SUNWIN STEVIA INTERNATIONAL, INC. - Annual Report: 2010 (Form 10-K)

suwn10-k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

(MARK ONE)

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2010

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________________ TO __________________________

Commission File Number: 000-53595

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

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

6 SHENGWANG AVENUE, QUFU, SHANDONG, CHINA 273100

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (86) 537-4424999

Securities registered under Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
None		Not applicable

Securities Registered Under Section 12(g) of the Act:

Common stock, par value $0.001

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. oYes xNo

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. oYes xNo

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. xYes oNo

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). oYes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	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) oYes No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value on October 31, 2009 was $36,645,462.

Indicated the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 163,329,449 shares of common stock are issued and outstanding as of July 26, 2010.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: None.

TABLE OF CONTENTS

		Page No.
Part I
Item 1.	Business.	1
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments.	17
Item 2.	Properties.	17
Item 3.	Legal Proceedings.	18
Item 4.	(Removed and Reserved).	18

Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	18
Item 6.	Selected Financial Data.	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	32
Item 8.	Financial Statements and Supplementary Data.	32
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	32
Item 9A.(T)	Controls and Procedures.	32
Item 9B.	Other Information.	34

Part III
Item 10.	Directors, Executive Officers and Corporate Governance.	34
Item 11.	Executive Compensation.	36
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	39
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	40
Item 14.	Principal Accountant Fees and Services.	41

Part IV
Item 15.	Exhibits, Financial Statement Schedules.	42
	Signatures	44

INDEX OF CERTAIN DEFINED TERMS USED IN THIS REPORT

Our fiscal year end is April 30. The fiscal year ended April 30, 2009 is referred to as “fiscal 2009”, the fiscal year ended April 30, 2010 is referred to as “fiscal 2010”, and the fiscal year ending April 30, 2011 is referred to as “fiscal 2011”.

When used in this report, the terms:

	-	“Sunwin”, “we”, “us” and the “Company” refers to Sunwin International Neutraceuticals, Inc., a Nevada corporation, and our subsidiaries;

	-	“Sunwin Tech” refers to our wholly owned subsidiary Sunwin Tech Group, Inc., a Florida corporation;

	-	“Qufu Natural Green” refers to our wholly owned subsidiary Qufu Natural Green Engineering Co., Ltd., a Chinese limited liability company;

	-	“Shengya Veterinary Medicine” refers to, Shengya Veterinary Medicine Co., Ltd., a Chinese limited liability company, and a wholly owned subsidiary of Qufu Natural Green;

	-	“Sunwin Stevia International” refers to our wholly owned subsidiary Sunwin Stevia International Corp., a Florida corporation, which was converted to Sunwin USA, LLC a Delaware limited liability company;

	-	“Sunwin USA” refers to Sunwin USA, LLC, a Delaware limited liability company, a 55% owned equity method investment;

	-	“Sunwin Canada” refers to our wholly owned subsidiary Sunwin (Canada) Pharmaceutical Ltd., a Canadian corporation;

	-	“Qufu Shengwang” refers to Qufu Shengwang Stevia Biology and Science Co., Ltd., a Chinese limited liability company. Qufu Natural Green owns a 60% interest in Qufu Shengwang; and

	-	“Qufu Shengren” refers to Qufu Shengren Pharmaceutical Co., Ltd., a Chinese limited liability company, and a wholly owned subsidiary of Qufu Natural Green.

We also use the following terms when referring to certain related parties:

	-	“Pharmaceutical Corporation” refers to Shandong Shengwang Pharmaceutical Co., Ltd., a Chinese limited liability company which is controlled by Mr. Laiwang Zhang, President, Chairman and a principal shareholder of our company;

	-	“Shandong Group” refers to Shandong Shengwang Group Co., Ltd., a Chinese limited liability company, controlled by Mr. Zhang; and

	-	“Wild Flavors” refers to Wild Flavors, Inc., a Delaware corporation.

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PART I

ITEM 1.

BUSINESS

We sell stevioside, a natural sweetener, as well as herbs used in traditional Chinese medicines and veterinary products. Substantially all of our operations are located in the People’s Republic of China (the “PRC”). We have built an integrated company with the sourcing and production capabilities designed to meet the needs of our customers.

During fiscal 2010 our operations were organized in two operating segments related to our product lines:

-	Stevioside, and
-	Chinese and Veterinary Medicines.

In June, 2010, we elected to streamline our product offerings to focus on our core business of producing and selling stevia and other herb-based products including herb extracts and herb medicines. During fiscal 2009 and 2010, our Veterinary Medicine segment has witnessed a significant decrease in customer demand primarily due to (i) the global economic downturn, and (ii) reduction in breeding and farm operations by our customers who cut back production in an effort to reduce the spread of swine flu in humans and animals and as a result of restrictions imposed by the PRC on the use of antibiotics and the breeding of livestock. We anticipate this decline to continue in both customer demand and profit margins for the coming years. Consequently, subsequently to April 30, 2010 we made a determination that we will exit all business activities related to our veterinary medicines segment. On June 29, 2010 entered into an agreement to sell our 100% interest in our subsidiary Shengya Veterinary Medicine to Mr. Laiwang Zhang, our President and Chairman of the Board of Directors. See “Business – Our Corporate History – Sale of Shengya Veterinary Medicine.” The transaction is expected to close on July 31, 2010. Revenues from Shengya were 11% and 16%, respectively, of our total revenues in fiscal 2010 and 2009.

STEVIOSIDE - A NATURAL SWEETENER

In our Stevioside Segment, we produce and sell a variety of grades of stevioside, an all natural, low calorie sweetener, and OnlySweet, a stevioside based table top sweetener. In fiscal 2010, our Stevioside Segment generated revenues of $10.7 million, representing 74% of our total consolidated revenues.

Stevioside and rebaudioside are all natural low calorie sweeteners extracted from the leaves of the stevia rebaudiana plant of the Aster/Chrysanthemum family. The leaves of the stevia rebaudiana plant have been used for centuries to sweeten bitter beverages and to make tea in the plant’s native Paraguay. Stevia is grown commercially in Brazil, Paraguay, Uruguay, Central America, Israel, Thailand and China. The stevia rebaudiana plant was first introduced to China in 1977 and commercial harvesting of stevia started in the mid-1980’s. There are two major species of stevia grown in China; one was cultivated by Chinese researchers and another was introduced from Japan. Most stevioside produced in China is exported throughout Asia, primarily to Japan and South Korea.

The use of Stevioside and Related Approvals

Stevioside is a safe and natural alternative to sugar for people needing low sugar or low calorie diets. Stevioside can be used to replace sugar in beverages and foods, including those that require baking or cooking where man made chemical based sweetener replacements are not suitable. As of the date of this report, stevioside may be used in a wide variety of consumer products including soft drinks, vegetable products, tabletop sweeteners, confectioneries, fruit products and processed seafood products, in the United States, Japan, Korea, China, Taiwan, India, Indonesia, Israel, Germany, Brazil, Paraguay, Malaysia, Russia and Switzerland.

We believe worldwide demand for alternative sweeteners, such as our stevia based products, will increase as more countries permit the use of stevioside as a food additive. In December 2008, Australia and New Zealand approved highly purified forms of stevioside as safe for use in food and beverages. Previously, stevioside had only been permitted for use as a dietary supplement in these countries. Stevioside has been sanctioned by the Ministry of Health of China to be used as a food additive, and is listed in the Sanitation Standard of Food Additives. Presently the European Union (“EU”) and Canada permit the use of stevioside only as a dietary supplement.

Efforts to eliminate the European Union’s ban on the consumption of stevia are ongoing. The European Stevia Research Center (“ESC”) and the European Stevia Association (“EUSTAS”) are EU based organizations that focus on stevioside research and the elimination of the EU’s ban on the consumption of stevioside. The ESC is housed at the Laboratory of Functional Biology at the Katholieke Universities Leuven (“KU Leuven”) in Belgium and was founded by Professors Jan Geuns of the Laboratory for Functional Biology and Johan Buyse of the Laboratory of Physiology and Immunology of Domestic Animals at KU Leuven.

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In June 2007, the Joint Expert Committee on Food Additives (“JECFA”) concluded that steviol glycoside showed no adverse affects and was stable for use in food and acidic beverages under normal conditions and in June 2008 extended its recommendation for acceptable daily intake of up to 4 mg per kg body weight per day.

In April 2010, at the request from the European Commission, the European Food Safety Authority’s scientific Panel on additives, the ANS Panel, has assessed the safety of steviol glycosides, sweeteners extracted from plant leaves, and established an acceptable daily intake for their safe use. The assessment has been sent to the European Commission which will consider whether or not to authorize the substances in the European Union for their proposed use in particular in sugar free or reduced energy foods such as certain flavored drinks, confectionery with no added sugar or energy reduced soups.

The toxicological testing conducted by the ANS panel showed that the substances are not genotoxic, nor carcinogenic, nor are they linked to any adverse effects on the human reproductive system or for the developing child. The ADS panel set an acceptable daily intake of 4 mg per kg body weight per day for steviol glycosides, a level consistent with that already established by JECFA.

EUSTAS believes that the current EU ban on stevia is out of sync with the current global regulatory environment and the EU could grant approval for stevia in 2010 based on the FDA’s decisions and JECFA's decision on the acceptable daily intake of stevia.

On March 23, 2010, we received a “no objection letter” from the U.S. Food and Drug Administration (the “FDA”) regarding our request for FDA Generally Recognized As Safe (GRAS) status on five of our stevia extract products, including Rebaudioside A 98, Rebaudioside A 95, Rebaudioside A 80, Rebaudioside A 60, and Stevioside 90 Stevia Extracts. The FDA affirmed GRAS status confirms that these stevia extracts are considered safe for use as a general purpose sweetener in foods, excluding meat and poultry products. This affirmation was based on our conclusion which is supported by the extensive independent review of our production processes and the overall quality of these stevia products by a panel of qualified scientists.

OnlySweet

OnlySweet is an all natural, zero calorie, dietary supplement comprised of three natural ingredients, including stevioside. In June 2008 we began production of a new blend of OnlySweet increasing its sweetness. We believe this new OnlySweet formulation represents a significant advancement in quality resulting in a sweeter with more natural taste compared to other manufacturers of stevioside based sweeteners. We believe consumers will be attracted to these improvements in taste, absence of aftertaste and overall mouth feel of this new blend of OnlySweet. OnlySweet renewed its Kosher certification in July 2009 and is manufactured in the United States at an FDA approved blending facility.

We sell OnlySweet to health food retailers, national and regional grocery chains in boxes of 50 and 100 packets of one gram each. OnlySweet is carried in an estimated 3,500 stores in the U.S. and is generally located in the sweetener aisle with all natural and alternative sweeteners. We intend to continue to focus on marketing OnlySweet as a zero calorie sweetener alternative; as well as a “green” alternative. Natural products are one of the fastest growing segments in the grocery industry.

Our Customers

The majority of our stevioside is sold on a wholesale basis to domestic food manufacturers and foreign trade companies. Our top 10 customers accounted for 63% of our stevioside sales in fiscal 2010. Chengdu Wagott Pharmaceutical Co., Ltd. represented 24% of our total revenues from this segment in fiscal 2010.

Sources and Availability of Raw Materials - Stevioside

The Shandong Province is a primary harvesting base of stevia leaves as well as the main region for the production of stevioside in China. We purchase all raw materials directly from local suppliers at market prices and pay for the leaves at the time of purchase. We test stevia leaves prior to purchase in an effort to maintain quality control. Our internal policy is to purchase leaves with stevioside content in excess of 12%. We believe there is ample supply in the market of leaves with stevioside content in excess of 12%. In fiscal 2010, no supplier accounted for more than 10% of our purchases of raw materials used in our Stevioside Segment.

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Manufacturing, Extraction and Packaging

We have been engaged in the continuous production of stevioside since 1998. We use a traditional extraction technology process known as “aqueous extraction” which involves the use of purified water extraction and air dehydration to produce stevioside. The extraction process for stevioside generally takes seven days. The plant leaves are first dried and then inspected to insure quality leaves are used in the extraction process. We then use a combined process involving a solid/liquid extraction procedure, followed by a liquid-purifying step that is traditionally used to extract the stevioside from the stevia leaves. This all natural method results in a pure white stevia crystal, with no brownish coloring. Once the extraction process has been completed, the final product is ready for packaging and shipment to our customers. We bulk package our stevioside in 10 kilogram packages, two per box.

We set our production schedules based on the market demand and our capacity. Our stevioside production capacity is approximately 500 metric tons annually which reflects a production capacity decrease of 100 metric tons from fiscal 2009. This decrease is a result of the closure of a 36,000 square foot stevioside production facility located in the inner part of Qufu City due to a government policy which mandated the closure of factories not located in newly zoned areas of the city.

In July 2008, our stevioside manufacturing facility located in the Shuyuan Economic Zone of Qufu City, of the Shandong Province received a Certificate of Good Manufacturing Practices from the PRC. In fiscal 2010 we discontinued our practice of purchasing stevioside from third parties for resale. As a result of the completion of our new manufacturing facilities we have sufficient production capacity to meet demand.

In fiscal 2009, we converted our GMP certified pharmaceutical production facilities located at Qufu Shengren to a high grade stevioside production line (Rebaudioside A 80, 95 and 98). In fiscal 2010, we manufactured approximately 280 tons of stevioside, a decrease of 157 tons from prior year, mainly due to a reduction instevia sales..

CHINESE AND VETERINARY MEDICINE SEGMENT

In our Chinese and Veterinary Medicine Segment, we manufacture and sell a variety of veterinary medicines, including seven series of more than 200 products, as well as traditional Chinese medicine formula extracts which are used in products made for use by both humans and animals. In fiscal 2010 this segment generated revenues of $3.8 million, representing 26% of our total consolidated revenues.

Veterinary Medicines

Historically, we were an advocate of preparing animal medicine from Chinese herbs, especially in antiviral and feed additives. We had concentrated our efforts in this product category on developing and producing medicines which were relevant to the needs of the animal stock industry in the PRC, and developing special veterinary medicines derived from traditional Chinese medicines or combining traditional Chinese medicine with Western medicine for feed additives, feeds and antibiotics. In fiscal 2010, these products were sold throughout 28 provinces in the PRC. During fiscal 2010, we discontinued 12 veterinary medicine products, but also launched 63 additional veterinary medicine products.

In fiscal 2010, we manufactured and sold all natural polysaccharid and flavonoid extraction compound feed additives. We believe these compounds have little or no side effects and can be substituted for antibiotics and chemical compounds often found in animal feeds. We believe our products provide a number of additional benefits, including:

	-	Producing safe and healthy animal foods;
	-	Reducing fat and cholesterol contents, improving the quality of animal feeds, and in turn improving the taste of livestock and birds;
	-	Reducing potential toxicity associated with antibiotic and chemical compounds present in animal feeds;
	-	Improving livestock growth rates;
	-	Improving animal disease-resistance. We believe these products regulate the intestines which in turn prevent diseases or aid in the resistance to diseases; and
	-	Reduced labor cost. These products contain active plant substances such as flavonoid and multi-hydroxybenzene. The additives serve a dual-purpose; restraining the growth of mildew thereby improving the taste of the animal feed and increasing appetite. By increasing the animal’s appetite, the animal feeds in less time thereby reducing labor costs.

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We also sold our brand of CIO2 food disinfectant. CIO2, a chemical employed in both industrial and commercial applications., was developed successfully in 1985. It was regarded as a food disinfectant by the European Environmental Protection Unit and the U.S. Environmental Protection Agency and was sanctioned as a food additive by the FDA. Japan, Australia and the European Union followed suit and regarded CIO2 as the fourth generation of safe disinfectant and food additive as a substitute to chlorine serial disinfectants. CIO2 is regarded as an A-grade safe additive by the World Health Organization and has been strongly promoted on a global scale since February 2004.

Traditional Chinese Medicine Formula Extracts

Chinese herbal medicine has been applied as a means of both the prevention and treatment of illness and disease. We believe many modern chemical medicines contain high toxicities and present numerous side effects. Purely chemical based medicines are difficult, time consuming and expensive to develop. We believe natural Chinese traditional medicines represent an alternative approach offering advantages over a variety of chemical medicines and the process of combining herbal extraction and chemical medicines is becoming a popular alternative, following the current trends of “natural” and “green” products in a variety of industries.

We manufacture and sell approximately 280 different extracts of the estimated 400 traditional Chinese medicine extracts, which can be divided into the following three general categories:

	-	single traditional Chinese medicine extracts;
	-	compound traditional Chinese medicine extracts; and
	-	Purified extracts, including active parts and monomer compounds such as soy isoflavone.

Our Customers

Veterinary Medicine. We sold our veterinary medicine products on a wholesale basis to livestock and poultry farmers, retail veterinary product outlets and cultivating businesses. During fiscal 2010 and fiscal 2009, no customer accounted for more than 10% of our total revenues from this segment. We do not have contracts with our customers and sales are made under a purchase order arrangement. Generally, payment terms for our veterinary medicine products range from prepaid prior to shipment to net 60 days.

Chinese Medicine. We sell our traditional Chinese medicine formula extracts on a wholesale basis to domestic traditional Chinese medicine manufacturers and animal pharmaceutical manufacturers primarily located in China. In fiscal 2010 and fiscal 2009, no single customer represented more than 10% of our total revenues from this segment. We do not have contracts with our customers and sales are made under a purchase order arrangement. We generally require a deposit (ranging from 10% to 30% of the purchase) at the time an order is submitted, and offer payment terms of between six months to one year for the balance of the payment.

Sources and Availability of Raw Materials – Chinese and Veterinary Medicines

Most of our raw material purchases for our veterinary medicines are from the country’s herbal harvesting bases in the Shanxi Province. This area as well as the Anhui Province and the Anguo Area of the Hebei Province, two other herbal markets in China, are commonly referred to as the Chinese Traditional Medicine Treasury. We purchased raw materials for our veterinary medicines and traditional Chinese medicine formula extracts on the open market at market prices. For products which are based on traditional Chinese medicines, we used extract formulas produced by our own traditional Chinese medicine formula extract group. Since we purchased our raw materials at spot prices in the open market, an increase in the market price for these raw materials could have an adverse impact on our cost structure and related margins in this segment. We purchased raw materials from a number of suppliers to ensure favorable pricing.

We believe there is ample supply in the market for the foreseeable future of the ingredients for our products of our Chinese and Veterinary Medicine Segment. In fiscal 2010, no suppliers accounted for over 10% of our purchases of raw materials used in this segment.

Formulation, Manufacturing and Packaging

We manufactured approximately 280 extracts used in traditional Chinese medicine. These formulas are either commonly used formulas published in the National Medicine Dictionary or industry standard formulas which may have been developed by university research scientists or internally developed by our research and development personnel. Internally developed formulas must be approved by the Shandong Bureau of Quality and Technical Supervision prior to public use.

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NEW PRODUCT DEVELOPMENT

We engage in new product development both through our internal research facilities, industry consultants and specialists and in partnership with a number of research facilities in the PRC. including:

-	Tianfulai Bio-Tech Technology Co., Ltd. (Beijing) where we are seeking to develop the traditional Chinese medicine polysaccharide anthone extract powder for forage; and
-	Beijing Medical University and China Agriculture University.

We pay for the use of these facilities on an as needed basis and the costs are included in our research and development expenses. In fiscal 2010 and fiscal 2009 we spent $1.5 million and $0.04 million, respectively, on research and development.

As part of Wild Flavors investment in our company, Wild Flavors agreed to provide product development services as part of a broader services agreement with Sunwin USA LLC. See “Item 1. Business – Our Corporate History – Wild Flavors.”

In August 2009 we entered into an agreement with a consultant to provide training to workshop technologists/technicians and improve testing procedure to increase the production yield of our stevioside production process for which we paid approximately $96,000. This work was completed in January 2010.

In September 2009 we entered into an agreement with Jianping Feng to provide lab technicians training, assist us in new product development, project research and the selection of professional consultants in our veterinarian medicine business. The term of the agreement is from September 1, 2009 to August 31, 2010. We agreed to pay Mr. Feng approximately $176,000 over the term of the contract.

In October 2009 we entered into an agreement with Beijing Hongma Mingtai Biotechnology Co., Ltd. to assist us in the preparation and filing of an application with Chinese Ministry of Agriculture for a new herb based veterinary medicine drug including preparation, compilation, review and submission of the application documents and trial test reports required in connection with the filing of the application. We agreed to pay Beijing Hongma Mingtai Biotechnology Co., Ltd. approximately $147,000 for this work and an additional $147,000 upon release of the product, satisfactory customer acceptance and achievement of market share.

In November 2009 we entered into an agreement with Lin Hou to develop extraction techniques to enhance the stevioside content and quality during mass production. We agreed to pay Mr. Hou approximately $74,000 and issue 1,000,000 shares of our common stock valued at $260,000 upon reaching various milestones throughout the course of the project. These shares were issued in June 2010.

In December 2009 we entered into an agreement with Xiangtao Kong to assist us in developing processing techniques for the production of high grade stevia products and to assist us in production design, equipment installation and testing for the mass production of these high grade stevia products. We agreed to grant to Mr. Kong 684,000 shares of our common stock (valued at $157,366) upon satisfactory completion of testing of the equipment he is responsible for implementing. These shares were issued in June 2010.

In April 2010 we entered into an agreement with Beijing Hongma Mingtai Biotechnology Co., Ltd. to compile and revise GMP software used in the production of a variety of veterinarian and Chinese herbal medicine products and assist us in data entry, staff training, document submission and obtaining GMP certification. We agreed to pay Beijing Hongma Mingtai Biotechnology Co., Ltd. approximately $188,000 in installments over the course of the project upon completion of various milestones.

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Competition

Our subsidiaries and the business segments they operate in face unique challenges and extensive competition.

