net assets of Qufu Shengwang were further revised to account for a $698,115 decrease in the value of inventory and a $2,924,489 decrease in the value of intangible assets as of April 30, 2008.

As a result of the Second Amendment to Acquisition Agreement, on November 18, 2008 the Company entered into a second amendment to the Stock Sale Agreement to reduce the total number of Shares to be purchased by Shandong Group from 29,525,776 to 19,175,480 at a price of $.21 per share (the “Second Amendment to Stock Sale Agreement”). As a result of the Second Amendment to Stock Sale Agreement, the Company cancelled 10,350,296 shares issued to Shandong Group and refund to Shandong Group $2,173,562 reflecting the difference between the purchase price of $6,200,413 under the Amendment to Stock Sale Agreement and the purchase price of $4,026,851 for the Shares under the Second Amendment to the Stock Sale Agreement. The 19,175,480 shares of Common Stock purchased by Shandong Group represents approximately 22% of the issued and outstanding shares of common stock of the Company prior to the transaction.

In addition, the Stock Sale Agreement Amendment provides that in the event Qufu Shengwang does not earn a minimum of $5,000,000 in net income as determined in accordance with U.S. GAAP (the "Target Amount") over a period of 36 consecutive months beginning the first day of the month following the closing of the stock purchase (the "Earnings Target Period"), then Group Corporation shall be obligated to return to us a number of shares of common stock equal to an amount computed by multiplying (i) a fraction, the numerator of which is the Target Amount less the amount of Qufu Shengwang's net income earned over the Earnings Target Period and the denominator is the Target Amount; by (ii) 29,525,776, the number of shares purchase under the Stock Sale Agreement Amendment. The closing under the Stock Sale Agreement Amendment shall take place no later than September 30, 2008.

- 30 -

Index

As set forth above, in February 2006 we granted options to five employees and, upon exercise, the option holders tendered to us non-interest bearing promissory notes representing the exercise price of the options. At January 31, 2009 the amount outstanding under those notes was $0 and is reflected on our balance sheet as a subscription receivable. In addition, on September 24, 2007, our subsidiary, Sunwin Canada, borrowed $430,000 from an unaffiliated party associated with the Chairman of our company. The loan bears no interest, is unsecured and is due on demand. On September 5, 2008, the three employees who collectively represented the amount of subscription receivable due us, which included Ms. Wu our Chief Financial Officer, agreed to pay the amounts of the subscription receivables owned by each of them directly to the lender in satisfaction of $372,900 of the amount owned by our company and lender agreed to accept in partial payment of amounts due him, payment by three employees of our company. As a result of this transaction, monies due us in the amount of $372,900, carried as a subscription receivable, were satisfied and the balance due to related parties was reduced by a similar amount.

As of January 31, 2009, we do not have any commitments for capital expenditures. During fiscal 2009, we may seek to raise additional working capital to further augment our cash position and to provide additional funds for expansion through acquisition, and expanded marketing and distribution as we seek to bring distribution of stevioside to North American markets. We do not have any firm commitments for any additional capital and there are no assurances we will obtain a commitment upon terms and conditions which are acceptable to us.

OFF BALANCE SHEET ARRANGEMENTS

Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. An off-balance sheet arrangement means a transaction, agreement or contractual arrangement to which any entity that is not consolidated with us is a party, under which we have:

	·	Any obligation under certain guarantee contracts;

	·	unconsolidated entity or similar arrangement that serves as credit,

	·	liquidity or market risk support to that entity for such assets;

	·	Any obligation under a contract that would be accounted for as a derivative instrument, except that it is both indexed to our stock and classified in stockholder's equity in our statement of financial position; and

	·	Any obligation arising out of a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or engages in leasing, hedging or research and development services with us.

- 31 -

Index

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with U.S. GAAP.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable for a smaller reporting company.

ITEM 4T. CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of January 31, 2009, the end of the period covered by this report, our management concluded its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this report, is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and to reasonably assure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of the evaluation date, our CEO and CFO have concluded that we do not maintain disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. The decision by our management is based upon two recent events, including:

As previously disclosed in our Form 8-K filed with the SEC on September 12, 2008, our Board of Directors determined on September 11, 2008 that our consolidated financial statements for the fiscal year ended April 30, 2008 could no longer be relied upon as they contained an error. This error related to the liability of advances from customers, which was overstated by $570,090. The advance was, in fact, an advance from one of our subsidiaries to another subsidiary, that, had it been accounted for correctly, would have been eliminated in consolidation. As a result of this error, our management has determined that we failed to maintain effective controls to review and reconcile intercompany transactions. Our financial statements and disclosures were restated to correct for this matter and were included in Form 10-K/A filed with the SEC on September 15, 2008.

During the preparation of this report we determined that the prior disclosure surrounding the granting of options in February 2006 to certain of our employees and the subsequent exercise of those options through the delivery of non-interest bearing notes was incorrect. While the option grants and promissory notes were properly accounted for, our historical disclosure had failed to properly disclose that Ms. Fanjan Wu, our Chief Financial Officer was a party to those transactions. She was the recipient of options to purchase 800,000 shares of common stock and tendered to us a non-interest bearing promissory note in the amount of $720,000. At July 31, 2008 the amount due under that note was $54,900. As described later in this report, that amount has been satisfied through the assumption of a third party debt. As a result of this error, our management has determined that we failed to maintain effective controls to properly record related party transactions.

Accordingly, management determined that these control deficiencies constitute material weaknesses. A material weakness is a control deficiency, or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of our annual or interim financial statements would not be prevented or detected. As a result of these material weaknesses, our management has concluded that our internal control over financial reporting was not effective as of January 31, 2009. Our management believes that significant remediation measures are required in order to improve our disclosure controls.

- 32 -

Index

Our Chief Financial Officer and our staff within our finance and accounting group in China do not have the requisite expertise in the proper application of U.S. GAAP and the securities laws of the United States to ensure that the requisite information is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and to reasonably assure that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Accordingly, until such time as we have properly trained our internal accounting staff, including our Chief Financial Officer, in the application of U.S. GAAP and compliance with the securities laws of the United States we may experience additional and/or continuing material weaknesses in our disclosure controls that may result in errors in our financial statements in future periods.

There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Not applicable to a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

- 33 -

Index

ITEM 6. EXHIBITS

Exhibit

Number	Description

31.1	Section 302 Certificate of Chief Executive Officer

31.2	Section 302 Certificate of Chief Financial Officer

32.1	Section 906 Certificate of Chief Executive Officer

32.2	Section 906 Certificate of Chief Financial Officer

- 34 -

Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.


Dated: March 16, 2009	By: /s/ Dongdong Lin
	Dongdong Lin,
	Chief Executive Officer


Dated: March 16, 2009	By: /s/ Fanjun Wu
	Fanjun Wu,
	Chief Financial Officer

- 35 -