Stevioside. There are approximately 30 stevioside manufacturers operating on a continuing basis in China. Our primary competitors in the stevioside market are Ganzhou Julong High Technology Food Industry Co., Ltd., Shandong Huaxian Stevia Co., Ltd., GLG Live Tech Corp. and PureCircle Limited. While these competitors have production capacity similar to ours, we believe we compete effectively with them based on our production capabilities and product quality. In addition, other companies periodically enter the market depending upon demand. These short term participants may choose to stop production when raw materials are not readily available in the marketplace. The sporadic oversupply of product from these competitors can adversely affect our market share. Furthermore if demand wanes, these competitors may reduce the price of their products which can adversely affect market prices. In addition to competing with other Chinese companies, we also compete with foreign growers and processors.

Veterinary Medicine. Our principal competitors in our veterinary medicine product line were China Animal Husbandry Industry Co., Ltd., Qilu Animal Health Products Factory Co., Ltd. and Shinjaizhuang Huamu Animal Husbandry Co. Ltd. In addition, as the PRC is a member of the World Trade Organization, our competitors are permitted to import a variety of products that directly compete with the products we sell. As we foresee a continued decline in sales and profit margin in this Segment for the coming years due to the global economic downturn and a reduction in breeding and farm operations we made a strategic decision in June 2010 to exit all business activities related to Veterinary Medicine to streamline our product offerings by focusing on our core business in the production and sales of stevia and other herb-based products including herbal extracts and medicines.

Chinese Medicine. The market in the PRC for traditional Chinese medicine extracts is extremely competitive. We believe there are more than 500 companies engaged in herb extraction in the PRC. Companies in many different industries, including pharmaceutical companies, chemical companies, health products companies, herb extraction companies, biological engineering companies and research and development institutions, are now engaged in herb extraction. Our major competitors include Anhui Xuancheng Baicao Plants Industry & Trade Co., Ltd., Sichuan Shifangkangyuan Medicine Materials Co., Ltd. and Lanzhou Lantai Bio-Engineering Tech Co., Ltd. Most products from these companies are exported to overseas markets. Competitive factors primarily include price and quality. We believe our ability to compete is related to our product quality and reputation in the market place. Globally, we believe we will be able to effectively compete against similar companies from other countries as a result of our lower labor costs and China’s soil and growing conditions, which enable us to produce higher quality products.

INTELLECTUAL PROPERTY

Our success depends in part on our ability to protect our intellectual property which includes various raw materials purification technologies used in our products. We have received a trademark from the U.S. Patent and Trademark Office covering the trade name “Only Sweet” which we are using for our stevioside in our North American distribution of the product.

To protect our proprietary rights, in our dealings outside the PRC we generally rely on confidentiality agreements with employees and third parties, and agreements with consultants, vendors and customers, although we have not signed such agreements in every case. We do not have any similar agreements with any of our employees or consultants in the PRC. Despite such protections, a third party could, without authorization, utilize our propriety technologies without our consent. In the past three of our traditional Chinese medicine products and four of our veterinary medicine products have been copied by our competitors. We can give no assurance that our agreements with employees, consultants and others who participate in the production of our products will not be breached, or that we will have adequate remedies for any breach, or that our proprietary technologies will not otherwise become known or independently developed by competitors.

GOVERNMENT REGULATION

Our business and operations are primarily located in the People’s Republic of China. We are subject to state and local environmental laws related to certification of water release. We are subject to registration and inspection by The Ministry of Agriculture of China with respect to the manufacture and distribution of veterinary medicines and the State Food and Drug Administration of China (“SFDA”) with respect to the manufacturing and distribution of traditional Chinese medicine extracts. We are also licensed by the Shandong Provincial Government to manufacture veterinary medicine and stevioside. We believe we are in compliance with all provisions of those registrations, inspections and licenses and have no reason to believe that they will not be renewed as required by the applicable rules of the Central Government and the Shandong Province. In addition, our operations must conform to general governmental regulations and rules for private (non-state owned) companies doing business in China.

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The Good Manufacturing Practice ("GMP") regulations of the U.S. Food, Drug and Cosmetic Act require domestic or foreign manufacturers to employ a quality system for the design, manufacture, packaging, labeling, storage, installation, and servicing of finished medical devices intended for commercial distribution in the United States. In addition, the GMP regulations require (i) various specifications and controls be established for devices; (ii) devices be designed under a quality system to meet these specifications; (iii) devices be manufactured under a quality system; (iv) devices meet these specifications; (v) devices be correctly installed, checked and serviced; (vi) quality data be analyzed to identify and correct quality problems; and (vii) complaints must be processed. The regulations are intended to ensure that medical devices are safe and effective for their intended use. The FDA monitors device problem data and inspects the operations and records of device developers and manufacturers to determine compliance with the GMP regulations.

The production, distribution and sale of our products in the United States is subject to various federal and state regulations, including but not limited to: the Federal Food, Drug and Cosmetic Act (“FDCA”); the Dietary Supplement Health and Education Act of 1994; the Occupational Safety and Health Act; various environmental statutes; and various other federal, state and local statutes and regulations applicable to the production, transportation, sale, safety, advertising, labeling and ingredients of such products.

Compliance with applicable federal and state regulations is crucial to our. Although we believe that we are in compliance with applicable regulations, should the FDA or any state in which we operate amend its guidelines or impose more stringent interpretations of current laws or regulations, we may not be able to comply with these new guidelines. Such regulations could require the reformulation of certain products to meet new standards, market withdrawal or discontinuation of certain products we are unable to reformulate, imposition of additional record keeping requirements, expanded documentation regarding the properties of certain products, expanded or different labeling and/or additional scientific substantiation. Failure to comply with applicable requirements could result in sanctions being imposed on us or the manufacturers of any of our products, including but not limited to fines, injunctions, product recalls, seizures and criminal prosecution.

The FDCA generally regulates ingredients added to foods and requires that such ingredients making up a food product are themselves safe for their intended uses. In this regard, generally when a company adds an ingredient to a food, the FDCA requires that the ingredient either be determined by the company to be generally regarded as safe (“GRAS”) by qualified experts or go through FDA’s review and approval process as a food additive.

PRC Legal System

Despite efforts to develop its legal system over the past several decades, including but not limited to legislation dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, the PRC continues to lack a comprehensive system of laws. Further, the laws that do exist in the PRC are often vague, ambiguous and difficult to enforce, which could negatively affect our ability to do business in China and compete with other companies in our segments.

In September 2006, the Ministry of Commerce (“MOFCOM”) promulgated the Regulations on Foreign Investors' Mergers and Acquisitions of Domestic Enterprises (M&A Regulations) in an effort to better regulate foreign investment in China. The M&A Regulations were adopted in part as a needed codification of certain joint venture formation and operating practices, and also in response to the government's increasing concern about protecting domestic companies in perceived key industries and those associated with national security, as well as the outflow of well-known trademarks, including traditional Chinese brands.

As a U.S. based company doing business in China, we seek to comply with all PRC laws, rules and regulations and pronouncements, and endeavor to obtain all necessary approvals from applicable PRC regulatory agencies such as the MOFCOM, the State Assets Supervision and Administration Commission (“SASAC”), the State Administration for Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission (“CSRC”), and the State Administration of Foreign Exchange (“SAFE”).

Currency. The value of the Renminbi (“RMB”), the main currency used in China, fluctuates and is affected by, among other things, changes in China’s political and economic conditions. The conversion of RMB into foreign currencies such as the U.S. dollar have been generally based on rates set by the People’s Bank of China, which are set daily based on the previous day’s interbank foreign exchange market rates and current exchange rates on the world financial markets. In June 2010, China announced its decision to allow more flexibilities of its currency against the U.S. dollar.

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OUR CORPORATE HISTORY

We were incorporated in Nevada in August 1987.

Effective on April 30, 2004, we acquired 100% of the issued and outstanding shares of Sunwin Tech from its stockholders in exchange for approximately 17,000,000 shares of our common stock which resulted in a change of control of our company. Sunwin Tech was organized in January 2004 before its acquisition of 80% of Qufu Natural Green. Prior to the acquisition of Qufu Natural Green, we did not have any business and operations. Concurrent with the closing of the acquisition of Qufu Natural Green, our officers and directors resigned and current officers and directors of Qufu Natural Green were appointed to their positions. In connection with the transaction, Sunwin Tech purchased 4,500,000 shares of our common stock owned by our former principal stockholders for $175,000, and, at the closing, Sunwin Tech distributed the 4,500,000 shares to Messrs. Baozhong Yuan, Laiwang Zhang, Xianfeng Kong and Lei Zhang, pro-rata to their ownership of Sunwin Tech immediately prior to the closing. Following the transactions, the former Sunwin Tech stockholders owned approximately 68 % of our issued and outstanding capital stock.

Prior to our acquisition of Sunwin Tech, effective February 1, 2004, Sunwin Tech acquired 80% of Qufu Natural Green from Pharmaceutical Corporation, a company controlled by Mr. Laiwang Zhang, our President and Chairman, in exchange for 32,500,000 shares of Sunwin Tech’s common stock. At the time of this merger the minority stockholders of Qufu Natural Green included Pharmaceutical Corporation (17%) and Shandong Group (2.5%), both of which are controlled by Mr. Laiwang Zhang, our President and Chairman. The remaining minority stockholder, Qufu Veterinary Medicine Company, Ltd. (0.5%) was controlled by a Chinese state owned agency.

In July 2004 following the transaction with Sunwin Tech, we changed the name of our company from Network USA, Inc. to Sunwin International Neutraceuticals, Inc.

Subsequent to the acquisition of 80% of Qufu Natural Green, Shandong Group acquired the 17% interest of Qufu Natural Green owned by Pharmaceutical Corporation, and ultimately the Shandong Group acquired the 0.5% Qufu Natural Green interest owned by Qufu Veterinary Medicine Company, Ltd., after it was dissolved. These events resulted in Shandong Group owning 20% of Qufu Natural Green.

In February 2006, we acquired the remaining 20% of Qufu Natural Green from Shandong Group in exchange for 5,000,000 shares of our common stock valued at $2,775,000. At the request of Mr. Zhang, the control person of Shandong Group, 2,000,000 shares were issued to Ms. Dongdong Lin, our Chief Executive Officer, and the remaining 3,000,000 shares were issued to Mr. Zhang. Of the total purchase price, approximately $179,994 was allocated to consulting expenses paid to Mr. Zhang and Ms. Lin as it represented the difference between the purchase price and the valuation of the minority interest purchased.

Qufu Shengwang Acquisition

On June 30, 2008, Qufu Natural Green, agreed to acquire a 60% interest in Qufu Shengwang from Shandong Group for $7,016,200. This purchase price was based on 60% of the value of the net tangible assets of Qufu Shengwang as of April 30, 2008. Upon completion of the acquisition of Qufu Shengwang in June 2008, Shandong Group agreed to purchase 29,000,000 shares of our common stock at a price of $.25 per share.

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

In addition, on September 2, 2008, we entered into an amendment to the June 30, 2008 stock sale and purchase agreement (the “Stock Sale Agreement Amendment”) with Shandong Group to purchase 29,525,776 shares of the Company’s Common Stock at $.21 per share, representing approximately 34% of our issued and outstanding common stock. 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 (the “Earnings Target Period”), then Shandong Group shall be obligated to return to us a number of shares of our 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 Earn-Out Period and the denominator is the Target Amount; by (ii) 29,525,776, the number of shares purchase under the Stock Sale Agreement Amendment.

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On November 18, 2008, Qufu Natural Green entered into a second amendment to the June 30, 2008 acquisition agreement with Qufu Shengwang and its shareholder, Shandong Group, to further reduce the purchase price for the acquisition of a 60% interest in Qufu Shengwang to $4,026,851. The revised 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

In addition, on November 18, 2008, we entered into a second amendment to the Stock Sale Agreement to reduce the total number of shares of common stock to be purchased by Shandong Group from 29,525,776 to 19,175,480 at $.21 per share (the “Second Amendment to Stock Sale Agreement”). As a result of the Second Amendment to Stock Sale Agreement, we cancelled 10,350,296 shares of our common stock issued to Shandong Group and reduced the amount due from Shandong Group by $2,173,562 reflecting the difference between the purchase price under the Amendment to Stock Sale Agreement and the purchase price for the Shares under the Second Amendment to the Stock Sale Agreement. In satisfaction of this term, the purchase was completed by Shandong Group’s delivery of the 60% interest in Qufu Shengwang. The 19,175,480 shares of common stock purchased by Shandong Group represented approximately 22% of the issued and outstanding shares of our common stock prior to completion of the transaction.

Wild Flavors

On February 5, 2009, we entered into a Securities Purchase Agreement with Wild Flavors to purchase 20,000,000 shares of our common stock at $.15 per share (the “Wild Flavors Stock”) together with five year warrants to purchase 26,666,666 shares of our common stock with an exercise price of $0.35 per share (the “Warrants“).

Pursuant to the terms of the Securities Purchase Agreement, we agreed to convert Sunwin Stevia International into Sunwin USA, a Delaware limited liability company. This conversion was completed in June 2009. In exchange for our contribution of Sunwin Stevia International‘s capital, we received 5,500 membership units in Sunwin USA, representing a 55% interest after giving effect to the issuance of 4,500 membership units to Wild Flavors. In addition, Wild Flavors agreed to provide sales, marketing, logistics and supply chain management, product development and regulatory services to Sunwin USA over a period of two years beginning on February 5, 2009 (the “Services”). We valued the Services at $1,000,000. In addition, Wild Flavors agreed to act as the sole manager of Sunwin USA and will be responsible for all of its business and affairs. Wild Flavors has the right of first refusal to purchase additional membership units in Sunwin USA at $222.22 per unit to provide any additional capital required by Sunwin USA as mutually determined by us and Wild Flavors.

Under the terms of the Securities Purchase Agreement, Wild Flavors has the option to exchange its 45% interest in Sunwin USA into 6,666,666 shares of our 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 (a) 6% of the issued and outstanding membership units of Sunwin USA or (b) the number of membership units of Sunwin USA necessary to increase Wild Flavor’s ownership interest to 51% if (i) Sunwin USA 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 USA an 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.

On February 5, 2009 as part of the transactions Sunwin Stevia International entered into a Distributorship Agreement with Wild Flavors for the worldwide distribution of our stevioside products. The Distributorship Agreement is for an initial term of 60 months with automatic renewal terms of 12 successive 36 month renewal periods.

On February 5, 2009 as part of the Securities Purchase Agreement, we entered into a stockholders agreement with Wild Flavors and certain of our shareholders who owned approximately 34.12% of our common stock. The stockholders agreement provides that so long as Wild Flavors owns at least 4,000,000 shares of our common stock, the parties will vote or cause their shares of our common stock to be voted to elect two members of our Board of Directors designated by Wild Flavors and three members designated by our shareholders who are a party to the stockholders agreement.

In connection with the Securities Purchase Agreement we paid fees of $100,000 in cash and 1,000,000 shares of our common stock and paid legal fees of $10,000 to our counsel associated with the Securities Purchase Agreement. After payment of these fees and costs associated with this transaction with Wild Flavors, we received net proceeds of approximately $2,885,000. The net proceeds of this offering will be used for expansion of our production facilities in China and general corporate purposes.

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The Securities Purchase Agreement gives Wild Flavors the right to receive notice of and participate in a proposed sale of our securities except for (i) transactions involving strategic mergers and acquisitions; (ii) license and partnering arrangements so long as such issuances are not for the purpose of raising capital and which holders of such securities are not at any time granted registration rights and issuances; (iii) grants pursuant to stock option plans and employee stock purchase plans; and (iv) issuances as a result of the exercise of existing warrants to purchase our common stock.

In addition, the Securities Purchase Agreement gives Wild Flavors, among other rights, a right of first refusal with respect to subsequent offers, if any, by us for the sale of our securities or debt obligations up until February 5, 2011. The right of first refusal does not apply with respect to certain limited exceptions, including strategic license agreements, mergers and similar acquisitions and certain option programs.

Qufu Shengren Acquisition

On March 25, 2009 Qufu Natural Green acquired Qufu Shengren for $3,097,242. The purchase price was equal to the value of the assets of Qufu Shengren as determined by an independent asset appraisal in accordance with PRC issued asset appraisal principles in China. Qufu Shengren is engaged in the production and distribution of bulk drugs and pharmaceuticals.

Upon completion of the acquisition of Qufu Shengren in March 2009, the shareholders of Qufu Shengren purchased 21,434,201 shares of our common stock at $.145 per share representing approximately 14.4% of our issued and outstanding common stock at the time of the sale. In satisfaction of this term, the purchase was completed by delivery of the 100% interest in Qufu Shengren by its shareholders.

Sale of Shengya Veterinary Medicine

On June 29, 2010 Qufu Natural Green entered into a Stock Sale and Purchase Agreement (the “Shengya Agreement”) to sell its 100% ownership interest in Shengya to Mr. Zhang, our president and chairman of our Board of Directors. Under the terms of the Agreement, the purchase price for the 100% ownership interest in Shengya is $5,003,869, the net book value of Shengya’s assets (total assets minus total liabilities) as set forth on its consolidated balance sheet as of April 30, 2010 (the “Purchase Price”). Upon closing of the transaction, Mr. Zhang will pay the Purchase Price by cancelling 7,818,545 shares of our common stock he owns (the “Cancelled Shares”). The value of our common stock for purposes of computing the number of Cancelled Shares was the average of the closing price of the stock over the 10 trading days prior to the date of the Shengya Agreement. The transaction is expected to close on July 31, 2010.

Sunwin Canada

In June 2010, we elected to dissolve Sunwin Canada in fiscal 2011 in an effort to further streamline our business operations. We formed Sunwin Canada in April 2006 in part to market our traditional Chinese medicines to Canadian retail stores. In fiscal 2010 this subsidiary recorded no revenues from this subsidiary.

EMPLOYEES

As of July 26, 2010, we employed 211 people in the following areas:

Function	Number of Employees
Management and administration		31
Manufacturing and production		144
Quality control and research and development		13
Sales and marketing		23
Total		211

All of our employees are primarily based in Qufu, China while some managerial and sales staff occasionally works in other Chinese cities or overseas on different projects. Each full-time Chinese employee is a member of a local trade union. Labor relations have remained positive and we have not had any employee strikes or major labor disputes. Unlike trade union in western countries, trade unions in most parts of China are organizations mobilized jointly by the government and the management of the corporation.

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U.S. and Chinese Advisors

On April 29, 2009 the Company entered into a consulting agreement with China Direct Investments, Inc. (“CDI”) to provide services during the period beginning May 1, 2009 through April 30, 2010. Under the terms of the agreement, CDI will provide advice regarding general business matters, evaluate potential sources of investment capital, manage professional resources, coordinate filings with the SEC, assist in the implementation of internal controls, translation services, and assist in the coordination of investor road shows, or investment conferences. As compensation for services we issued CDI 1.3 million shares of our common stock within 30 days of signing the agreement, and paid them $150,000 within 45 days of signing the agreement. On March 26, 2010 our Board of Directors approved the issuance of 1.4 million shares of our common stock valued at $490,000 to CDI as a bonus for its performance during fiscal 2010 under the terms of the April 29, 2009 consulting agreement.

On March 31, 2010, we signed a memorandum agreement with CDI to provide it consulting services to us through the end of fiscal 2011 and we agreed to pay for all services rendered by the third party providers and professionals needed to provide services required by us, such as legal and auditing fees, transfer agent fees, investor relations consultant fees and other out of pocket expenses required in connection with our U.S. operations. Under the terms of the agreement, CDI will provide advice regarding potential exchange listing and capital structure, coordination of filings with the SEC, assist in identifying potential directors, capital raising, investor relations, general business matters, evaluate potential sources of investment capital, manage professional resources, the implementation of internal controls, and the coordination of the disposition of our veterinarian business.

ITEM 1A.

RISK FACTORS

The risk factors in this section describe the major risks to our business, prospects, results of operations, financial condition or cash flows, and should be considered carefully. In addition, these factors constitute our cautionary statements and could cause our actual results to differ materially from those projected in any forward-looking statements (as defined in such act) made in this Annual Report on Form 10-K. Investors should not place undue reliance on any such forward-looking statements. Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “intends,” “plans,” “believes” and “projects”) may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements.

Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

RISKS RELATED TO OUR COMPANY

OUR REVENUES HAVE DECLINED AND THERE ARE NO ASSURANCES THEY WILL RETURN TO HISTORIC LEVELS IN FUTURE PERIODS.

Our revenues for fiscal 2010 declined approximately 35% from fiscal 2009 and our revenues for fiscal 2009 declined approximately 3% from fiscal 2008. We reported an operating loss of $4.9 million and a net loss of $5.0 million for fiscal 2010. While we believe the decline in our revenues in our Stevioside Segment is primarily due to continuing reduced customer demand over all product categories due to slow recovery in response to the global economic downturn, and that these revenues may rebound in future periods, subsequent to April 30, 2010 we made a determination to exit our Veterinary medicine business because of the weak performance in this business which we expect to continue. If our efforts to increase our revenues are not successful in our remaining business units, it is likely that we will continue to report losses from operations in future periods and we will be required to use our working capital to fund our operating expenses instead of our growth.

OUR FUTURE REVENUES DEPEND UPON CONTINUED MARKET ACCEPTANCE OF OUR STEVIOSIDE PRODUCTS AND APPLICATION OF STEVIOSIDE IN MAINSTREAM CONSUMER PRODUCTS.

Currently we derive a majority of our revenue from the sale of stevioside and stevioside based products, and we expect this will continue for the foreseeable future, particularly in light of our decision to discontinue our Veterinary medicine business unit. If manufactures and producers of products that use stevioside as a sweetener do not increase and the market does not continue to accept these products, our revenues will decline significantly, and this would negatively affect our results of operations, financial condition and cash flows.

Factors that may affect the market acceptance of our stevioside based sweetener products include the taste, price, availability of supply, competing products, the development of stevioside-based flavors, and its applications in mainstream consumer products. Many of these factors especially R&D of stevioside-based flavors and mainstream consumer products are beyond our control.

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EACH OF OUR THREE MAIN PRODUCT GROUPS OPERATES IN HIGHLY COMPETITIVE BUSINESSES AND BARRIER TO ENTRY TO THE MARKET IS LOW.

Each of our product groups is subject to competition from other manufacturers of those products and the barriers to entry in the markets in which we compete are relatively low. While we believe we are one of the leading manufacturers of stevioside in the PRC, from time to time there is a sporadic oversupply of this product which can decrease our market share and competitive position in this product group. Because there are no assurances we will be successful in this endeavor, we may never attain a competitive position in this product group. In addition, our competition within the traditional Chinese medicine formula extract portion of our business is the most intense. There are over 500 companies in China against whom we compete in the sale of traditional Chinese medicine formula extracts and the barriers to entry in this product segment are relatively low. If these other companies successfully market their products or market their products better than we market ours, we may have difficult time marketing and selling our products. As a result, we cannot assure you that we will be able to effectively compete in any of our product segments.

WE ARE HIGHLY DEPENDENT ON OUR PRESIDENT, AS WELL AS HIS AFFILIATED COMPANIES, PHARMACEUTICAL CORPORATION AND SHANDONG GROUP.

We are dependent upon the services of Mr. Laiwang Zhang, our President, and his affiliated companies Pharmaceutical Corporation and Shandong Group, for the continued growth and operation of our company because of his experience in the industry and his personal and business contacts in China. Although we have a management agreement with Phamaceiutical Corporation to provide housing to certain of our non-management employees, government mandatory insurance for our employees, rent for our principal offices and the use of research and development facilities, we do not have an employment agreement with Mr. Zhang. We also do business with several companies which are affiliated with Mr. Zhang as described later in this report under “Certain Relationships and Related Party Transactions.” We are dependent upon those relationships to provide us with certain services which we cannot readily obtain on our own without additional expense. Other than with respect to the management agreement, we do not have written agreements with any of these related parties.

Although we have no reason to believe that Mr. Zhang or his affiliated companies would discontinue their services with us, the interruption or loss of these services would adversely affect our ability to effectively run our business and pursue our business strategy as well as our results of operations.

WE ENGAGE IN A NUMBER OF RELATED PARTY TRANSACTIONS WHICH MAY NOT ALWAYS BE ON TERMS AS FAVORABLE AS WE COULD RECEIVE FROM NON-AFFILIATED THIRD PARTIES. THE AMOUNT OF THE MANAGEMENT FEE WE PAY MAY NOT BE AS ADVANTAGEOUS TO US AS TERMS WE COULD NEGOTIATE WITH AN UNRELATED PARTY.

As described elsewhere herein, we historically have engaged in a number of transactions with affiliated entities and we anticipate that we will continue to engage in such transactions in future periods. In addition, we pay Shengwang Pharmaceutical, a related party, an annual management fee which includes costs and services related to housing provided to certain of our non-management employees, government mandatory insurance for our employees and rent for our principal offices and the research and development facilities we use. Although the management fee paid increased to $316,454 in fiscal 2009 from $199,166 in fiscal 2008, Pharmaceutical Corporation has agreed as part of the February 5, 2009 transactions with Wild Flavors to cap its consulting fees to $175,508 (RMB 1,200,000) per year beginning in January 2010. Further, Pharmaceutical Corporation has waived such consulting fees for fiscal 2010.See Item 1 – Business – Our Corporate History - Wild Flavors. While we believe that the terms and costs of this management fee are fair to us, because this agreement is not negotiated on an arms-length basis there are no assurances that we could not obtain more favorable terms from an unrelated party. We cannot assure you that the terms of these transactions will always be as favorable to us as we might receive from non-affiliated third parties.

WE CANNOT CONTROL THE COST OF OUR RAW MATERIALS, WHICH MAY ADVERSELY IMPACT OUR PROFIT MARGIN AND FINANCIAL POSITION.

Our principal raw materials are stevioside and herbs used in the formulation of traditional Chinese medicine extracts. The prices for these raw materials are subject to market forces largely beyond our control, including availability and competition in the market place. The prices for these raw materials have varied significantly in the past and may vary significantly in the future. While our cost of sales as a percentage of revenues in our Stevioside segment increased by 6% in fiscal 2010 compared to fiscal 2009, the increases could be significantly higher in the future. Because of increased competition in all of our business segments, we may not be able to pass along potential price increases to our customers and, accordingly, our gross profit margins would be adversely impacted.

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RESTRICTIONS ON CURRENCY EXCHANGE MAY LIMIT OUR ABILITY TO RECEIVE AND USE OUR REVENUES EFFECTIVELY. WE MAY NOT HAVE READY ACCESS TO CASH ON DEPOSIT IN BANKS IN THE PRC.

Because a substantial portion of our revenues are in the form of Renminbi (RMB), the main currency used in China, any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside China or to make dividend or other payments in U.S. Dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies, after providing valid commercial documents, at those banks authorized to conduct foreign exchange business. In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to government approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. At April 30, 2010 our PRC subsidiaries had approximately $11.7 million on deposit in banks in China, which represented approximately 92% of our cash. We cannot be certain that we could have ready access to that 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 RMB, especially with respect to foreign exchange transactions.

OUR OPERATIONS ARE SUBJECT TO GOVERNMENT REGULATION. IF WE FAIL TO COMPLY WITH THE APPLICABLE REGULATIONS, OUR ABILITY TO OPERATE IN FUTURE PERIODS COULD BE IN JEOPARDY.

We are subject to state and local environmental laws related to certification of water release. We are subject to registration and inspection by The Ministry of Agriculture of China with respect to the manufacture and distribution of veterinary medicines and the State Food and Drug Administration of China (SFDA) with respect to the manufacturing and distribution of traditional Chinese medicine extracts. We are also licensed by the Shandong Provincial Government to manufacture veterinary medicine and stevioside. While we are in substantial compliance with all provisions of those registrations, inspections and licenses and have no reason to believe that they will not be renewed as required by the applicable rules of the Central Government and the Shandong Province, any non-renewal of these authorities could result in the cessation of our business activities. In addition, any change in those laws and regulations could impose costly compliance requirements on us or otherwise subject us to future liabilities.

OUR RECOGNITION OF UNREALIZED GAINS (LOSS) ON FOREIGN CURRENCY TRANSACTION CAN MATERIALLY IMPACT OUR INCOME FROM PERIOD TO PERIOD.

For foreign currency translations, in fiscal 2010 and fiscal 2009 we reported unrealized loss of $3,756 and gains of $638,675, respectively. As described elsewhere herein, the functional currency of our Chinese subsidiaries is the RMB. As required by generally accepted accounting principles, the financial statements of our subsidiaries are translated to U.S. dollars using year-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. The recording of these non-cash gains, which is required under generally accepted accounting principles in the United States, does have a material impact on our financial statements.

WE HAVE NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE LESS PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND OTHER MATTERS.

Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address Board of Directors’ independence, audit committee oversight, the adoption of a code of ethics and the adoption of a related persons transaction policy. Although we have adopted a Code of Ethics, we have not yet adopted any of these other corporate governance measures and, since our securities are not yet listed on a national securities exchange, we are not required to do so. We have not adopted corporate governance measures such as an audit or other independent committees of our Board of Directors as we presently do not have any independent directors. It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, and our lack of independent directors, decisions concerning matters such as the terms of related party transactions, the amount of management fee paid to a related party, compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

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RISKS RELATED TO DOING BUSINESS IN CHINA

OUR OPERATIONS ARE LOCATED IN CHINA AND MAY BE ADVERSELY AFFECTED BY CHANGES IN THE POLITICAL AND ECONOMIC POLICIES OF THE CHINESE GOVERNMENT.

Our business operations could be restricted by the political environment in the PRC. The PRC has operated as a socialist state since 1949 and is controlled by the Communist Party of China. In recent years, however, the government has introduced reforms aimed at creating a socialist market economy and policies have been implemented to allow business enterprises greater autonomy in their operations. Changes in the political leadership of the PRC may have a significant effect on laws and policies related to the current economic reform programs, other policies affecting business and the general political, economic and social environment in the PRC, including the introduction of measures to control inflation, changes in the rate or method of taxation, the imposition of additional restrictions on currency conversion and remittances abroad, and foreign investment. Moreover, economic reforms and growth in the PRC have been more successful in certain provinces than in others, and the continuation or increases of such disparities could affect the political or social stability of the PRC.

Although we believe that the economic reform and the macroeconomic measures adopted by the Chinese government have had a positive effect on the economic development of China, the future direction of these economic reforms is uncertain and the uncertainty may decrease the attractiveness of our company as an investment, which may in turn result in a decline in the trading price of our common stock.

WE CANNOT ASSURE YOU THAT THE CURRENT CHINESE POLICIES OF ECONOMIC REFORM WILL CONTINUE. BECAUSE OF THIS UNCERTAINTY, THERE ARE SIGNIFICANT ECONOMIC RISKS ASSOCIATED WITH DOING BUSINESS IN CHINA.

Although the majority of productive assets in China are owned by the Chinese government, in the past several years the government has implemented economic reform measures that emphasize decentralization and encourages private economic activity. In keeping with these economic reform policies, the PRC has been openly promoting business development in order to bring more business into the PRC. Because these economic reform measures may be inconsistent or ineffective, there are no assurances that:

-	the Chinese government will continue its pursuit of economic reform policies;
-	the economic policies, even if pursued, will be successful;
-	economic policies will not be significantly altered from time to time; or
-	business operations in China will not become subject to the risk of nationalization.

We cannot assure you that we will be able to capitalize on these economic reforms, assuming the reforms continue. Because our business model is dependent upon the continued economic reform and growth in China, any change in Chinese government policy could materially adversely affect our ability to continue to implement our business model. China’s economy has experienced significant growth in the past decade, but such growth has been uneven across geographic and economic sectors and has recently been slowing. Even if the Chinese government continues its policies of economic reform, there are no assurances that economic growth in that country will continue or that we will be able to take advantage of these opportunities in a fashion that will provide financial benefit to us.

THE CHINESE GOVERNMENT EXERTS SUBSTANTIAL INFLUENCE OVER THE MANNER IN WHICH OUR CHINESE SUBSIDIARIES MUST CONDUCT OUR BUSINESS ACTIVITIES.

The PRC only recently has permitted provincial and local economic autonomy and private economic activities. The government of the PRC has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions of the PRC, and could require us to divest ourselves of any interest we then hold in our Chinese subsidiaries.

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THE RECENT OUTBREAK OF SWINE FLU OR ANY RECURRENCE OF SEVERE ACUTE RESPIRATORY SYNDROME, OR SARS, OR ANOTHER WIDESPREAD PUBLIC HEALTH PROBLEM, COULD INTERRUPT OUR OPERATIONS.

An occurrence of a serious animal disease, such as swine influenza (swine flu), a respiratory disease of pigs caused by influenza viruses, or any outbreak of other epidemics in the PRC affecting animals or humans including a renewed outbreak of SARS or another widespread public health problem in China could have a negative effect on our operations. Our operations may be impacted by a number of health-related factors, including the following:

-	material disruptions to the operations of our customers or suppliers;
-	a decline in breeding and farm operations of our customers;
-	quarantines or closures of some of our offices which would severely disrupt our operations;
-	the sickness or death of our key management and employees; or
-	a general slowdown in the Chinese economy.

An occurrence of any of the foregoing events or other unforeseen consequences of public health problems could result in a loss of revenues in future periods and could impact our ability to conduct the operations of our Chinese subsidiaries as they are presently conducted. If we were unable to continue the operations of our Chinese subsidiaries as they are now conducted, our revenues in future periods would decline and our ability to continue as a going concern could be in jeopardy. In addition, some of our customers have cut back their breeding and farming operations reducing the amount of their purchases from us. Furthermore, there can be no assurance that our customers will not continue to be affected by the threat of swine flu or similar influenzas in the future, or that their production will resume to normal levels. If either case should continue to occur, our business, results of operations and financial condition will be adversely and materially affected.

REGULATIONS RELATING TO OFFSHORE INVESTMENT ACTIVITIES BY CHINESE RESIDENTS MAY INCREASE THE ADMINISTRATIVE BURDEN WE FACE AND CREATE REGULATORY UNCERTAINTIES THAT MAY LIMIT OR ADVERSELY EFFECT OUR ABILITY TO COMPLETE A BUSINESS COMBINATION WITH PRC COMPANIES.

Regulations were issued on November 1, 2005 (SAFE Circular 75), on September 2006 (2006 M&A Rules), and on May 29, 2007 (SAFE Implementation Notice 106), by the PRC State Administration of Foreign Exchange, or SAFE, that will require approvals from, and registrations with, PRC government authorities in connection with direct or indirect offshore investment activities by PRC residents and PRC corporate entities; The SAFE regulations retroactively require approval and registration of direct or indirect investments previously made by PRC residents in offshore companies.

In the event that a PRC shareholder with a direct or indirect stake in an offshore parent company fails to obtain the required SAFE approval and make the required registration, the PRC subsidiaries of such offshore parent company may be prohibited from making distributions of profit to the offshore parent and from paying the offshore parent proceeds from any reduction in capital, share transfer or liquidation in respect of the PRC subsidiaries. Further, failure to comply with the various SAFE approval and registration requirements described above, as currently drafted, could result in liability under PRC law for foreign exchange evasion. The regulations discussed could also result in the relevant Chinese government authorities limiting or eliminating our ability to purchase and retain foreign currencies in the future, which could limit or eliminate our ability to pay dividends in the future. More recently, however, new regulations have been drafted that would partially reverse the policy that requires Chinese companies to obtain permission from SAFE to own overseas corporate entities.

As a result of the lack of implementing rules, the uncertainty as to when the new draft regulations will take effect, and uncertainty concerning the reconciliation of the new regulations with other approval requirements, it remains unclear how these existing regulations, and any future legislation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. This may restrict our ability to implement our business combination strategy and adversely affect our operations.

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RESTRICTIONS ON CURRENCY EXCHANGE MAY LIMIT OUR ABILITY TO RECEIVE AND USE OUR REVENUES EFFECTIVELY.

Because all of our revenues are in the form of Renminbi, any future restrictions on currency exchanges may limit our ability to use revenue generated in Renminbi to fund any future business activities outside China or to make dividend or other payments in U.S. dollars. Although the Chinese government allows greater convertibility of the Renminbi for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies, after providing valid commercial documents, at those banks authorized to conduct foreign exchange business. In addition, conversion of Renminbi for capital account items, including direct investment and loans, is subject to government approval in the PRC, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot 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.

CERTAIN AGREEMENTS TO WHICH WE ARE A PARTY AND WHICH ARE MATERIAL TO OUR OPERATIONS LACK VARIOUS LEGAL PROTECTIONS WHICH ARE CUSTOMARILY CONTAINED IN SIMILAR CONTRACTS PREPARED IN THE UNITED STATES.

Although we are a U.S. company, substantially all of our business and operations are conducted in the PRC. We are a party to certain material contracts, including the leases for the facilities used by our stevioside and our Chinese and veterinary medicine segments. While these contracts contain the basic business terms of the agreements between the parties, these contracts do not contain certain provisions which are customarily contained in similar contracts prepared in the U.S., such as representations and warranties of the parties, confidentiality and non-compete clauses, provisions outlining events of defaults, and termination and jurisdictional clauses. Because our material contracts omit these types of clauses, notwithstanding the differences in Chinese and U.S. laws we may not have the same legal protections as we would if the contracts contained these additional provisions. We anticipate that contracts we enter into in the future will likewise omit these types of legal protections. While we have not been subject to any adverse consequences as a result of the omission of these types of clauses, and we consider the contracts to which we are a party to contain all the material terms of our business arrangements with the other party, we cannot assure you that future events will not occur which could have been avoided if the contracts were prepared in conformity with U.S. standards, or what the impact, if any, of this hypothetical future events could have on our company.

WE MAY BE UNABLE TO ENFORCE OUR RIGHTS DUE TO POLICIES REGARDING THE REGULATION OF FOREIGN INVESTMENTS IN CHINA.

The PRC’s legal system is a civil law system based on written statutes in which decided legal cases have little value as precedents, unlike the common law system prevalent in the United States. The PRC does not have a well-developed, consolidated body of laws governing foreign investment enterprises. As a result, the administration of laws and regulations by government agencies may be subject to considerable discretion and variation, and may be subject to influence by external forces unrelated to the legal merits of a particular matter. The PRC’s regulations and policies with respect to foreign investments are evolving. Definitive regulations and policies with respect to such matters as the permissible percentage of foreign investment and permissible rates of equity returns have not yet been published. Statements regarding these evolving policies have been conflicting and any such policies, as administered, are likely to be subject to broad interpretation and discretion and to be modified, perhaps on a case-by-case basis. The uncertainties regarding such regulations and policies present risks which may affect our ability to achieve our business objectives. If we are unable to enforce any legal rights we may have under our contracts or otherwise, our ability to compete with other companies in our industry could be materially and negatively affected.

IT MAY BE DIFFICULT FOR STOCKHOLDERS TO ENFORCE ANY JUDGMENT OBTAINED IN THE UNITED STATES AGAINST US, WHICH MAY LIMIT THE REMEDIES OTHERWISE AVAILABLE TO OUR STOCKHOLDERS.

Substantially all of our assets are located outside the United States and substantially all of our current operations are conducted in the PRC. Moreover, all of our directors and officers are nationals or residents of the PRC. All or a substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for our stockholders to effect service of process within the United States upon these persons. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities law of the United States or any state thereof, or be competent to hear original actions brought in the PRC against us or such persons predicated upon the securities laws of the United States or any state thereof.

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FAILURE TO COMPLY WITH THE UNITED STATES FOREIGN CORRUPT PRACTICES ACT COULD SUBJECT US TO PENALTIES AND OTHER ADVERSE CONSEQUENCES.

We are subject to the United States Foreign Corrupt Practices Act which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS MAY DELAY OR PREVENT A TAKE-OVER WHICH MAY NOT BE IN THE BEST INTERESTS OF OUR STOCKHOLDERS.

Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Nevada Revised Statutes also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation’s disinterested stockholders.

In addition, our articles of incorporation authorize the issuance of up to 1,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our Board of Directors, of which no shares are currently outstanding. Our Board of Directors may, without stockholder approval, issue preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock. Collectively, these provisions may prevent a change of control of our company in situations where a change of control would be beneficial to our stockholders.

BECAUSE OUR STOCK CURRENTLY TRADES BELOW $5.00 PER SHARE, AND IS QUOTED ON THE OTC BULLETIN BOARD, OUR STOCK IS CONSIDERED A “PENNY STOCK” WHICH CAN ADVERSELY AFFECT ITS LIQUIDITY.

As the trading price of our common stock is less than $5.00 per share, our common stock is considered a “penny stock,” and trading in our common stock is subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser’s written consent prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a “penny stock”, including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.

A LARGE PORTION OF OUR OUTSTANDING COMMON SHARES ARE “RESTRICTED SECURITIES” AND FUTURE SALES OF THOSE SHARES BY OUR STOCKHOLDERS COULD ADVERSELY IMPACT THE MARKET PRICE OF OUR COMMON STOCK.

At July 26, 2010 we had 163,329,449 shares of common stock outstanding, of which approximately 64,453,856 shares are "restricted securities." Future sales of restricted common stock under Rule 144 or otherwise could negatively impact the market price of our common stock.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

Not applicable for smaller reporting companies.

ITEM 2.

PROPERTIES

All of our facilities described below are located in the Shuyuan Economic Zone of Qufu City, of the Shandong Province.

Our principal executive offices and stevioside manufacturing facility is comprised of approximately 64,000 square feet situated on land which we hold land use rights. The land use rights expire on March 14, 2054.

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In October 2002 Qufu Natural Green entered into a lease agreement with Pharmaceutical Corporation, an affiliate, which covers the approximately 54,000 square foot facility used in our traditional Chinese medicine business. This lease, which expires on October 1, 2012, provides for an annual rent of approximately $23,400. No rent was paid for this facility in fiscal 2010 as Pharmaceutical Corporation waived its annual management fee charged to Qufu Natural Green that includes rent for this facility.

In October 2002 Qufu Natural Green entered into a lease agreement with Qufu LuCheng Chiya Resident Commitment, an unaffiliated local government entity. This agreement provides for the use of an approximate 25,200 square foot facility used in our Veterinary medicine business. This lease, which expires in August 2012, provides for annual rent of approximately $26,325. This lease is will be assigned to Mr. Zhang our President and Chairman of the Board of Directors upon completion of the sale of Shengya Veterinary Medicine to Mr. Zhang which is expected to close in July 2010. See “Business - Our Corporate History - Sale of Shengya Veterinary Medicine”

In April 2004, Qufu Natural Green entered into a lease agreement with Qufu ShengDa Industry Co., Ltd., an unaffiliated local governmentally owned entity which includes an approximate 36,000 square foot stevioside production facility. This lease, which was originally set to expire on April 1, 2014 provided for annual rent of $4,387, for the first five years of the term and increased to $7,313 annually for the balance of the lease term. This lease was terminated in December 2009 as a result of a government policy which mandated the closure of factories not located in newly zoned areas of the city.

Qufu Shengwang owns an 89,000 square foot facility which includes 30,000 square feet of manufacturing space, a 21,500 square foot warehouse and 38,000 square feet of office space. Qufu Shengwang occupies this facility pursuant to land use rights which expire in March 2054.

Qufu Shengren occupies approximately 4.9 acres of land at no cost pursuant to a March 13, 2004 land use agreement with Shandong Group that expires on March 14, 2054. Located on this land is a 33,000 square foot manufacturing facility we are converting to a high grade stevioside production facility, an 18,000 square foot warehouse facility and approximately 3.74 acres (approximately 163,000 square feet) of vacant land.

ITEM 3.

LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings, and to our knowledge, none of our officers, directors or principal stockholders are party to any legal proceeding in which they have an interest adverse to us.

ITEM 4.

(REMOVED AND RESERVED)

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTC Bulletin Board under the symbol “SUWN”. The following table sets forth the reported high and low closing prices for our common stock as reported on the OTCBB for the following periods. These prices do not include retail mark-ups, markdowns or commissions, and may not necessarily represent actual transactions.

	High		Low
Fiscal 2009
May 1, 2008 through July 31, 2008	$	0.39	$	0.22
August 1, 2008 through October 31, 2008	$	0.29	$	0.10
November 1, 2008 through January 31, 2009	$	0.47	$	0.10
February 1, 2009 through April 30, 2009	$	0.38	$	0.15

Fiscal 2010
May 1, 2009 through July 31, 2009	$	0.23	$	0.15
August 1, 2009 through October 31, 2009	$	0.28	$	0.17
November 1, 2009 through January 31, 2010	$	0.31	$	0.19
February 1, 2010 through April 30, 2010	$	0.58	$	0.24

On July 26, 2010, the last reported sale price of the common stock on OTC Bulletin Board was $0.50 per share. As of July 26, 2010 there were 751 stockholders of record of the common stock. The number of record holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.

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Transfer Agent

Our transfer agent is Colonial Stock Transfer Company, Inc. which is located at 66 Exchange Place, Salt Lake City, Utah 84111. The phone number is (801) 355-5740 and its website is www.colonialstock.com.

Dividend Policy

We have never paid cash dividends on our common stock. We intend to keep future earnings, if any, to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Our future payment of dividends will depend on our earnings, capital requirements, expansion plans, financial condition and other relevant factors. Under Nevada law, we are prohibited from paying dividends if the distribution would result in our company not being able to pay its debts as they become due in the usual course of business, or if our total assets would be less than the sum of our total liabilities plus the amount that would be needed were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. In addition, as a result of Chinese laws our operating subsidiaries may be subject to restrictions on their ability to make distributions to us, including as a result of restrictions on the conversion of local currency into U.S. dollars, or other hard currency, and other regulatory restrictions.

RECENT SALES OF UNREGISTERED SECURITIES

As compensation for services pursuant to an April 29, 2009 consulting agreement between us and China Direct Investments, Inc. (“CDI”) for services to be provided during the period beginning May 1, 2009 through April 30, 2010, we issued 1,300,000 shares of our common stock valued at $260,000. Also, on March 26, 2010 we issued 1,400,000 shares of our common stock valued at $ 490,000 to CDI as a bonus for its performance during fiscal 2010 under the terms of our consulting agreement with such firm. CDI is an accredited investor and the issuance was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

ITEM 6.

SELECTED FINANCIAL DATA

Not applicable to smaller reporting companies.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion and analysis of our consolidated financial condition and results of operations for the fiscal years ended April 30, 2010 and 2009 should be read in conjunction with the consolidated financial statements, including footnotes and other information presented elsewhere in this Form 10-K.

Overview

During 2010 and 2009 our operations were organized in two operating segments related to our product lines:

-	Stevioside; and
-	Chinese and Veterinary Medicine.

In June, 2010, we elected to streamline our product offerings to focus on our core business of producing and selling stevia and other herb-based products including herb extracts and herb medicines as a result of the weak performance in our Veterinary Medicine business which we expect to continue. Consequently, we will exit all business activities related to our veterinary medicine business and on June 29, 2010 entered into an agreement to sell our 100% interest in our subsidiary Shengya Veterinary Medicine to Mr. Laiwang Zhang, our president and chairman of the Board of Directors. See “Item 1. Business – Our Corporate History – Sale of Shengya Veterinary Medicine.”

On March 23, 2010, we received a “no objection letter” from the FDA regarding our request for FDA Generally Recognized As Safe (GRAS) status on five of our stevia extract products, including Rebaudioside A 98, Rebaudioside A 95, Rebaudioside A 80, Rebaudioside A 60, and Stevioside 90 Stevia Extracts. FDA affirmed GRAS status confirms these stevia extracts are considered safe for use as a general-purpose sweetener in foods, excluding meat and poultry products. This affirmation is based on our conclusion which is supported by the extensive independent review of our production processes and the overall quality of these stevia products by a panel of qualified scientists.

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As a result of the recent FDA action, greater worldwide acceptance of stevia as a natural low calorie sweetener and our a strategic alliance with Wild Flavors, Inc., we plan to devote additional resources to product development and the further expansion of our stevia sales efforts in the United States and other countries.

Stevioside

Stevioside and rebaudioside are all natural low calorie sweeteners extracted from the leaves of the stevia rebaudiana plant. Stevioside is a safe and natural alternative to sugar for people needing low sugar or low calorie diets. Stevioside can be used to replace sugar in beverages and foods, including those that require baking or cooking where man made chemical based sweetener replacements are not suitable.

OnlySweet™

OnlySweet™ is an all natural, zero calorie, dietary supplement comprised of three natural ingredients, including stevioside. OnlySweet™ is carried in 3,500 stores in the U.S. and is generally located in the sweetener aisle with all natural and alternative sweeteners. We intend to continue to focus on marketing OnlySweet™ as a zero calorie sweetener alternative; as well as a “green” alternative. Natural products are one of the fastest growing segments in the grocery industry.

On May 11, 2009 we converted our former consolidated subsidiary Sunwin Stevia International into Sunwin USA and contributed $423,493 of net assets into the newly formed entity. Although we retained a 55% ownership interest in the new entity, due to contractual rights the noncontrolling interest holder has effective operating control in all significant decisions that would be expected in the ordinary course of business. Based on these factors we began to account for Sunwin USA as an equity method investment beginning from the first quarter of 2010, and our 55% interest in net income of the entity as part of other income. OnlySweet™ is the only product Sunwin USA markets and we do not anticipate that our inability to consolidate this entity will adversely impact our revenues in future periods.

Chinese and Veterinary Medicines Segment

In our Chinese Medicine and Veterinary Medicine segment, we manufacture and sell a variety of veterinary medicines, including seven series of more than 200 products, all natural polysaccharid and flavonoid extraction compound feed additives, a CIO2 food disinfectant and traditional Chinese medicine formula extracts which are used in products made for use by both humans and animals.

We also manufacture and sell approximately 280 different extracts of the estimated 400 traditional Chinese medicine extracts, which can be divided into the following three general categories:

-	single traditional Chinese medicine extracts;
-	compound traditional Chinese medicine extracts; and
-	purified extracts, including active parts and monomer compounds such as soy isoflavone.

Our Performance

In fiscal 2010 our total revenues, including related party revenues, declined 35% compared with fiscal 2009. Revenues from our Chinese and Veterinary Medicines segment decreased 51% while revenues from our Stevioside segment decreased 26%. These decreases in our Chinese and Veterinary Medicines segment was primarily due to a continuation of decreased customer demand and decreased production levels coupled with stricter governmental regulations on veterinary feeds and medicines. Production in our Stevioside segment was negatively impacted by severe weather and high temperature in the summer which hampered the plant growth and increased the incidences of plant diseases, resulting in a lower yield. We also made the decision to broaden our stevia product offerings to include a number of higher quality stevia grades needed in new product formulations we are developing in partnership with Wild Flavors to introduce to the global food and beverage industry. This resulted in the need for us to idle production while we were upgrading our 33,000 square foot Qufu Shengren stevioside production facility in fiscal 2010 for the production of high grade stevia. Production was further impacted by the closing of our 36,000 square foot stevioside production facility located in Qufu, China in December 2009 due to a government policy which mandated the closure of factories not located in newly zoned areas of the city. These factors caused us to significantly reduce our overall production during fiscal 2010. In addition to our reduced production, stevia sales in fiscal 2010 were negatively impacted by softness in the overall bulk stevia market, especially in both the Japanese and South Korean markets which did not fully recover from the prior year’s global economic downturn. Furthermore, we encountered fierce competition from smaller Chinese vendors who supplied cheaper and lower grade ingredients and stevioside extracts for export to Southeast Asia.

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Some of our customers opted out of our higher quality Reb A 40% and 60% in favor of lower quality stevia grades, such as stevioside A3 80%, and as a result our Qufu stevioside divisions suffered a loss. Management believes its decision to differentiate itself as a producer of higher quality stevia grades and product formulations through its partnership with Wild Flavors in the U.S. and Europe will lead to sustainable growth in stevia shipments for the future. These two markets are currently the largest in the world for low or zero calorie products in the food and beverage industry and our ability to now sell into the U.S. as a sweetener opens this vast market opportunity. Additionally, we anticipate that same opportunity will emerge in the European Union sometime in 2011.

Both segments were also negatively affected by higher freight and other input costs which resulted in higher cost of revenues. Our total operating expenses increased 65% in fiscal 2010 over fiscal 2009. We reported a net loss of $5.1 million for fiscal 2010, compared to a net income of $0.4 million in fiscal 2009. Further, we reported a net loss attributable to our company of $4.9 million in fiscal 2010 as compared to a net income attributable to our company of $0.5 million. These declines in net income are primarily a result of $7.7 million decrease in our fiscal 2010 revenues, $2.9 million increase in operating expenses, and $0.8 million increase in other expenses.

Our Outlook

We believe the future represents a significant opportunity for growth in our Stevioside Segment. The key factors to our growth include:

-	We will continue to strengthen our stevioside product quality by investing in quality controls and increasing audits and applications for quality control certifications;
-	On March 23, 2010, we received a “no objection letter” from the FDA seeking GRAS status for our high grade stevioside extracts which gives us the opportunity to enter the U.S. market;
-	We continue to focus our marketing efforts to boost Asia-based stevioside sales in China, Japan, and Korea; and
-	We plan to acquire the remaining 40% non-controlling interest in Qufu Shengwang in fiscal 2011 which will help further expand and solidify our position in this market segment.

We continue to place emphasis on the expansion of sales of stevioside in the PRC and throughout Asia and North America. We believe the FDA’s “no objection letter” regarding our GRAS status that applies to five of our stevia extract products, including Rebaudioside A 98, Rebaudioside A 95, Rebaudioside A 80, Rebaudioside A 60, and Stevioside 90 Stevia Extracts places our company at the forefront of the all natural low calorie sweetener industry with more grades of stevia available for use in the United States than any other stevia producer in the world. The FDA affirmed our GRAS status on these stevia extracts as safe for use in the form of a general-purpose sweetener in foods, excluding meat and poultry products. We believe this affirmation will help us to expand our future revenue in the U.S. markets through improvements in product development, marketing, and distribution.

With a continued decline in sales and profit margin in our veterinary segment due to stricter governmental regulations on veterinary feeds and medicines and a reduction in demand for our old product lines we plan to exit all business activities related to veterinary medicine to streamline our product offerings by focusing on our core business in the production and sales of stevia and other herb-based products including herbal extracts and medicines.

While we foresee significant opportunities in our Stevioside segment, we face a number of challenges including new product acceptance of stevia based formulations in the food and beverage industry, our ability to manage material and labor costs, and any possible adverse effect of changes in China’s currency exchange rates on our exports.

Foreign Exchange Considerations

Revenues from our operations in the PRC accounted for substantially all of our revenues for fiscal 2010 and fiscal 2009. We report 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 Section 830-20-35 of the FASB Accounting Standards Codification, and are included in determining net income or loss. For foreign operations with the local currency as the functional currency, assets and liabilities are translated from the local currencies into U.S. dollars at the prevailing exchange rate on the respective balance sheet date.

The functional currency of our Chinese subsidiaries is the local currency, the Renminbi (the “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 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 effect of exchange rate changes on cash for fiscal 2010 and fiscal 2009 were $295 and $153,180, respectively.

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On June 19, 2010 China’s Central Bank announced plans to make the RMB exchange rate more flexible, which could potentially weaken its de facto two-year peg to the US dollar, resulting in an increase in the RMB exchange rate against the US dollar in the future. If any increase in the value of the RMB were to occur, it could negatively impact our product export to other countries.

RESULTS OF OPERATIONS

The following table provides certain comparative information for our results of operations in fiscal 2010 and fiscal 2009.

	Fiscal Years Ended April 30,
	2010			2009			$ Difference			% Difference

Total Revenues	$	14,492,959		$	22,209,912		$	(7,716,953	)	(35	)	%
Cost of Sales		11,931,027			17,129,874			(5,198,847	)	(30	)	%
Gross Profit		2,561,932			5,080,038			(2,,518,106	)	(50	)	%

Operating Expenses:
Selling Expenses		1,106,288			1,694,900			(588,612	)	(35	)	%
General and Administrative		5,920,582			2,827,771			3,092,811		109		%
Loss on disposition of property and equipment		156,865						156,865		N/A
Loss on equity investment		275,966						275,966		N/A
Total operating Expenses		7,459,701			4,522,671			2,937,030		65		%
(loss) income from operations		(4,897,768	)		557,367			(5,455,136	)	N/A

Other income (expense)		(188,939	)		135,483			(757,253	)	N/A

Net income (loss) before income tax provision		(5,086,708	)		692,850			(5,779,558	)	N/A
Income taxes		(9,979	)		(307,527	)		297,548		(97	)	%
Net (loss) income		(5,096,687	)		385,323			(5,482,010	)	N/A

(Loss) gain on foreign currency translation		(3,756	)		638,675			(642,431	)	N/A

Comprehensive (loss) income	$	(5,100,443	)	$	1,023,998		$	(6,124,441	)	N/A

Overall

In fiscal 2010, our total revenues decreased $7.7 million or 35% from fiscal 2009. This decrease is a result of a $3.9 million decrease in sales in our Chinese and Veterinary Medicine segment, coupled with a $3.8 million decrease in our Stevioside segment. The decrease in demand for our Chinese and Veterinary Medicine segment is primarily due to (i) reduced customer demand over all product categories in this segment as a result of the global economic downturn; and (ii) reduced customer demand due to our existing older product lines, which can no longer meet the current market needs, and a reduction of demand for antibiotics and other veterinary products as a result of decreased breeding and farm operations by our customers who cut back production in an effort to reduce the spread of swine flu in humans and animals and as a result of restrictions imposed by the PRC on the use of antibiotics and breeding of livestock impacted by this virus. In fiscal 2010 revenues in our Stevioside segment decreased 26% as compared to that of fiscal 2009 as a result of slower global demand for our Stevioside extracts.

Our Stevioside segment revenues for fiscal 2010 do not take into account of revenues attributable to Sunwin USA. Beginning in the first quarter of our fiscal 2010 we have ceased to consolidate Sunwin USA and instead accounted for our investment in the entity under the equity method due to the existence of noncontrolling interest holder’s controlling rights in the ordinary course of business, which overcame the presumption of consolidation. Please refer to our further discussion in Stevioside segment below.

In fiscal 2010, revenues from our Stevioside segment represented 74% of our total revenues as compared to 65% in fiscal 2009. This change in contribution of revenues to our company is the result of the decrease in revenues in our Chinese and Veterinary Medicine segment. As set forth below, actual revenues from our Stevioside segment also decreased in fiscal 2010 from fiscal 2009 due to reduced demand and increased competition and the change of accounting method in our Sunwin USA subsidiary.

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Our gross profit in fiscal 2010 decreased $2.5 million, or 50%, as compared to fiscal 2009. In fiscal 2010, cost of sales as a percentage of revenues increased five percentage points attributable to the higher production costs in our Stevioside segment while such costs remained the same in our Chinese and Veterinary Medicine segment. Through our acquisitions of Qufu Shengwang and Qufu Shengren, in fiscal 2009 we began converting our Qufu production facilities to the production of higher grades of stevioside. This transition has resulted in higher costs associated with the operation of certain facilities which, when coupled with our decreased sales, contributed to our decreased margins in fiscal 2010.

In fiscal 2010, total operating expenses increased $2.9 million or 65% as compared to fiscal 2009. These increases were primarily as a result of a $1.4 million increase in research and development for new products and manufacturing processes, a $0.7 million increase in management compensation including $0.2 million in calendar year-end bonuses, a $0.6 million write-down of our obsolete inventories, and a $0.4 million increase in consulting fees as part of a stock based consulting bonus paid to China Direct Investments, Inc, and a $0.3 million loss attributable to our investment in Sunwin USA, which were partially offset by a $0.6 million decrease in selling expenses for commissions and freight due to lower sales volumes.

The following table provides information on revenues, cost of sales, gross profit, operating expenses, and operating income (loss) for each of our reporting segments for fiscal 2010 and fiscal 2009, respectively, as well as information related to our corporate operating expenses:

	Stevioside					Chinese and Veterinary Medicine					Corporate and Other						Total
	Fiscal Year Ended April 30,
	2010			2009		2010			2009		2010			2009			2010			2009
Revenues	$	10,730,828		$	14,513,553	$	3,762,131		$	7,696,359	$	-		$	-		$	14,492,959		$	22,209,912
Cost of Sales		9,221,076			11,582,643		2,709,951			5,547,231		-			-			11,931,027			17,129,874
Gross Profit		1,509,752			2,930,910		1,052,180			2,149,128		-			-			2,561,932			5,080,038

Total Operating Expenses		3,143,437			2,324,789		3,407,479			1,842,468		908,785			355,414			7,459,701			4,522,671
Total Income (Loss) from Operations	$	(1,633,686	)	$	606,121	$	(2,355,298	)	$	306,660	$	(908,785	)	$	(355,414	)	$	(4,897,769	)	$	557,367

Other key indicators:

(All figures are a percentage of Revenues)	Stevioside						Chinese and Veterinary Medicine						Total
	For fiscal years ended April 30,
	2010			2009			2010			2009			2010			2009
Cost of Sales		86	%		80	%		72	%		72	%		82	%		77	%
Selling Expenses		5	%		5	%		16	%		13	%		8	%		8	%
General & Administrative Expenses		21	%		11	%		74	%		11	%		41	%		11	%
Total Operating Expenses		27	%		16	%		90	%		24	%		51	%		20	%

Stevioside Segment

Our Stevioside segment revenues for fiscal 2010 did not include revenues attributable to Sunwin USA because we changed our method of accounting for this entity as described earlier in this section Our portion of Sunwin USA’s loss for fiscal 2010 is reflected in the following table under “SUWN USA (Equity method)”. n fiscal 2009 revenues from our Stevioside segment included $0.6 million revenues attributable to Sunwin USA which are included in the following table under “SUWN USA”.

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The table below displays how we accounted for result of operations of our Stevia Segment in fiscal 2010 and fiscal 2009:

	For the year ended April 30, 2010									For the year ended April 30, 2009
	Stevia China			SUWN USA			Total stevia segment			Stevia China		SUWN USA			Total stevia segment
				(Equity method)								(Consolidation)
Revenues		10,730,828						10,730,828			13,900,838		612,715			14,513,553
Cost of revenues		9,221,076						9,221,076			11,155,714		426,929			11,582,643
Gross Profit		1,509,752						1,509,752			2,745,124		185,786			2,930,910
								-								-
Loss on Equity Investment					275,966			275,966
Other Operating Expenses		2,867,471						2,867,471			1,798,103		526,686			2,324,789
								-								-
(LOSS) INCOME FROM OPERATIONS		(1,357,719	)		(275,966	)		(1,633,685	)		947,021		(340,900	)		606,121
								-								-
Total Other Income (Expense)		18,701						18,701			5,014		(3,682	)		1,332

INCOME TAXES		7,415						7,415			217,251					217,251

NET (LOSS) INCOME		(1,346,433	)		(275,966	)		(1,622,399	)		724,756		(337,218	)		387,538

Without the consideration of Sunwin USA, the results of operations from our Stevioside segment in fiscal 2010 fiscal and fiscal 2009 are as follows:

Revenues. Revenues from our Stevioside segment in fiscal 2010 represented 74% of our total revenues as compared to 63% in fiscal 2009. However, revenues within this segment decreased $3.2 million or 23% as compared to fiscal 2009. In fiscal 2010, we manufactured approximately 280 tons of stevioside as compared to approximately 437 tons in fiscal 2009. Our revenues in this segment were adversely impacted by a number of factors, including softness in the bulk stevia market in Japan and South Korean which are principal export markets for our products, increased competition, a shift by some of our customers to a lower grade stevia in an effort to reduce costs as well as the impact of severe weather conditions in the summer of 2009 which resulted in lower plant yield, idling of production facilities for an upgrade and the loss of one production facility through a PRC government mandated closing.

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Gross Profit. Our gross profit in this segment in fiscal 2010 decreased $1.2 million to $1.5 million, a gross margin of 14%, as compared to $2.7 million or a gross margin of 20%, in fiscal 2009. This decrease in our gross profit margin was primarily attributable to a higher stevioside cost and a higher fixed production cost as we continued to experience higher manufacturing costs for the production of higher grades of stevia at our Qufu production facilities. In fiscal 2010, cost of sales in our Stevioside segment accounted for 86% of its revenues, an increase of six percentage points from fiscal 2009. In the future, with the anticipated return of our customer demand for higher grades of stevioside and with our further ramp up of our production volume at these new facilities, we expect to increase our growth profit margins.

Operating Expenses. Operating expenses for our Stevioside Segment in fiscal 2010 increased $1.1 million, or 63%, as compared to fiscal 2009. This increase is primarily attributable to increases in general and administrative costs within this segment due to an increase of $0.6 million in research and development for new stevioside A3 and RA 98% production and quality control processes, an increase of $0.3 million in management compensation, and an increase of $0.2 million from a loss on disposition of property and equipment due to the closure of a 36,000 square foot stevioside production facility in Qufu, partially offset by a $0.1 million reduction in sales expenses.

The following unaudited pro forma results of operations have been prepared as if Sunwin USA had been accounted for under the equity method of accounting in the following periods:

	For the Years Ended April 30,
	2010			2009
				(Unaudited)
	Sunwin USA			Sunwin USA
Loss in investment under the equity method	$	(275,966	)	$	(189,520	)

NET LOSS	$	(275,966	)	$	(189,520	)

Chinese and Veterinary Medicine Segment

Revenues. In fiscal 2010, revenues from our Chinese and Veterinary Medicine Segment decreased $3.9 million or 51% as compared to fiscal 2009. During this period, revenues from this segment represented 26% of our total revenues as compared to 35% in fiscal 2009. This decrease is primarily the result of a decrease in sales of both our traditional Chinese medicine products of $2.0 million and veterinary medicine products of $2.0 million, respectively. As described elsewhere herein, we are in the process of exiting all lines related to our veterinary medicine business. As a result, our revenues from this segment will be significantly reduced in future periods.

Gross Profit. Our gross profit in this segment decreased $1.0 million to $1.1 million as compared to fiscal 2010. However, as a percentage of revenues our gross profit margin remained at 27.9%, the same as that in fiscal 2009 as a result of our efforts to contain input and manufacturing costs.

Operating Expenses. In fiscal 2010, operating expenses associated with this segment totaled $3.4 million, an increase of $1.6 million as compared to fiscal 2009. This increase is primarily the result of an increase of $2.0 million in general and administrative expenses, including $0.9 million in research and development, $0.6 million in one-time impairment charges to dispose obsolete products in our veterinary inventory, $0.4 million in bad debt expenses, and $0.4 million in management compensation, offset by a decrease of $0.4 million in sales expenses due to lower sales commissions, freight, promotion, and other related selling costs.

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Corporate and Other

We incur various operating expenses at the corporate level related to stock-based compensation, legal, auditing, professional and business consultants. For fiscal 2010, these expenses increased $0.5 million to $0.9 million as compared to $0.4 million in fiscal 2009. This increase results primarily from a $0.4 million increase in stock-based compensation and $0.1 million for consulting services.

TOTAL OTHER INCOME (EXPENSE)

In fiscal 2010, our total other expense totaled $0.2 million, an increase of $0.3 million as compared to total other income of $0.1 million in fiscal 2009. Other expense for fiscal 2010 consists of a $0.2 million loss on change in fair market value of our derivative liability related to warrants issued in our 2007 private offering.

FOREIGN TAXES

In fiscal 2010, foreign taxes decreased $0.3 million to $0.01 million compared to that of fiscal 2009 due to lower taxable income generated in China. We did not generate taxable income in the U.S. during the period and only incurred corporate and non-cash expenses.

NET INCOME AND COMPREHENSIVE INCOME (LOSS)

In fiscal 2010 we reported net loss of $5.1 million as compared to net income of $0.4 million for fiscal 2009. The decrease is primarily due to a decrease in net revenue of $7.7 million resulting in a decrease of $2.5 million in gross profit, an increase of $2.9 million in operating expenses, and an increase of $0.3 million in other expenses. In fiscal 2010 we reported a comprehensive loss of $5.1 million, a decrease of $6.1 million as compared to the reported comprehensive income of $1.0 million in fiscal 2009.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate adequate amounts of cash to meet the company’s needs for cash. The following table provides certain selected balance sheet comparisons between April 30, 2010 and 2009, respectively:

	April 30,
	2010		2009		$ Increase/Decrease			% Increase/Decrease

Working Capital	$	18,786,249	$	19,881,064	$	(1,094,815	)		(6	)	%

Cash	$	12,746,756	$	10,487,165	$	2,259,591			22		%
Accounts receivable, net		2,803,482		4,011,446		(1,207,964	)		(30	)	%
Inventories, net		5,696,533		7,415,809		(1,719,276	)		(23	)	%
Prepaid expenses and other current assets		287,383		294,210		(6,827	)		(2	)	%

Total current assets		21,794,416		22,208,630		(414,214	)		(2	)	%
Property and equipment, net		17,138,123		19,121,340		(1,983,217	)		(10	)	%
Land use rights		2,237,404		2,289,267		(51,863	)		(2	)	%
Total Assets	$	41,317,470	$	43,619,237	$	(2,301,767	)		(5	)	%

Accounts payable and accrued expenses	$	2,855,584	$	2,098,967	$	756,617			36		%
Other current payables		-		10,000		(10,000	)		(100	)	%
Taxes payable		151,105		160,021		(8,916	)		(6	)	%
Due to related party		1,478		58,578		(57,100	)		(97	)	%

Total current liabilities		3,008,167		2,327,566		680,601			29		%
Derivative Liability		347,936		-		347,936
Other payables		157,816		157,830		(14	)	nm
Total liabilities	$	3,513,919	$	2,485,396	$	1,028,523			41		%

n/m not meaningful

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From an overall perspective, the ongoing global economic instability has not had a significant impact upon our liquidity as the majority of our short-term financing is obtained through payment terms with our suppliers and vendors rather than business loans from banks. Both the economic downturn and decreased market demand have impacted our operations in the following ways: (i) reduced customer demand across all of our segments and product categories; (ii) reduced customer demand for antibiotics and other veterinary products as a result of both the impact of aging inventories in our product offerings and the decreased breeding and farm operations by our customers who cut back production in an effort to reduce the spread of swine flu in humans and animals and as a result of restrictions imposed by the PRC on the use of antibiotics and breeding of livestock impacted by this virus; and (iii) our customers are slower to pay us with days sales outstanding increasing to an average of 73 days for fiscal 2010 up from 66 days for fiscal 2009.

At April 30, 2010, we had working capital of $18.8 million including cash of $12.7 million as compared to working capital of $19.9 million including cash of $10.5 million at April 30, 2009. Our cash position by geographic area was as follows:

	April 30, 2010		April 30, 2009
China	$	11,696,648	$	10,100,869
United States		1,049,651		380,487
Canada		457		5,809
Total	$	12,746,756	$	10,487,165

Accounts receivable, net of allowance for doubtful accounts, at April 30, 2010 totaled $2.8 million as compared to $4.0 million at April 30, 2009. Our allowance for doubtful accounts, which reflects accounts receivable balances in excess of 12 months, increased $0.7 million to $1.5 million from $0.8 million at April 30, 2009. We may, however, collect all or a portion of these doubtful accounts. At April 30, 2010 our accounts receivables decreased 30% as a result of our decrease in sales as compared to fiscal 2009.

At April 30, 2010, inventories, net of reserve for obsolete inventory, decreased $1.7 million to $5.7 million as compared to $7.4 million of April 30, 2009. This decrease is primarily due to a reduced demand from our customers and curtailed productions. Of the total inventories, $4.2 million in finished goods, $1.5 million in raw material, $0.3 million in packing material and consumable, and $0.2 million in production in process, offset by $0.5 million in inventory reserve.

At April 30, 2010, we had property and equipment, net of accumulated depreciation, of $17.1 million as compared to $19.1 million as of April 30, 2009. In fiscal 2010, we recorded $1.9 million to accumulated depreciation, disposed $1.0 million in furniture and equipment, and added $0.9 million of new purchases to plant and equipment.

At April 30, 2010, we reflected $2.9 million of accounts payable and accrued expenses, an increase of 36% from April 30, 2009. This balance includes trade accounts payable and accrued expenses of $1.9 million, other payables of $0.8 million, and accrued salaries and benefits of $0.2 million. Of the total accounts payable and accrued expenses at April 30, 2010, $1.5 million relates to our Stevioside Segment, $0.9 million relates to our Chinese and Veterinary Medicine Segment, and $0.5 million relates to our corporate payables in the United States. The increase at April 30, 2010 compared to April 30, 2009 reflects payments of balances due made in the ordinary course of business.

At April 30, 2010, we held cash of $12.7 million as compared to cash of $10.5 million at April 30, 2009, an increase of $2.2 million. During fiscal 2010, net cash provided by operating activities totaled $1.5 million, net cash used in investing activities totaled $0.3 million, and net cash provided by financing activities totaled $1.1 million, and the effect of the prevailing exchange rate had no material impact on cash.

Net cash provided by operating activities increased to $1.5 million during fiscal 2010 as compared to cash provided by operating activities of $0.7 million for fiscal 2009. For the year ended April 30, 2010, we reported a net loss of $5.1 million including $0.3 million from Sunwin USA under the equity method of accounting which had no effect on cash, and used $0.1 million to pay down taxes payable and increased $0.1 million in our accounts receivable due from related parties. During the same period, we decreased $1.0 million in our inventory build-up, $0.5 million in our accounts receivable, and increased $0.4 million each in accounts payable and accrued expenses, and other payable, respectively. For non-cash items, we made adjustments to net income of $1.9 million in depreciation, $0.8 million in stock based compensation for consulting fees, $0.7 million in allowance for doubtful accounts, $0.6 million in inventory impairment, and $0.2 million in our loss on disposition of property and equipment. For fiscal 2009, we used $0.8 million to pay down accounts payable, $1.2 million to fund increased levels of inventory and $0.2 million to pay down taxes payable. These uses were primarily offset by adjustments to net income of non cash expenses of $2.0 million related to depreciation, amortization, and consulting.

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Net cash used in investing activities totaled $0.3 million during fiscal 2010 as compared to cash used of $0.2 during fiscal 2009. In fiscal 2010, we used $0.9 million for purchase of property and equipment, and provided $0.9 million in proceeds from the sales of our property and equipment. We also made $0.3 million adjustment for cash used at Sunwin USA under the equity method. In fiscal 2009, we extended an advance of $2.5 million to Qufu Shengren prior to the date we acquired this company. We acquired this amount plus additional cash deposits upon acquisition, thus offsetting the cash outflow related to the advance resulting in net cash acquired through acquisition of $0.2 million. The cash acquired through these acquisitions was offset by capital expenditures of $0.4 million associated with capital improvements in our Stevioside Segment.

Net cash provided by financing activities totaled $1.1 million during fiscal 2010, consisting of $1.1 million in proceeds from the sales of our common stocks and warrant exercise. In fiscal 2009, we provided $3.2 million in proceeds from the sales of our common stocks and warrant exercise, offset by $0.1 million used for investment banking placement fees.

We believe that existing cash and cash equivalents and internally generated funds will be sufficient to cover working capital requirements and capital expenditures for the next twelve months other than additional working capital requirement that may result from further expansion of our operations through acquisitions of additional facilities.

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.

A summary of significant accounting policies is included in Note 1 to the Consolidated Financial Statements appearing elsewhere in this report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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 revenues and expenses during the reporting periods presented.

Significant estimates for the periods reported include the allowance for doubtful accounts which is based on an evaluation of our outstanding accounts receivable including the age of amounts due, the financial condition of our specific customers, knowledge of our industry segment in Asia, and historical bad debt experience. This evaluation methodology has proven to provide a reasonable estimate of bad debt expense in the past and we intend to continue to employ this approach in our analysis of collectability. However, we are aware that given the current global economic crises, including that of the PRC, meaningful time horizons may change. We intend to enhance our focus on the evaluation of our customers' sustainability and adjust our estimates as may be indicted.

We rely on assumptions such as volatility, forfeiture rate, and expected dividend yield when calculating the fair value of our derivative liability related to common stock purchase warrants. We also rely on assumptions and estimates to calculate reserve for obsolete inventory and the depreciation of property, plant and equipment. We make assumptions of expiration of our products held as inventory based on historical experience and if applicable, regulatory recommendation. We also group property plant and equipment into similar groups of assets and estimate the useful life of each group of assets; see Note 3 – Property and Equipment of the Consolidated Financial Statements appearing elsewhere herein for further information on asset groups and estimated useful lives.

Further, we rely on certain assumptions and calculations underlying our provision for taxes in the PRC. Assumptions and estimates employed in these areas are material to our reported financial conditions and results of operations. These assumptions and estimates have been materially accurate in the past and are not expected to materially change in the future. Actual results could differ from these estimates.

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We record property and equipment at cost. Depreciation and amortization are provided 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. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. 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.

We account for stock options issued to employees as compensation expense in the statement of operations. We calculate the total cost based on the grant-date fair value of stock options and other equity-based compensation issued to employees and recognize the expense over the required service period.

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

EITF Issue No. 07-5 (ASC 815), "Determining Whether an Instrument (or embedded Feature) is Indexed to an Entity's Own Stock" (EITF 07-5) was issued in June 2008 to clarify how to determine whether certain instruments or features were indexed to an entity's own stock under EITF Issue No. 01-6 (ASC 815), "The Meaning of "Indexed to a Company's Own Stock" (EITF 01-6) (ASC 815),. EITF 07-5(ASC 815), applies to any freestanding financial instrument (or embedded feature) that has all of the characteristics of a derivative as defined in FAS 133, for purposes of determining whether that instrument (or embedded feature) qualifies for the first part of the paragraph 11(a) scope exception. It is also applicable to any freestanding financial instrument (e.g., gross physically settled warrants) that is potentially settled in an entity's own stock, regardless of whether it has all of the characteristics of a derivative as defined in FAS 133 (ASC 815), for purposes of determining whether to apply EITF 00-19 (ASC 815). EITF 07-5(ASC 815) does not apply to share-based payment awards within the scope of FAS 123(R), Share-Based Payment (FAS 123(R) (ASC 718)). However, an equity-linked financial instrument issued to investors to establish a market-based measure of the fair value of employee stock options is not within the scope of FAS 123(R) and therefore is subject to EITF 07-5(ASC 815). Upon our adoption of ASC 815 retroactively effective on May 1, 2009, we determined that the warrants associated with a capital raise in March 2007 did not qualify for a scope exception under FASB ASC Section 815-10-15 as they were determined to not be indexed to our stock. This change in accounting policy became retroactively effective May 1, 2009 and the warrants were reclassified from equity to a derivative liability.

In January 2009, the FASB issued FSP EITF 99-20-1 (ASC 325), to amend the impairment guidance in EITF Issue No. 99-20 (ASC 325) in order to achieve more consistent determination of whether an other-than-temporary impairment (“OTTI”) has occurred. This FSP amended EITF 99-20 (ASC 325) to more closely align the OTTI guidance therein to the guidance in Statement No. 115 (ASC 320, 10-35-31). Retrospective application to a prior interim or annual period is prohibited. The guidance in this FSP was considered in the assessment of OTTI for various securities at December 31, 2008.

In June 2009, the FASB approved the “FASB Accounting Standards Codification” (the “Codification”) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. The Codification is effective for interim and annual periods ending after September 15, 2009.

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-04 “Accounting for Redeemable Equity Instruments - Amendment to Section 480-10-S99” which represents an update to section 480-10-S99, distinguishing liabilities from equity, per EITF Topic D-98, Classification and Measurement of Redeemable Securities. We have adopted this update and it did not have a material impact on its consolidated financial position, results of operations or cash flows.

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In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-05 “Fair Value Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair Value” , which provides amendments to subtopic 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: 1. A valuation technique that uses: a. The quoted price of the identical liability when traded as an asset b. Quoted prices for similar liabilities or similar liabilities when traded as assets. 2. Another valuation technique that is consistent with the principles of topic 820; two examples would be an income approach, such as a present value technique, or a market approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability. The amendments in this update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments in this update also clarify that both a quoted price in an active market for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. We have adopted this update and it did not have a material impact on its consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-08 “Earnings Per Share – Amendments to Section 260-10-S99?? which represents technical corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share for a Period that includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock. We have adopted this update and it did not have a material impact on its consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-09 “Accounting for Investments-Equity Method and Joint Ventures and Accounting for Equity-Based Payments to Non-Employees” . This update represents a correction to Section 323-10-S99-4, Accounting by an Investor for Stock-Based Compensation Granted to Employees of an Equity Method Investee . Additionally, it adds observer comment Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees to the Codification. We have adopted this update and it did not have a material impact on its consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-12 “Fair Value Measurements and Disclosures Topic 820 – Investment in Certain Entities That Calculate Net Assets Value Per Share (or Its Equivalent)”, which provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). The amendments in this update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this update, such as the nature of any restrictions on the investor’s ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be make by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in U.S. GAAP on investments in debt and equity securities in paragraph 320-10-50-1B. The disclosures are required for all investments within the scope of the amendments in this update regardless of whether the fair value of the investment is measured using the practical expedient. We have adopted this update and it did not have a material impact on its consolidated financial position, results of operations or cash flows.

In October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue Arrangements.” This ASU establishes the accounting and reporting guidance for arrangements including multiple revenue-generating activities. This ASU provides amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of accounting. The amendments in this ASU also establish a selling price hierarchy for determining the selling price of a deliverable. Significantly enhanced disclosures are also required to provide information about a vendor’s multiple-deliverable revenue arrangements, including information about the nature and terms, significant deliverables, and its performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. The amendments in this ASU are effective prospectively for revenue arrangements entered into or materially modified in the fiscal years beginning on or after June 15, 2010. Early application is permitted. We are currently evaluating this new ASU.

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In October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements That Include Software Elements.” This ASU changes the accounting model for revenue arrangements that include both tangible products and software elements that are “essential to the functionality,” and scopes these products out of current software revenue guidance. The new guidance will include factors to help companies determine what software elements are considered “essential to the functionality.” The amendments will now subject software-enabled products to other revenue guidance and disclosure requirements, such as guidance surrounding revenue arrangements with multiple-deliverables. The amendments in this ASU are effective prospectively for revenue arrangements entered into or materially modified in the fiscal years beginning on or after June 15, 2010. Early application is permitted. We are currently evaluating this new ASU

In January 2010, the FASB issued changes to disclosure requirements for fair value measurements. Specifically, the changes require a reporting entity to disclose, in the reconciliation of fair value measurements using significant unobservable inputs (Level 3), separate information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). These changes become effective for us beginning February 1, 2010. Other than the additional disclosure requirements, management has determined these changes will not have an impact on the Consolidated Financial Statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

OFF BALANCE SHEET ARRANGEMENTS

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 generally accepted accounting principles in the United States.

Cautionary Note Regarding Forward-Looking Information and Factors That May Affect Future Results

This report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Annual Report on Form 10-K and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. A list of factors that could cause our actual results of operations and financial condition to differ materially is set forth below, and these factors are discussed in greater detail under Item 1A – “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2010:

	-	Our revenues have declined in the past two fiscal years and there are no assurances they will return to historic levels in future periods;
	-	Dependence upon continued market acceptance of our stevioside products, obtaining Generally Recognized as Safe status in the United States and approval in other countries in the world that do not permit use of steviosides in food products;
	-	Competition and low barriers to entry to the market in which we sell our products;
	-	Our dependence on our president, as well as his affiliated companies, Pharmaceutical Corporation and Shandong Group;
	-	Our ability to assure that related party transactions are fair to our company;
	-	Our inability to control the cost of our raw materials;
	-	The limitation on our ability to receive and use our revenues effectively as a result of restrictions on currency exchange in the PRC;
	-	Our operations are subject to government regulation. If we fail to comply with the applicable regulations, our ability to operate in future periods could be in jeopardy;
	-	Our recognition of unrealized gains on foreign currency transaction can materially impact our income from period to period;
	-	The absence of various corporate governance measures which may reduce stockholders’ protections against interested director transactions, conflicts of interest and other matters;
	-	The effect of changes resulting from the political and economic policies of the Chinese government on our assets and operations located in the PRC;

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	-	The impact of economic reform policies in the PRC;
	-	The influence of the Chinese government over the manner in which our Chinese subsidiaries must conduct our business activities;
	-	The recent outbreak of swine flu or any recurrence of Severe Acute Respiratory Syndrome, or SARS, or another widespread public health problem, could interrupt our operations.
	-	Regulations relating to offshore investment activities by Chinese residents may increase the administrative burden we face and create regulatory uncertainties that may limit or adversely affect our ability to complete a business combination with PRC companies.
	-	The lack various legal protections in certain agreements to which we are a party and which are material to our operations which are customarily contained in similar contracts prepared in the United States;
	-	Our ability to enforce our rights due to policies regarding the regulation of foreign investments in China;
	-	Difficulties stockholders may face who seek to enforce any judgment obtained in the United States against us, which may limit the remedies otherwise available to our stockholders
	-	Our ability to comply with the United States Foreign Corrupt Practices Act which could subject us to penalties and other adverse consequences;
	-	Provisions of our articles of incorporation and bylaws may delay or prevent a take-over which may not be in the best interests of our stockholders;
	-	Adverse affects on the liquidity of our stock because it currently trades below $5.00 per share, is quoted on the OTC bulletin board, and is considered a “penny stock;” and
	-	The impact on our stock price due to future sales of restricted stock held by existing shareholders.

We caution that the factors described herein and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to smaller reporting company.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements are contained in pages F-1 through F-26, which appear at the end of this annual report.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T).

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, to allow timely decisions regarding required disclosure. Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures as of April 30, 2010. Based on that evaluation and as described below under “Management’s Report on Internal Control Over Financial Reporting,” we have identified several material weaknesses in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) described in the next section. Solely as a result of these material weaknesses, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective as of April 30, 2010.

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Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that, due to the material weaknesses described below, our internal control over financial reporting was not effective as of April 30, 2010.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements would not be prevented or detected on a timely basis. Our management has identified the following material weaknesses in our internal control over financial reporting:


	-		We have an inadequate number of accounting personnel and our CFO and our staff within our finance and accounting group in the PRC do not have the requisite expertise in generally accepted accounting principles and the securities laws of the United States to ensure the proper application thereof;
	-		Our internal audit function is significantly deficient due to insufficient qualified resources to perform internal audit functions; and
	-		We do not have an Audit Committee of our Board of Directors that is comprised of independent directors.

We believe the following actions we plan to take will be sufficient to remediate the material weaknesses described above:


	-		We will seek to hire an adequate number of personnel involved in the preparation of the financial statements and disclosures with the requisite expertise in generally accepted accounting principles to ensure the proper application thereof;
	-		We will evaluate hiring additional internal audit resources and are considering a position for an internal auditor who will test and monitor the implementation of our accounting and internal control procedures;

	-		We will implement an initiative to ensure the importance of internal controls and compliance with established policies and procedures that are fully understood throughout our company; and
	-		We will provide training to our employees to ensure these procedures are properly performed.

Management believes the actions described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. While these remedial actions have previously been identified, the necessary operational and personnel weaknesses were not alleviated in fiscal 2010. Our management intends to substantially complete these identified remedial actions during fiscal 2011.

If the result of our remediation of the identified material weaknesses is not successful, or if additional material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to restate our financial statements, implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation. As we implement remediation measures, we may supplement or modify them as described above.

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are 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. Due to 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, within our Company have been detected.

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Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation of our controls performed during the quarter ended April 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION.

None

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

The following sets forth the names and ages of each of our executive officers and directors as of July 24, 2010 and the positions they hold:

Name	Age		Positions
Laiwang Zhang		48	President and Chairman
Dongdong Lin		36	Chief Executive Officer, Secretary and Director
Fanjun Wu		36	Chief Financial Officer
Chengxiang Yan		42	Director and General Manager of Qufu Natural Green

Laiwang Zhang. Mr. Zhang has served as our President and Chairman since April 30, 2004 and he has served as Chairman of Qufu Natural Green since January 2003. Mr. Zhang also serves as Chairman of Pharmaceutical Corporation, a company engaged in the sale and distribution of Chinese herb medicines, since April 2000. In 1996, Mr. Zhang founded Shandong Group, a holding company with interests in companies operating in the areas of nutritional products, Chinese herb extracts, package products, animal health products, animal medicine and chemical products. Since April 1996, he has been General Manager of this company. From April 1992 to April 1996 Mr. Zhang served as Manager of our subsidiary Shengya Veterinary Medicine. From 1984 to 1992, Mr. Zhang served as President of Shandong Qufu Amylum Plant, a company that manufactures amylum. Mr. Zhang graduated from Shandong Technical University in 1984 with a Masters Degree in Engineering.

Dongdong Lin. Ms. Lin has served as our Chief Executive Officer, Secretary and a member of our Board of Directors since February 2005. Ms. Lin served as Manager of the Technology Information Department of Pharmaceutical Corporation, a company engaged in the sale and distribution of Chinese herb medicines, from January 2003 to December 2004. Ms. Lin joined Shandong Group in 1996, serving as a supervisor from April 1998 to April 2000, and Manager of the Department of Export and Import from April 2000 to December 2002. Ms. Lin holds a Bachelors Degree in Technology English from Haerbin Industry University and a Masters Degree in Economics from the China Academy of Social Science.

Fanjun Wu. Ms. Wu has been our Chief Financial Officer since April 30, 2004. Since 1997, she has been employed by Qufu Natural Green, serving as Director of Finance from 1997 to 1998 and thereafter as Chief Financial Officer. From 1992 to 1996, Ms. Wu was a Director of Finance for our subsidiary Shengya Veterinary Medicine, which was owned by Shandong Group prior to our acquisition in 2004. Ms. Wu graduated from Qufu Industrial College in 1995 with the Bachelor’s Degree in Accounting.

Chengxiang Yan. Mr. Yan has been the General Manager of our subsidiary Qufu Natural Green since 1999 and a member of our Board of Directors since April 30, 2004 following our acquisition of Qufu Natural Green. From 1999 to 2004, Mr. Yan was the Director of the Marketing Department for that company. From 1996 to 1998, Mr. Yan was Director of the Marketing Department for Shandong Group, a holding company with interests in companies operating in the areas of nutritional products, Chinese herb extracts, package products, animal health products, animal medicine and chemical products, and from 1993 to 1996, he was Director of the Marketing Section for our subsidiary Shengya Veterinary Medicine owned by Shandong Group before our acquisition in 2004. Mr. Yan graduated from Shandong Agriculture University in 1993 with a Bachelor’s Degree in Farming.

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There are no family relationship between any of the executive officers and directors. Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified.

Director Qualifications

The following is a discussion for each director of the specific experience, qualifications, attributes or skills that led to our conclusion that such person should be serving as a member of our Board of Directors as of the date of this annual report in light of our business and structure. In addition to their individual skills and backgrounds which are focused on our industry as well as financial and managerial experience, we believe that the collectively skills and experience of our Board members are well suited to guide us as we continue to grow our company.

Liawang Zhang. Mr. Zhang has over 10 years of professional experience in areas of nutritional products, Chinese herb extracts, package products, animal health products, animal medicine and chemical products. He has signficiant experience in starting companies within our industry segment and has many professional contacts which serve to promote our efforts to expand our business and operations.

Dongdong Lin. Ms. Lin has over 14 years operational experience in our industry.

Chengxiang Yan. Mr. Yan has over 14 years marketing experience in our industry and an advanced degree in farming.

Stockholders Agreement – Election of Directors

On February 5, 2009 as part of the Securities Purchase Agreement we entered into with Wild Flavors, Inc., we entered into a stockholders agreement with Wild Flavors, Inc. and certain of our shareholders who owned approximately 34.12% of our common stock at the time the agreement was entered into. The stockholders agreement provides that so long as Wild Flavors, Inc. owns at least 4,000,000 shares of our common stock, the parties to that agreement will vote or cause their shares of our common stock to be voted to elect two members of our Board of Directors designated by Wild Flavors, Inc. and three members designated by our shareholders who are a party to the stockholders agreement. As of the date of this report, Wild Flavors, Inc. has not designated anyone to be appointed to our Board of Directors.

Compliance with Section 16(a) of the Exchange Act

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us under Rule 16a-3(d) of the Securities Exchange Act of 1934 during the fiscal year ended April 30, 2010 and Forms 5 and amendments thereto furnished to us with respect to the fiscal year ended April 30, 2010, as well as any written representation from a reporting person that no Form 5 is required, we are not aware that any officer, director or 10% or greater shareholder failed to file on a timely basis, as disclosed in the aforementioned Forms, reports required by Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year ended April 30, 2010 with the exception of Fanjun Wu who filed one late Form 4 reporting two purchases.

Code of Business Conduct and Ethics

In April 2005, we adopted a Code of Ethics applicable to our Chief Executive Officer, principal financial and accounting officers and persons performing similar functions. A Code of Ethics is a written standard designed to deter wrongdoing and to promote:

-	honest and ethical conduct;
-	full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements;
-	compliance with applicable laws, rules and regulations;
-	the prompt reporting violation of the code; and
-	accountability for adherence to the Code.

A copy of our Code of Ethics is filed as an exhibit to this annual report and we will provide a copy, without charge, to any person desiring a copy of the Code of Ethics, by written request to us at our principal offices, attention: Corporate Secretary.

Committees of the Board of Directors and Independence

Our Board of Directors has not yet established an Audit Committee, a Compensation Committee, a Nominating Committee or any committee performing a similar function. The functions of those committees are being undertaken by the entire board as a whole. Because we do not have any independent directors, our Board of Directors believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.

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We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given that all our operations are located in the PRC and our lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.

None of our directors is an audit committee “financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. In general, an audit committee “financial expert??is an individual member of the audit committee or Board of Directors who:

-	understands generally accepted accounting principles and financial statements;
-	is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves;
-	has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements;
-	understands internal controls over financial reporting; and
-	understands audit committee functions.

Since the reverse acquisition of our company by Sunwin Tech in April 2004 our Board of Directors has been comprised of individuals who are members of our management or otherwise affiliated with our company. While we would prefer that one or more of our directors be an audit committee financial expert, none of our current directors have professional backgrounds in either finance or accounting.

All of our current management is located in the PRC and no member of our Board of Directors has previously served as an officer or a director of a U.S. public company. As a result of both the cultural differences between doing business in the PRC and doing business as a public company in the U.S., as well as the lack of experience of our Board of Directors with laws, rules and regulations which apply to public companies in the U.S., we are seeking to expand our Board of Directors to include qualified individuals who are also residents of the U.S. to serve as independent directors. At such time as we are able to attract additional members to our Board of Directors which include one or more independent directors, we intend to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.

ITEM 11.

EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table summarizes all compensation recorded by us in fiscal 2010 for:

-	our principal executive officer or other individual serving in a similar capacity;
-	our two most highly compensated executive officers other than our principal executive officer who made in excess of $100,000 in fiscal 2010 and who were serving as executive officers at April 30, 2010 as that term is defined under Rule 3b-7 of the Securities Exchange Act of 1934; and
-	up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at April 30, 2010.

For definitional purposes in this annual report these individuals are sometimes referred to as the “named executive officers.” The value attributable to any option awards is computed in accordance with FASB ASC Topic 718. No officers or directors received compensation in the form of Non-Equity Incentive Plan Compensation, Nonqualified Deferred Compensation Earnings, or any perquisites and other personal benefits in excess of the $10,000 in the aggregate in fiscal 2010 and fiscal 2009.

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Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Total ($)
Laiwang Zhang (1)	2010	$	117,002	$	2,925		0		0	$	119,927
	2009		0		0		0		0		0
Dongdong Ling (2)	2010		37,892		2,925		0		0		40,817
	2009		8,378		8,900		0		0		17,278
FangJun Wu (3)	2010		36,179		2,925		0		0		39,104
	2009		3,240		0		0		0		3,240

(1)	Mr. Zhang has served as our President and Chairman of the Board of Directors since April 2004.

(2)	Ms. Lin has served as our Chief Executive Officer since February 2005.

(3)	Ms. Wu has served as our Chief Financial Officer since April 30, 2004

Narrative Regarding Executive Compensation

Mr. Zhang has served as our President and Chairman of the Board since April 2005, Ms. Lin, who has served as our Chief Executive Officer since February 2005 and Ms. Wu who has served as our Chief Financial Officer since April 2004, are not a party to an employment agreement with our company. Their compensation is determined by our Board of Directors, of which Mr. Zhang and Ms. Lin are members. The Board of Directors considers a number of factors in determining the compensation of Mr. Zhang, Ms. Lin and Ms. Wu including the scope of their duties and responsibilities to our company, compensation levels of executives with comparable duties in similar companies such as ours and the time they devote to our business. The Board of Directors did not consult with any experts or other third parties in establishing the compensation for Mr. Zhang, Ms. Lin or Ms. Wu. For fiscal 2010 Mr. Zhang was paid $14,625 per month beginning in September 2009 through April 2010 and received a discretionary bonus of $2,925. In the fiscal year ending April 30, 2011, Mr. Zhang will be paid an annual salary of $175,500.

Ms. Lin's compensation was comprised of a base salary of $37,892 and a discretionary bonus of $2,925 for fiscal 2010. For fiscal 2011 Ms. Lin will be paid an annual base salary of $52,644.

Ms. Wu's compensation was comprised of a base salary of $36,179 and a discretionary bonus of $2,925 for fiscal 2010. For fiscal 2011 Ms. Wu will be paid an annual base salary of $52,644.

In addition, each of Mr. Zhang, Ms. Lin and Ms. Wu will be entitled to an annual discretionary bonus as determined by the Board of Directors.

We are required to contribute a portion of our employees’ total salaries to the Chinese government’s social insurance funds, including medical insurance, unemployment insurance and job injuries insurance, and a housing assistance fund, in accordance with relevant regulations. Mr. Zhang, Ms. Lin and Ms. Wu are covered by these government sponsored programs.

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Outstanding Equity Awards at Fiscal Year End

The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of April 30, 2010:

OPTION AWARDS											STOCK AWARDS

Name (a)	Number of securities underlying unexercised options (#) exercisable (b)		Number of securities underlying unexercised options (#) unexercisable (c)		Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) d)		Option exercise price ($) (e)		Option expiration date (f)		Number of shares or units of stock that have not vested (#) (g)		Market value of shares or units of stock that have not vested ($) (h)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) (i)		Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested (#) (j)

Laiwang Zhang		0		0		0		0		0		0		0		0		0
Dongdong Lin		0		0		0		0		0		0		0		0		0
Fanjun Wu		0		0		0		0		0		0		0		0		0

2005 Equity Compensation Plan

On March 23, 2005, our Board of Directors authorized and adopted our 2005 Equity Compensation Plan. The purpose of the plan is to encourage stock ownership by our officers, directors, key employees and consultants, and to give these persons a greater personal interest in the success of our business and an added incentive to continue to advance and contribute to us. We have currently reserved 5,000,000 of our authorized but unissued shares of common stock for issuance under the plan, and a maximum of 5,000,000 shares may be issued, unless the plan is subsequently amended (subject to adjustment in the event of certain changes in our capitalization), without further action by our Board of Directors and stockholders, as required. Subject to the limitation on the aggregate number of shares issuable under the plan, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. Shares used for stock grants and plan options may be authorized and unissued shares or shares reacquired by us, including shares purchased in the open market. Shares covered by plan options which terminate unexercised will again become available for grant as additional options, without decreasing the maximum number of shares issuable under the plan, although such shares may also be used by us for other purposes. As of July 24, 2010, there are no shares available to be issued or options outstanding under the 2005 Equity Compensation Plan.

2006 Equity Compensation Plan

On February 7, 2006, our Board of Directors authorized and adopted our 2006 Equity Compensation Plan. The purpose of the plan is to encourage stock ownership by our officers, directors, key employees and consultants, and to give such persons a greater personal interest in the success of our business and an added incentive to continue to advance and contribute to us. Our Board of Directors administers the 2006 Equity Compensation Plan including, without limitation, the selection of the persons who will be awarded stock grants and granted options, the type of options to be granted, the number of shares subject to each Option and the exercise price. We have currently reserved 6,200,000 of our authorized but unissued shares of common stock for issuance under the 2006 Equity Compensation Plan, and a maximum of 6,200,000 shares may be issued, unless the plan is subsequently amended (subject to adjustment in the event of certain changes in our capitalization). Subject to the limitation on the aggregate number of shares issuable under the plan, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. Shares used for stock grants and plan options may be authorized and unissued shares or shares reacquired by us, including shares purchased in the open market. Shares covered by plan options which terminate unexercised will again become available for grant as additional options, without decreasing the maximum number of shares issuable under the 2006 Equity Compensation Plan, although such shares may also be used by us for other purposes. As of July 24, 2010, there are no shares available to be issued or options outstanding under the 2006 Equity Compensation Plan.

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Director Compensation

We do not have a policy establishing compensation arrangements for members of our Board of Directors and no Board member received any compensation for his or her services during fiscal 2010.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

At July 26, 2010, we had 163,329,449 shares of common stock issued and outstanding. The following table sets forth information known to us as of July 26, 2010 relating to the beneficial ownership of shares of our common stock by:

-	each person who is known by us to be the beneficial owner of more than five percent of our outstanding common stock;
-	each director;
-	each named executive officer; and
-	all named executive officers and directors as a group.

Unless otherwise indicated, the business address of each person listed is in care of 6 Shengwang Avenue, Qufu, Shandong, China 273100. We believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock shown as being owned by them. Under securities laws, a person is considered to be the beneficial owner of securities owned by them (or certain persons whose ownership is attributed to them) and that can be acquired by them within 60 days from the that date, including upon the exercise of options, warrants or convertible securities. We determine a beneficial owner’s percentage ownership by assuming that options, warrants or convertible securities that are held by them, but not those held by any other person, and which are exercisable within 60 days of the that date, have been exercised or converted.

NAME OF BENEFICIAL OWNER	AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP		% OF CLASS
Laiwang Zhang (1)		11,275,699		6.9	%
Dongdong Lin (1)		4,984,108		3.1	%
Chengxiang Yan (1)		-		-
Fanjun Wu (1)		1,732,052		1.1	%
All officers and directors as a group (four persons)		17,991,859		11.1	%

Wild Flavors, Inc. (2)		46,666,666		22.2	%

1	Amounts include shares of common stock beneficially owned. No officers of directors hold options or warrants to purchase common stock.
2	Amount includes 20,000,000 shares of our common stock and five year warrants to purchase 26,666,666 shares of common stock with an exercise price of $0.35 per share issued pursuant to a securities purchase agreement with Wild Flavors in February 2009.

- 39 -

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth securities authorized for issuance under any equity compensation plans approved by our shareholders as well as any equity compensation plans not approved by our shareholders as of April 30, 2010.

Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)

Weighted average exercise price of outstanding options, warrants and rights (b)

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)

Plan category

Plans approved by our shareholders:

2005 Equity Compensation Plan

N/A

2006 Equity Compensation Plan

N/A

Plans not approved by shareholders:

None.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Related Person Transaction Policy

We have not adopted a related person transaction policy that requires our Board of Directors to approve or ratify transactions between our company or one or more of our subsidiaries and any related person.

Related Party Transactions

From time to time we engage in transactions with related parties. The following is a summary of the related party transactions reflected on our consolidated financial statements at April 30, 2010 and which have occurred through the date of this report:

Accounts Receivable – related party

At April 30, 2010, Accounts Receivable – related party was $138,945 from Qufu Shengwang Import and Export Corporation, a Chinese entity owned by our Chairman, Mr. Laiwang Zhang for sales of our high-grade stevia products.

Due to related party

At April 30, 2010, due to related party was $1,478 due to Pharmaceutical Corporations, for management fees.

Revenues – related party

At April 30, 2010, Revenues – related party was $431,969 in connection with our sales of high grade stevia products to Qufu Shengwang Import and Export Corporation, a Chinese entity owned by our Chairman, Mr. Laiwang Zhang.

We have agreed to pay Pharmaceutical Corporation a management fee for services rendered on our behalf. These management services include costs and services related to housing provided to certain of our non-management employees, government mandatory insurance for our employees, rent for our principal offices and the use of research and development facilities. For fiscal 2010 Pharmaceutical Corporation waived its management fee, and for fiscal 2009 this management fee was $316,454, which is included in our general and administrative expenses in the respective financial statements appearing elsewhere in this annual report. Pharmaceutical Corporation is controlled by Mr. Zhang, our President and Chairman. We have agreed to negotiate the amount of the fees payable to Pharmaceutical Corporation for these services in January of each year.

As described elsewhere herein, on June 29, 2010 Qufu Natural Green entered into the Shengya Agreement with Mr. Zhang to sell its 100% ownership interest in Shengya to Mr. Zhang, our President and Chairman of our Board of Directors. The transaction is expected to close on July 31, 2010.

- 40 -

Director Independence

None of our directors are considered independent within The NASDAQ Stock Market’s director independence standards pursuant to Marketplace Rule 5605.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Sherb & Co., LLP served as our independent registered public accounting firm for fiscal 2010 and fiscal 2009. The following table shows the fees that were billed for the audit and other services provided by such firm for fiscal 2010 and fiscal 2009.

	2010		2009
Audit Fees	$	90,000	$	90,000
Audit - Related Fees		-		-
Tax Fees		7,500		-
All Other Fees		-		-
	$	97,500	$	90,000

Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the independent auditors in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

Audit-Related Fees - This category consists of assurance and related services by the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC and other accounting consulting.

Tax Fees - This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

All Other Fees - This category consists of fees for other miscellaneous items.

Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent auditors. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting.

- 41 -

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

a) The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

Exhibit No.		Description of Exhibit
3.1		Articles of Incorporation (Incorporated by reference to the Annual Report on Form 10-KSB for the fiscal year ended April 30, 2000).
3.2		Certificate of Amendment to Articles of Incorporation (Incorporated by reference to the Form 8-K/A as filed on July 30, 2004).
3.3		By-Laws (Incorporated by reference to the Annual Report on Form 10-KSB for the fiscal year ended April 30, 2000).
4.1		Form of $0.65 common stock purchase warrant (Incorporated by reference to the Report on Form 8-K as filed on March 23, 2007).
4.2		Common Stock Purchase Warrant between Sunwin International Neutraceuticals, Inc. and Wild Flavors, Inc. dated February 5, 2009 (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K as filed on February 11, 2009).

4.3		Stockholders Agreement dated February 5, 2009 Sunwin International Neutraceuticals, Inc., Laiwang Zhang, Dongdong Lin, Xingyuan Li, Junzhen Zhang, Xiangsheng Kong, Weidong Chai, Laiwang Zhang, Fanjun Wu and Wild Flavors, Inc. (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K as filed on February 11, 2009).
10.1		Share Exchange Agreement dated April 30, 2004 between Network USA, Inc. and the stockholders of Sunwin Tech Group, Inc. (Incorporated by reference to the Report on Form 8-K as filed with on May 12, 2004).
10.2		Stock Purchase Agreement between Sunwin Tech Group, Inc., Qufu Natural Green Engineering Company, Limited and Shandong Shengwang Pharmaceutical Group Corporation (Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended April 30, 2004).
10.3	+	2005 Equity Compensation Plan (Incorporated by reference to the Report on Form 8-K as filed on April 28, 2005).
10.4		Lease agreement dated October 1, 2002 between Shandong Shengwang Pharmaceutical Corporation and Qufu Natural Green Engineering Co., Ltd. (Incorporated by reference to the Annual Report on Form 10-KSB/A for the fiscal year ended April 30, 2005).
10.5		Lease agreement dated October 6, 2002 between Qufu LuCheng Chiya Resident Commitment and Qufu Natural Green Engineering Co., Ltd. (Incorporated by reference to the Annual Report on Form 10-KSB/A for the fiscal year ended April 30, 2005).
10.6		Lease agreement dated April 1, 2004 between Qufu ShengDa Industry Co., Ltd. and Qufu Natural Green Engineering Co., Ltd.( Incorporated by reference to the Annual Report on Form 10-KSB/A for the fiscal year ended April 30, 2005).
10.7		Stock Purchase Agreement dated February 7, 2006 between Sunwin International Neutraceuticals, Inc., Qufu Natural Green Engineering Company and Shandong Shengwang Pharmaceutical Group Corporation (Incorporated by reference to the Quarterly Report on Form 10-QSB for the period ended January 31, 2006).
10.8	+	2006 Equity Compensation Plan (Incorporated by reference to the Quarterly Report on Form 10-QSB for the period ended January 31, 2006).
10.9		Subscription Agreement (Incorporated by reference to the Report on Form 8-K as filed on March 23, 2007).
10.10		Acquisition Agreement by and among Qufu Natural Green Engineering Co., Ltd. and Qufu Shengwang Stevia Biology and Science Co., Ltd. and Shandong Shengwang Group, Co., Ltd. dated June 30, 2008 (Incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K as filed on July 7, 2008).
10.11		Stock Sale And Purchase Agreement between Sunwin International Neutraceuticals, Inc. and Shandong Shengwang Group Co., Ltd. (Incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K as filed on July 7, 2008).
10.12		Amendment to the June 30, 2008 Acquisition Agreement by and among Qufu Natural Green Engineering Co., Ltd. and Qufu Shengwang Stevia Biology and Science Co., Ltd. and Shandong Shengwang Group Co., Ltd. dated September 2, 2008. (Incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K as filed on September 8, 2008).
10.13		Amendment to the June 30, 2008 Stock Sale and Purchase Agreement between Sunwin International Neutraceuticals, Inc. and Shandong Shengwang Group Co., Ltd. dated September 2, 2008 (Incorporated by reference Exhibit 10.16 to the Current Report on Form 8-K as filed on September 8, 2008).
10.14		Memo on SUWN Debt to Qiang Ma dated September 5, 2008 (Incorporated by reference to Exhibit 10.18 to the Quarterly Report on Form 10-Q as filed on September 18, 2008).
10.15		November 18, 2008 Second Amendment to Acquisition Agreement by and among Qufu Natural Green Engineering Co., Ltd. and Qufu Shengwang Stevia Biology and Science Co., Ltd. and Shandong Shengwang Group, Co., Ltd. dated as of June 30, 2008 (Incorporated by reference Exhibit 10.19 to the Current Report on Form 8-K as filed on November 26, 2008).
10.16		November 18, 2008 Second Amendment to Stock Sale And Purchase Agreement between Sunwin International Neutraceuticals, Inc. and Shandong Shengwang Group Co., Ltd. dated as of June 30, 2008 (Incorporated by reference Exhibit 10.20 to the Current Report on Form 8-K as filed on November 26, 2008).
10.17		Securities Purchase Agreement between Sunwin International Neutraceuticals, Inc. and Wild Flavors, Inc. dated February 5, 2009 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K as filed on February 11, 2009).
10.18		Form of Operating Agreement between Sunwin International Neutraceuticals, Inc. and Wild Flavors, Inc. (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K as filed on February 11, 2009).

- 42 -

10.19		Distributorship Agreement dated February 5, 2009 among Sunwin International Neutraceuticals, Inc., Sunwin Stevia International Corp. and Wild Flavors, Inc. (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K as filed on February 11, 2009).
10.20		Consulting and Management Agreement between Sunwin International Neutraceuticals, Inc. and China Direct Investments, Inc. dated as of April 29, 2009. (Incorporated by reference to Exhibit 10.24 to the Annual Report on Form 10-K filed on July 29, 2009).
10.21		Stock Sale and Purchase Agreement dated June 29, 2010 among Qufu Natural Green Engineering, Shengya Veterinary Medicine Co., Ltd., and Mr. Laiwang Zhang (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 7, 2010).
10.22	*	Memorandum on Consulting Services dated March 31, 2010 between Sunwin International Neutraceuticals, Inc. and China Direct Investments, Inc.
14.1		Code of Ethics (Incorporated by reference to Exhibit 14 to the Registration Statement on Form SB-2 as filed on May 27, 2005).
21.1		Subsidiaries of the registrant.(Incorporated by reference to Exhibit 21.1 to the Post Effective Amendment No. 2 to the Registration Statement on Form S-1, SEC File No. 333-142419)
31.1	*	Section 302 Certificate of the Chief Executive Officer.
31.2	*	Section 302 Certificate of Chief Financial Officer.
32.1	*	Section 906 Certificate of Chief Executive Officer and Chief Financial Officer.

+ Management contract or compensatory plan or arrangement.

* filed herewith

- 43 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Sunwin International Neutraceuticals, Inc.

July 29, 2010	By:	/s/ Dongdong Lin
		Dongdong Lin, Chief Executive Officer and Director, (Principal Executive Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Laiwang Zhang	President and Chairman	July 29, 2010
Laiwang Zhang

/s/ Dongdong Lin	Chief Executive Officer and Director (Principal Executive Officer)	July 29,2010
Dongdong Lin


/s/ Fanjun Wu	Chief Financial Officer (Principal Financial and Accounting Officer)	July 29, 2010
Fanjun Wu

/s/ Chengxiang Yan	Director	July 29, 2010
Chengxiang Yan

- 44 -

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

FINANCIAL STATEMENTS

FOR THE YEARS ENDED APRIL 30, 2010 AND 2009

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F - 2
Consolidated Financial Statements:
Consolidated Balance Sheets	F - 3
Consolidated Statements of Operations	F - 4
Consolidated Statement of Stockholders’ Equity	F - 5
Consolidated Statements of Cash Flows	F - 6
Notes to Consolidated Financial Statements	F - 7

F - 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Directors

Sunwin International Neutraceuticals, Inc.

We have audited the accompanying consolidated balance sheets of Sunwin International Neutraceuticals, Inc. and its Subsidiaries as of April 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended April 30, 2010 and 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We are not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sunwin International Neutraceuticals, Inc. and its subsidiaries as of April 30, 2010 and 2009, and the results of its operations and its cash flows for the years ended April 30, 2010 and 2009 in conformity with accounting principles generally accepted in the United States.

	/s/ Sherb & Co., LLP
	Certified Public Accountants

Boca Raton, Florida
July 29, 2010

F - 2

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
	April 30, 2010		April 30, 2009
ASSETS

CURRENT ASSETS:
Cash	$	12,746,756	$	10,487,165
Accounts receivable, net of allowance for doubtful accounts of $1,504,170 and $817,923, respectively		2,803,482		4,011,446
Accounts receivable-related party		138,945		-
Inventories, net		5,696,533		7,415,809
Prepaid taxes		121,317		-
Prepaid expenses and other assets		287,383		294,210
Total Current Assets		21,794,416		22,208,630

Equity method investment		147,527		-
Property and equipment, net		17,138,123		19,121,340
Land use right		2,237,404		2,289,267
Total Assets	$	41,317,470	$	43,619,237
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	2,855,584	$	2,098,967
Taxes payable		151,105		160,021
Due to related party		1,478		58,578
Other current payables		-		10,000
Total Current Liabilities		3,008,167		2,327,566

Derivative liability		347,936		-
Other payables		157,816		157,830
Total Liabilities		3,513,919		2,485,396

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. STOCKHOLDERS' EQUITY
Preferred stock ($.001 Par Value; 1,000,000 shares authorized;
No shares issued and outstanding)		-		-
Common stock ($.001 Par Value; 200,000,000 shares authorized;
160,240,827 and 149,902,927 shares issued and outstanding at
April 30, 2010 and 2009, respectively)		160,241		149,903
Additional paid-in capital		29,095,572		27,712,257
Retained earnings		2,274,215		6,826,215
Other comprehensive income - foreign currency		3,824,713		3,828,469
Total Sunwin International Neutraceuticals, Inc. stockholders' equity		35,354,741		38,516,844
Non-controlling interest		2,448,810		2,616,997
Total stockholders' equity		37,803,551		41,133,841
Total Liabilities and Stockholders' Equity	$	41,317,470	$	43,619,237
See notes to consolidated financial statements

F - 3

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
	For the Year Ended April 30,
	2010			2009
Revenues	$	14,060,990		$	22,209,912
Revenues - related party		431,969			-
Total Revenues	$	14,492,959		$	22,209,912
Cost of revenues		11,931,027			17,129,874
Gross Profit		2,561,932			5,080,038

OPERATING EXPENSES:
Loss on equity investment		275,966			-
Selling expenses		1,106,288			1,694,900
Loss on disposition of property and equipment		156,865			-
General and administrative		5,920,582			2,827,771
Total Operating Expenses		7,459,701			4,522,671

(LOSS) INCOME FROM OPERATIONS		(4,897,769	)		557,367

OTHER INCOME (EXPENSE):
Loss on equity investment		(222,404	)		-
Other (expense) income		(19,843	)		83,281
Interest income		53,308			52,202
Total Other (Expense) Income		(188,939	)		135,483

(LOSS) INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST		(5,086,708	)		692,850

INCOME TAXES		(9,979	)		(307,527	)

NET (LOSS) INCOME		(5,096,687	)		385,323

LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		168,187			114,973

NET (LOSS) INCOME ATTRIBUTABLE TO SUNWIN INTERNATIONAL NEUTRACUETICALS, INC.		(4,928,500	)		500,296

NET (LOSS) INCOME PER COMMON SHARE - BASIC AND DILUTED:
Net (loss) income per common share - basic	$	(0.03	)	$	0.00
Net (loss) income per common share - diluted	$	(0.03	)	$	0.00

Weighted Average Common Shares Outstanding - basic		152,845,870			100,996,013
Weighted Average Common Shares Outstanding - diluted		152,845,870			101,464,350
See notes to consolidated financial statements

F - 4

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Year Ended April 30, 2010 and 2009

	Sunwin International Neutraceuticals, Inc. Shareholders
	Common Stock, $.001 Par Value
	Number of Shares		Amount		Additional Paid-in Capital			Retained Earnings			Subscription Receivable			Accumulated Other Comprehensive Loss		Noncontrolling Interest			Comprehensive Income			Total Equity
Balance, April 30, 2008		87,006,936	$	87,007	$	17,218,066		$	6,325,919		$	(372,900	)	$	3,189,794	$	-		$	-		$	26,447,886
Common stock issued for acquisition		40,609,681		40,610		7,083,483																	7,124,093
Noncontrolling interest in Qufu Shengwang																	2,731,970						2,731,970
Common stock sold for cash		20,000,000		20,000		2,970,000																	2,990,000
Common stock issued for placement fee		1,000,000		1,000		(1,000	)																-
Placement fee paid						(100,000	)																(100,000	)
Exercise of Warrants		1,286,310		1,286		191,660																	192,946
Subscription receivable												372,900											372,900
Amortization of stock based compensation				-		350,048			-						-								350,048
Comprehensive income:
Net income for the year		-		-		-			500,296						-		(114,973	)		385,323			385,323
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment															638,675		-			638,675			638,675
Other comprehensive income (loss)																				638,675			638,675
Comprehensive income		-		-		-			-			-			-		-			1,023,998			1,023,998
Balance, April 30, 2009		149,902,927	$	149,903	$	27,712,257		$	6,826,215		$	-		$	3,828,469	$	2,616,997			1,023,998		$	41,133,841
Common stock issued for services		2,700,000		2,700		747,300																	750,000
Exercise of Warrants		7,637,900		7,638		1,138,047																	1,145,685
Cumulative effect of change in accounting principle- adoption of ASC 815 effective January 1, 2009						(502,032	)		376,500														(125,532	)
Comprehensive income:
Net income for the year		-		-		-			(4,928,500	)					-		(168,187	)		(5,096,687	)		(5,096,687	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment															(3,756					(3,756	)		(3,756	)
Other comprehensive income (loss)																				(3,756	)		(3,756	)
Comprehensive income		-		-		-			-			-			-		-			(4,076,445	)		(5,100,443	)
Balance, April 30, 2010		160,240,827	$	160,241	$	29,095,572		$	2,274,215		$	-		$	3,824,713	$	2,448,810		$	(4,076,445	)		37,803,551
See notes to consolidated financial statements

F - 5

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Year Ended April 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(5,096,687	)	$	385,323
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		1,864,605			1,660,915
Loss on change in fair value of derivative liability		222,404			-
Amortization of land use rights		51,647			34,285
Stock based consulting fees		750,000			350,048
Loss on equity investment		275,966			-
Impairment of inventory		555,215			-
Loss on disposition of property and equipment		156,865			-
Allowance for doubtful accounts		686,147			337,975
Changes in assets and liabilities:
Accounts receivable		450,629			(70,902	)
Inventories		996,490			(1,229,143	)
Prepaid expenses and other current assets		4,802			213,864
Prepaid taxes		(121,287	)		-
Accounts payable and accrued expenses		433,322			(800,474	)
Accounts receivable due from related parties		(138,910	)		-
Other payable		399,446			-
Other current payable		(10,000	)		-
Taxes payable		(8,899	)		(207,102	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		1,471,755			674,789
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash contributed to equity method investment		(260,569	)		(2,500,000	)
Cash acquired in acquisition		-			2,660,519
Proceeds from property and equipment disposal		877,514			-
Purchase of property and equipment		(917,989	)		(405,405	)
NET CASH USED IN INVESTING ACTIVITIES		(301,044	)		(244,886	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock and exercise of warrants		1,145,685			3,192,946
Payments for placement fee		-			(110,000	)
Repayment of related party advances		(57,100	)		-
Proceeds from short term loan		-			10,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,088,585			3,092,946
EFFECT OF EXCHANGE RATE ON CASH		295			153,180
NET INCREASE IN CASH		2,259,591			3,676,029
CASH - beginning of fiscal year		10,487,165			6,811,136
CASH - end of fiscal year	$	12,746,756		$	10,487,165
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for taxes	$	198,203		$	-
Cash paid for interest	$	-		$	3,682
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Fair value of assets acquired-Qufu Shengwang	$	-		$	7,011,682
Liabilities assumed-Qufu Shengwang	$	-		$	181,756
Issuance of common stock in connection with acquisition per final purchase price	$	-		$	4,026,851
Issuance of common stock in connection with acquisition and refundable per final purchase price	$	-		$	2,173,562
Negative goodwill allocated to property and equipment acquired	$	-		$	71,104
Fair value of assets acquired-Qufu Shengren	$	-		$	6,137,919
Liabilities assumed-Qufu Shengren	$	-		$	2,501,367
Common stock issued for Qufu Shengren acquisition	$	-		$	3,097,242
Negative goodwill allocated to property and equipment acquired	$	-		$	593,310
Fair value of non-cash assets contributed to equity method investment	$	239,107		$	-
Fair value of liabilities contributed to equity method investment	$	76,183		$	-

See notes to consolidated financial statements.

F - 6

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

Sunwin International Neutraceuticals, Inc., a Nevada corporation, and its subsidiaries are referred to in this report as the “Company”, “we”, “us”, “our”, or “Sunwin”.

Our operations are organized in two operating segments related to our product lines:

-	Stevioside; and
-	Chinese and Veterinary Medicine.

In June, 2010, we elected to streamline our product offerings to focus on our core business of producing and selling stevia and other herb-based products including herb extracts and herb medicines. Consequently, we will exit all business activities related to our veterinary medicines and on June 29, 2010 entered into an agreement to sell our 100% interest in our subsidiary Shengya Veterinary Medicine to Mr. Laiwang Zhang, our president and chairman of the Board of Directors. See Note 13 - Subsequent Event.

Stevioside Segment

Stevioside and rebaudioside are all natural, low calorie sweeteners extracted from the leaves of the stevia rebaudiana plant. Stevioside is a safe and natural alternative to sugar for people needing low sugar or low calorie diets.

Chinese and Veterinary Medicine Segment

Qufu Shengwang

In fiscal 2009, Qufu Natural Green acquired a 60% interest in Qufu Shengwang from its shareholder, Shandong Group, for $4,026,851. The purchase price represents 60% of the value of the net tangible assets of Qufu Shengwang as of April 30, 2008. Shandong Group is owned by Laiwang Zhang, our President and Chairman of the Board of Directors. Qufu Shengwang manufactures and sells stevia food additives, agricultural organic fertilizers and bio fertilizers.

Qufu Shengren

In fiscal 2009, Qufu Natural Green acquired Qufu Shengren for $3,097,242. The purchase price is equal to the value of the assets of Qufu Shengren as determined by an independent asset appraisal in accordance with asset appraisal principles in the PRC. Qufu Shengren is engaged in the production and distribution of bulk drugs and pharmaceuticals.

Wild Flavors

In fiscal 2009, we entered into a distributorship agreement with Wild Flavors, Inc. ("Wild Flavors") for the worldwide distribution of our stevioside based sweetener products and issued Wild Flavors a 45% interest in Sunwin USA. In exchange Wild Flavors’ agreed to provide sales, marketing, logistics and supply chain management, product development and regulatory services valued at $1,000,000 over a period of two years beginning on February 5, 2009, will act as the sole manager of Sunwin USA and will be responsible for all of its business and affairs.

See Note 8 – Acquisitions for further discussion regarding these transactions.

F - 7

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

BASIS OF PRESENTATION

We are on a fiscal year ending April 30; as such the year ended April 30, 2010 is referred to as “fiscal 2010”, and the year ended April 30, 2009 is referred to as “fiscal 2009”.

Our consolidated financial statements include the accounts for the parent company and all our wholly owned and majority owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Our subsidiaries include the following:

-	Qufu Natural Green Engineering Co., Ltd., a Chinese limited liability company “Qufu Natural Green”

-	Qufu Shengren Pharmaceutical Co., Ltd., a Chinese limited liability company, “Qufu Shengren”, and a wholly owned subsidiary of Qufu Natural Green.

-	Shengya Veterinary Medicine Co., Ltd., a Chinese limited liability company “Shengya Veterinary Medicine”, and a wholly owned subsidiary of Qufu Natural Green

-	Qufu Shengwang Stevia Biology and Science Co., Ltd., a Chinese limited liability company, “Qufu Shengwang”. Qufu Natural Green owns a 60% interest in Qufu Shengwang

-	Sunwin Tech Group, Inc., a Florida corporation (“Sunwin Tech”)

-	Sunwin Stevia International Corp., a Florida corporation “Sunwin Stevia International”, a wholly owned subsidiary in fiscal 2009 was converted to Sunwin USA, LLC a Delaware limited liability company in fiscal 2010, to be referred to as “Sunwin USA”

-	Sunwin (Canada) Pharmaceutical Ltd., a Canadian corporation, “Sunwin Canada”

ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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.

Significant estimates for the periods reported include the allowance for doubtful accounts which is based on an evaluation of our outstanding accounts receivable including the age of amounts due, the financial condition of our specific customers, knowledge of our industry, and historical bad debt experience. This evaluation process resulted in our recognizing bad debt expense of $686,147 for fiscal 2010 and $337,975 for fiscal 2009. In fiscal 2010, bad debt expense totaling $547,184 was derived from Shengya veternary medicine. This evaluation methodology has proven to provide a reasonable estimate of bad debt expense in the past and we intend to continue to employ this approach in our analysis of collectability. However, we are aware that given the current global economic situation, including that of China, meaningful time horizons may change. We intend to enhance our focus on the evaluation of our customers' sustainability and adjust our estimates as may be indicated.

We rely on assumptions such as volatility, forfeiture rate, and expected dividend yield when calculating the fair value of our derivative liability related to common stock purchase warrants. We also rely on assumptions and estimates to calculate reserve for obsolete inventory and the depreciation of property, plant and equipment. We make assumptions of expiration duration on our products held as inventory based on historical experience and if applicable, regulatory recommendation. We also group property plant and equipment into similar groups of assets and estimate the useful life of each group of assets; see Note 3 – Property and Equipment for further information on asset groups and estimated useful lives.

Further, we rely on certain assumptions and calculations underlying our provision for taxes in China, see Note 7 – Income Taxes for further discussion. Assumptions and estimates employed in these areas are material to our reported financial conditions and results of operations. These assumptions and estimates have been materially accurate in the past and are not expected to materially change in the future. Actual results could differ from these estimates.

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. We 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 April 30, 2010 and 2009, the allowances for doubtful accounts were $1,504,170 and $817,923, respectively. The increase was mainly due to bad debt expenses charged at Shengya veterinary medicine.

F - 8

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

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.

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 paragraph 360-10-35-17 of the FASB Accounting Standards Codification, 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 $5,127,395 and $5,726,352 at April 30, 2010 and 2009, respectively. Also depreciation expense totaled $1,864,605 and $1,660,915 for fiscal 2010, and 2009, respectively.

TAXES PAYABLE

We are required to charge for and to collect value added taxes (VAT) on our sales. In addition, we pay value added taxes on our primary purchases, recorded as a receivable. These amounts are netted for financial statement purposes.

Taxes payable at April 30, 2010 and 2009 amounted to $151,105 and $160,021, respectively, consisting primarily of net VAT taxes payable.

OTHER CURRENT PAYABLES

Other payables at April 30, 2010 and 2009 totaled $0 and $10,000, respectively, and consist of a $10,000 short term loan payable at April 30, 2009 which had been repaid during the second quarter of fiscal 2010.

DERIVATIVE LIABILITY

We issued a total of 10,793,750 common stock purchase warrants exercisable at $0.65 per share in connection with our 2007 Unit Offering which will expire March 26, 2012; 8,410,280 and 772,380 of these warrants remain issued and outstanding as of May 1, 2009 and April 30, 2010, respectively. On February 20, 2009, our Board of Directors approved the permanent reduction in the exercise price of these warrants to $0.15 per share. The last sale price of our 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. The exercise price of the warrants is subject to reset adjustment in the event of price reduction. If we issue or sell shares of our common stock after the 2007 Unit Offering for an amount less than the original exercise price per share, the exercise price of the warrants is reduced to equal the new issuance price of those shares.

Upon our adoption of the Derivative and Hedging Topic of the FASB Accounting Standards Codification (“ASC 815”) retroactively effective on May 1, 2009, we determined that the warrants did not qualify for a scope exception under FASB ASC Section 815-10-15 as they were determined to not be indexed to our stock. This change in accounting policy became retroactively effective May 1, 2009 and the warrants were reclassified from equity to a derivative liability for the then fair market value of $1,366,890 and marked to market based upon valuation using the Black-Scholes option pricing model. The value of the warrants decreased by $376,500 from March 23, 2007, the warrants issuance date, to the adoption date of ASC 815, May 1, 2009. As of May 1, 2009, the cumulative effect in adopting ASC 815 was a reduction to additional paid in capital of $1,743,390 to reclassify the warrants from equity to derivative liability and a increase in retained earnings of $376,500 as a cumulative effect of a change in accounting principle to reflect the change in the value of the warrants between their issuance date and May 1, 2009. For the year ended April 30, 2010, we recorded a loss on change in fair value of derivative liability of $222,404 to mark to market for the increase in fair value of the warrants during the year ended April 30, 2010. Under ASC 815, the warrants will be carried at fair value and adjusted at each reporting period.

We determined the fair value of the warrants at each reporting date using the Black-Scholes Option Pricing Model based on the following assumptions and key inputs for each series of warrants and reporting date:

F - 9

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

	May 1, 2009			April 30, 2010
Dividend Yield		0	%		0	%
Volatility		140	%		158	%
Risk Free Rate		1.39	%		1.51	%
Expected Term		2.92			1.89
Asset Price	$	0.20		$	0.52
Exercise Price	$	0.15		$	0.15

FAIR VALUE OF FINANCIAL INSTRUMENTS

We follow paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. The adoption of Paragraph 820-10-35-37 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.

Paragraph 820-10-35-37 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, Paragraph 820-10-35-37 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepayments and other current assets, accounts payable, taxes payable, accrued expenses and other current liabilities, approximate their fair values because of the short maturity of these instruments. Our loan payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at April 30, 2010 and 2009.

We do not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at April 30, 2010 or 2009, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the interim period then ended.

INCOME TAXES

We file federal and state income tax returns in the United States for its corporate operations, and files separate foreign tax returns for our Chinese subsidiaries. We account for income taxes under the provisions of Section 740-10-30 of the FASB Accounting Standards Codification, 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.

F - 10

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

BASIC AND DILUTED EARNINGS PER SHARE

Pursuant to section 260-10-45 of the FASB Accounting Standards Codification, basic income (loss) per common share is computed by dividing income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the company, subject to anti-dilution limitations.

	For Fiscal Years Ended April 30,
	2010			2009
Numerator:
Net (loss) income	$	(4,928,500	)	$	500,296

Numerator for basic EPS, loss applicable to common stock holders	$	(4,928,500	)	$	500,296
Denominator:
Denominator for basic earnings per share - weighted average number of common shares outstanding		152,845,870			100,996,013
Stock Awards, Options, and Warrants(1)					468,337

Denominator for diluted earnings per share - adjusted weighted average outstanding average number of common shares outstanding		152,845,870			101,464,350
Basic and Diluted loss Per Common Share:
Earnings per share - basic	$	(0.03	)	$	0.00

Earnings per share - diluted	$	(0.03	)	$	0.00

(1)

At April 30, 2009 outstanding warrants to purchase common stock, which could have resulted in the issuance of 8,410,280 additional common shares were anti-dilutive as the exercise price of the warrants exceeded the average market price of our stock and, accordingly, has not been included in the earnings per share calculation for year ended April 30, 2009. On February 20, 2009, the exercise price for outstanding warrants was reduced from $0.65 to $0.15, making them dilutive. We used the treasury stock method to calculate the dilutive effect of these warrants as if they were all exercised as of February 20, 2009.

At April 30, 2010 outstanding purchase warrants which could have resulted in the issuance of 772,380 additional common shares were anti-dilutive as we reported a net loss applicable to our common shareholders; additionally, outstanding purchase warrants which could have resulted in the issuance of 26,666,666 additional common shares were also anti-dilutive as the exercise price of the warrants exceeded the average market price. Both these tranches of warrants were not included in diluted earnings per calculations for the year ended April 30, 2010.

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 Section 830-20-35 of the FASB Accounting Standards Codification and are included in determining net income or loss.

F - 11

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

Our reporting currency 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 year-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 effect of exchange rate changes on cash at April 30, 2010 and 2009 were $295 and $153,180, respectively.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income is comprised of net income and other comprehensive income or loss. Other comprehensive income or loss refers to revenues, expenses, gains and losses that are included in comprehensive income but excluded from net income as these amounts are recorded directly as an adjustment to stockholders’ equity.

Our comprehensive income consists of currency translation adjustments. The following table sets forth the computation of comprehensive income for fiscal 2010 and 2009, respectively:

	For the Years Ended April 30
	2010			2009

Net (loss) income	$	(5,096,687)		$	385,323
Other comprehensive (loss) income, net of tax
Foreign currency translation (loss) gain, net of tax		(3,756	)		638,675
Comprehensive (loss) income		(5,100,443	)		1,023,998
Comprehensive loss attributable to non-controlling interests		168,187			114,973
Comprehensive (loss) income attributable to Sunwin International Neutraceuticals, Inc.	$	(4,932,256	)	$	1,138,971

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. As of April 30, 2010, bank deposits in the United States did not exceed federally insured limits. At April 30, 2010, we had $11,696,648 on deposit in China, which are not insured. We have not experienced any losses in such accounts through April 30, 2010.

Almost all of the our sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, 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 our customers to help further reduce potential credit risk.

STOCK BASED COMPENSATION

We account for stock options issued to employees as compensation expense in the statement of operations based upon the grant-date fair value of stock options and other equity based compensation issued to employees with such expense recognized in our statements of operations over the service periods of each award.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred and totaled $1,486,577 and $39,888 for fiscal 2010 and fiscal 2009, respectively, and are included in general and administrative expenses on the accompanying statements of operations. Research and development costs are incurred on a project specific basis.

REVENUE RECOGNITION

F - 12

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

SHIPPING COSTS

Shipping costs are included in selling expenses and totaled $243,903 and $418,936 for fiscal 2010 and fiscal 2009, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB approved the “FASB Accounting Standards Codification” (the “Codification”) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. The Codification was effective for interim and annual periods ending after September 15, 2009.

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-04 “Accounting for Redeemable Equity Instruments - Amendment to Section 480-10-S99” which represents an update to section 480-10-S99, distinguishing liabilities from equity, per EITF Topic D-98, Classification and Measurement of Redeemable Securities . We have adopted this update and it did not have a material impact on its consolidated financial position, results of operations or cash flows.

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-05 “Fair Value Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair Value”, which provides amendments to subtopic 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: 1. A valuation technique that uses: a. The quoted price of the identical liability when traded as an asset b. Quoted prices for similar liabilities or similar liabilities when traded as assets. 2. Another valuation technique that is consistent with the principles of topic 820; two examples would be an income approach, such as a present value technique, or a market approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability. The amendments in this update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments in this update also clarify that both a quoted price in an active market for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. We have adopted this update and it did not have a material impact on our consolidated financial position, results of operations or cash flows.

F - 13

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-08 “Earnings Per Share – Amendments to Section 260-10-S99”, which represents technical corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share for a Period that includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock . We have adopted this update and it did not have a material impact on our consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-09 “Accounting for Investments-Equity Method and Joint Ventures and Accounting for Equity-Based Payments to Non-Employees”. This update represents a correction to Section 323-10-S99-4, Accounting by an Investor for Stock-Based Compensation Granted to Employees of an Equity Method Investee . Additionally, it adds observer comment Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees to the Codification. We have adopted this update and it did not have a material impact on our consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-12 “Fair Value Measurements and Disclosures Topic 820 – Investment in Certain Entities That Calculate Net Assets Value Per Share (or Its Equivalent)”, which provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). The amendments in this update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this update, such as the nature of any restrictions on the investor’s ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be make by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in U.S. GAAP on investments in debt and equity securities in paragraph 320-10-50-1B. The disclosures are required for all investments within the scope of the amendments in this update regardless of whether the fair value of the investment is measured using the practical expedient. We have adopted this update and it did not have a material impact on our consolidated financial position, results of operations or cash flows.

NOTE 2 - INVENTORIES

At April 30, 2010 and 2009, inventories consisted of the following:

	2010			2009
Raw materials	$	1,754,424		$	3,136,205
Work in process		164,623			265,295
Finished goods		4,236,678			4,297,066
		6,155,725			7,698,566
Less: reserve for obsolete inventory		(459,192	)		(282,757	)
	$	5,696,533		$	7,415,809

F - 14

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

NOTE 3 - PROPERTY AND EQUIPMENT

At April 30, 2010 and 2009, property and equipment consisted of the following:

	Estimated Life	2010			2009
Office Equipment	5-7 Years	$	195,774		$	215,966
Auto and Trucks	10 Years		772,924			375,157
Manufacturing Equipment	20 Years		13,185,329			16,032,086
Buildings	20 Years		8,106,022			8,062,991
Construction in Process			5,469			161,492
Gross Property and Equipment			22,265,518			24,847,692
Less: Accumulated Depreciation			(5,127,395	)		(5,726,352	)
Net Property and Equipment		$	17,138,123		$	19,121,340

For fiscal 2010 and fiscal 2009, depreciation expense totaled $1,864,605 and $1,660,915, respectively.

In November 2009, the Qufu City Environmental Protection Agency provided us notice to cease operations and vacate by December 31, 2009 our 36,000 square foot stevioside production facility that we leased from Qufu ShengDa Industry Co., Ltd., and unaffiliated government entity. This notice followed a city policy to cease operations of factories not located in newly zoned areas of the city. In connection with the cessation of operations at this facility, we abandoned production equipment located at this facility and we recognized a loss on disposal of equipment attributable to this event of $156,865.

NOTE 4 - LAND USE RIGHTS

At April 30, 2010 and 2009, Land Use Rights consisted of the following:

	Estimated Life	2010			2009
Land Use Right	43.5 years	$	2,323,503		$	2,323,710
Less: Accumulated Amortization			(86,099	)		(34,443
Net Land Use Right		$	2,237,404		$	2,289,267

In conjunction with our acquisition of Qufu Shengwang, we acquired land use rights for properties located in China until March 14, 2054. For fiscal 2010 and fiscal 2009, amortization expense amounted to $51,647 and $34,285, respectively. The difference between the amortization expense and accumulated amortization is due to exchange rate differences as we translate expense using an average exchange rate for the fiscal year and translate the accumulated amortization using the fiscal year end exchange rate.

NOTE 5 - RELATED PARTY TRANSACTIONS

Due to related parties

At April 30, 2010 and 2009, due to related parties consisted of the following:

	2010		2009
Due to Ma Qiang	$	-	$	57,100
Due to Pharmaceutical Corporation		1,478		1,478
Total	$	1,478	$	58,578

On September 24, 2007, our subsidiary, Sunwin Canada, borrowed $430,000 from Mr. Ma Qiang, an unaffiliated party associated with our Chairman. The loan bears no interest, is unsecured and is due on demand. On September 5, 2008, three employees, including Ms. Wu our Chief Financial Officer, who collectively owed us $372,900 related to the exercise price of options granted and exercised in fiscal 2006 agreed to satisfy their obligation to us by assuming $372,900 of the $430,000 we owed to Mr. Qiang. As a result of this transaction, monies due us in the amount of $372,900 were satisfied and the remaining balance due to Mr. Qiang was $57,100 at April 30, 2009. This amount was repaid in full to Mr. Qiang during the second quarter of fiscal 2010.

F - 15

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

Ms. Wu and two other employees of ours assumed $372,900 of the debt we owed to Mr. Qiang in September 2008 to satisfy their obligation to us under a promissory note they delivered to us as consideration for the payment of their September 2008 exercise of stock options we granted them. The delivery of a promissory note to us by Ms. Wu was considered the extension of credit to her and, accordingly, was in violation of Section 402 of the Sarbanes Oxley Act of 2002 which prohibits granting credit in the form of a personal loan to a director or executive officer of a public company.

Historically we have paid management fees to Pharmaceutical Corporation, in which Mr. Laiwang Zhang, our president and chairman holds a majority interest. In fiscal 2010 Pharmaceutical Corporation waived all management fees and in fiscal 2009 such management fees totaled $347,627. At April 30, 2010, we owed Pharmaceutical Corporation $1,478 for management fees. We are currently in discussions with Mr. Zhang regarding an additional waiver of this fee for fiscal 2011.

Accounts Receivable – related party

Total related party revenues of fiscal 2010 and 2009 was $431,969 and $0, respectively. At April 30, 2010 and 2009, we reported $138,945 and $0 in accounts receivable – related party, respectively. We sell high-grade stevia products to Qufu Shengwang Import and Export Corporation, a Chinese entity owned by our Chairman, Mr. Laiwang Zhang.

NOTE 6 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets at April 30, 2010 and 2009 totaled $287,383 and $294,210, 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. We recognize prepayments as inventory or expense as suppliers make delivery of goods or provide services, in compliance with our accounting policy.

NOTE 7 - INCOME TAXES

We account for income taxes under ASC 740, “Expenses – Income Taxes”. ASC 740 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. ASC 740 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”). Pursuant to the PRC Income Tax Law, wholly-owned foreign enterprises are subject to tax at a statutory rate of 33% (30% state income tax plus 3% local income tax). Commencing January 2008, the PRC Income Tax rate was reduced to a maximum of 25% (inclusive of state and local income taxes) for all companies.

The components of income (loss) before income tax consist of the following:

	Fiscal Years Ended April 30,
	2010			2009
U.S. Operations	$	(1,406,983	)	$	(657,519	)
Chinese Operations		(3,679,725	)		1,157,815
Total	$	(5,086,708	)	$	500,296

The components of the provision (benefit) for income taxes are as follows:

	Fiscal Years Ended April 30,
	2010		2009
Federal, State and Local	$	-	$	-
Peoples Republic of China - Federal and Local		-		307,527
Total	$	-	$	307,527

F - 16

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

The table below summarizes the reconciliation of our income tax provision (benefit) computed at the statutory U.S. Federal rate and the actual tax provision:

	Fiscal Years Ended April 30,
	2010			2009
Income tax (benefit) provision at Federal statutory rate	$	(1,728,000	)	$	236,000
State income taxes, net of Federal Benefit		(234,000	)		32,000
Temporary differences					135,000
Permanent differences		86,000
U.S. tax rate in excess of foreign tax rate		510,000			(214,000	)
Benefit of loss		1,376,000			254,000
Increase in valuation allowance for share-based transaction					(135,000	)
Tax provision	$	10,000		$	308,000

We have a net operating loss (“NOL”) carry forward for United States income tax purposes at April 30, 2010 expiring through the year 2030. Management estimates the NOL as of April 30, 2010 to be approximately $3,495,000. The utilization of our NOL’s may be limited because of a possible change in ownership as defined under Section 382 of Internal Revenue Code. In addition, to US NOL’s, we have a PRC NOL for our Chinese operations as of April 30, 2010 of approximately $3,500,000, that expires in 2015.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Included in the deferred tax asset is the aforementioned NOL and the tax benefit associated with the issuance of stock-based compensation. The realization of the deferred tax assets is dependent on future taxable income, in addition to the exercise of stock options; we are not able to predict if such future taxable income will be more likely than not sufficient to utilize the benefit. As such, we do not believe the benefit is more likely than not to be realized and we recognize a full valuation allowance for those deferred tax assets. Our deferred tax assets as of April 30, 2010 and 2009 are as follows:

	Fiscal Years Ended April 30,
	2010			2009
Deferred tax assets from NOL carry forwards	$	2,514,000		$	1,288,000
Temporary differences – share based compensation		1,177,000			1,070,000
Total deferred tax asset		3,691,000			2,358,000
Valuation allowance		(3,691,000	)		(2,358,000	)
Deferred tax asset, net of allowance	$	-		$	-

NOTE 8 – ACQUISITIONS

Acquisition of a 60% interest in Qufu Shengwang

On June 30, 2008, Qufu Natural Green entered into an acquisition agreement with Qufu Shengwang and its shareholder Shandong Group. Under the terms of the agreement, Qufu Natural Green agreed to acquire Shandong Group’s 60% interest in Qufu Shengwang for $7,016,200. Shandong Group is owned by Laiwang Zhang, our President and 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 April 30, 2008.

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. Qufu Shengwang sells products in the provinces of Shandong, Heilongjia, and Liaoning in China to farmers of vegetables, fruits, flowers, and livestock.

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 the Acquisition Agreement, Qufu Natural Green agreed to acquire Shandong Group's 60% interest in Qufu Shengwang for $6,200,413. 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 (“U.S. GAAP”) which required elimination of the difference between the fair market value and cost basis of the land use rights recorded by Qufu Shengwang upon completion of an audit of its financial statements as of April 30, 2008.

F - 17

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

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, we entered into a Stock Sale and Purchase Agreement with Shandong Group to purchase up to 29,000,000 shares of our common stock at $.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, we entered into an Amendment to the Stock Sale agreement to sell up to 29,525,776 shares of our common stock to Shandong Group at $.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.

Second Amendment to Stock Sale Agreement. As a result of the second amendment to acquisition agreement, on November 18, 2008 we entered into a second amendment to the Stock Sale Agreement to reduce the total number of shares of our common stock to be purchased by Shandong Group from 29,525,776 to 19,175,480 at $.21 per share. As a result of the Second Amendment to Stock Sale Agreement, we canceled 10,350,296 shares of the Common Stock issued to Shandong Group on December 10, 2008 and reduced the amount due from Shandong Group by $2,173,562 reflecting the difference between the purchase price under the Amendment to Stock Sale Agreement and the purchase price for the shares of common stock under the Second Amendment to the Stock Sale Agreement. In satisfaction of this term, the purchase was completed by Shandong Group’s delivery of the 60% interest in Qufu Shengwang. The 19,175,480 shares of Common Stock purchased by Shandong Group represented approximately 22% of the issued and outstanding shares of our common stock prior to the transaction.

Purchase price	$	4,026,851

Net Assets Acquired:
Total Assets		7,011,682
Minus: Liabilities		(181,756	)
Total Net Assets		6,829,926
*60% ownership
Net Assets Acquired:		4,097,956

Net Assets acquired in excess of purchase price; Allocated to Property and Equipment	$	71,105

Acquisition of Qufu Shengren

Qufu Shengren, founded in December 2003, manufactures and distributes pharmaceutical products throughout China. In March 2007, Qufu Shengren received a Certificate of Good Manufacturing Practices (“GMP Certificate”) from State Food and Drug Administration in China for its pharmaceutical products. Sunwin expects to convert Qufu Shengren’s pharmaceutical production facilities to the production of high grade stevia saving substantial construction time for Sunwin. Once the conversion of the facility is complete, Sunwin expects its overall high grade stevia production capacity to be 100 tons annually.

Acquisition Agreement. On March 25, 2009, Qufu Natural Green acquired Qufu Shengren for $3,097,242. The purchase price under the Agreement represents 100% of the value of the net tangible assets of Qufu Shengren of $3,097,242, as of December 30, 2008.

F - 18

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

Stock Sale Agreement. On March 25, 2009, we entered into a Stock Sale and Purchase Agreement with the shareholders of Qufu Shengren to purchase up to 21,434,201 of our common stock at $.145 per share, representing approximately 14.4 % of the issued and outstanding our common stock. The purchase was completed by delivery of the interest in Qufu Shengren by its shareholders.

Purchase Price	$	3,097,242

Net Assets Acquired (March 31, 2009):
Total Assets		6,137,919
Minus: Liabilities		(2,501,367	)
Total Net Assets		3,636,552
*100% ownership
Net Assets Acquired:		3,636,552

Net Assets acquired in excess of purchase price; Allocated to property and equipment	$	539,310

Proforma Statements

The unaudited pro forma combined financial statements are presented to illustrate the estimated effects on Sunwin having entered into the purchase agreement with Qufu Shengwang and Qufu Shengren.

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 acquisitions of Qufu Shengwang and Qufu Shengren 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.

An allocation of the purchase price has been made to major categories of assets and liabilities in the accompanying unaudited pro forma combined 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 our preliminary determination of purchase accounting adjustments and are based upon available information and certain assumptions that we believe 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 operations of Qufu Shengwang and Qufu Shengren. Further, actual results may be different from these unaudited pro forma combined financial statements.

The following unaudited pro forma combined financial information presented below, gives effect to the acquisitions, in 2009, of Qufu Shengwang and Qufu Shengren. These acquisitions were accounted for under the purchase method of accounting prescribed by SFAS 141 as SFAS 141R will become effective for us after May 1, 2009, the beginning of our fiscal year 2010, and early adoption of SFAS 141R is prohibited. The below presentation is prepared as if the acquisitions had occurred as of the beginning of fiscal year 2009, the fiscal year of acquisition .

F - 19

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

SUNWIN INTERNATIONAL NEUTRACUETICALS, INC. AND SUBSIDIARIES
UNAUDITED PRO-FORMA STATEMENTS OF OPERATIONS
	For the fiscal year ended April 30, 2009
												Sunwin
	Sunwin			Qufu			Qufu			Pro-forma		International
	International			Shengwang			Shengren			Adjustments		Pro-forma
				(Unaudited)			(Unaudited)			(Unaudited)		(Unaudited)
REVENUES	$	21,691,675		$	602,194		$	114,254		$	-	$	22,408,123
COST OF SALES		16,550,294			626,813			89,156			-	$	17,266,263
GROSS PROFIT		5,141,381			(24,619	)		25,098			-		5,141,860

OPERATING EXPENSES:
Stock-based consulting expense		350,047									-		350,047
Selling Expenses		1,660,944			43,993			3,442			-		1,708,379
General and Administrative		2,291,251			232,232			31,723			-		2,555,206
Total Operating Expenses		4,302,242			276,225			35,165			-		4,613,632

INCOME (LOSS) FROM OPERATIONS		839,139			(300,844	)		(10,067	)		-		528,228

OTHER INCOME:
Other income (expenses)		84,890			(1,609	)		51			-		83,332
Interest Income		50,130			3,105			415			-		53,650
Total Other Income		135,020			1,496			466			-		136,982

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		974,159			(299,348	)		(9,601	)		-		665,210

INCOME TAXES:		(307,527	)		-			-					(307,527	)

INCOME (LOSS) BEFORE PROVISION FOR NONCONTROLLING INTEREST		666,632			(299,348	)		(9,601	)		-		357,683

NONCONTROLLING INTEREST		-			-			-			119,739		119,739

NET INCOME (LOSS) ATTRIBUTABLE TO SUWN	$	666,632		$	(299,348	)	$	(9,601	)	$	119,739	$	477,422

OTHER COMPREHENSIVE INCOME:
Foreign currency translation gain		629,584			156,240			5,513			-		791,337

COMPREHENSIVE INCOME (LOSS)	$	1,296,216		$	(143,108	)	$	(4,088	)	$	119,739	$	1,268,759

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

Weighted common shares outstanding-basic													123,451,788
Weighted common shares outstanding-diluted													123,920,125

F - 20

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

NOTE 9 – EQUITY METHOD INVESTMENT

Sunwin USA, LLC

In fiscal 2009, we entered into a distributorship and operating agreement with Wild Flavors, Inc. ("Wild Flavors") for the worldwide distribution of our stevioside based sweetener products and issued Wild Flavors a 45% interest in Sunwin USA, LLC (“Sunwin USA”). In exchange, Wild Flavors’ agreed to provide sales, marketing, logistics and supply chain management, product development and regulatory services with a stated value of $1,000,000 over a period of two years beginning on February 5, 2009, and will act as the sole manager of Sunwin USA and will be responsible for all of its business and affairs.

On May 11, 2009 we converted our former subsidiary Sunwin Stevia International, a Florida Corporation, into Sunwin USA, LLC, a Delaware limited liability company and contributed $423,493 of net assets into the newly formed entity. We retain a 55% ownership interest in the new company, but the assumption to consolidate this entity based on our greater than 50% ownership interest is overcome due to the aggregate impact of veto and approval rights of the minority voting interest.

Under the terms of the operating agreement Wild Flavors manages all business and affairs of Sunwin USA, and has the right to appoint all of its officers. Furthermore, the operating agreement prohibits us from terminating, limiting or restricting Wild Flavor’s authority, altering or rescinding the operating agreement, or binding Sunwin USA. Accordingly, by virtue of these contractual rights, Wild Flavors has operating control over Sunwin USA. Wild Flavor’s rights and the limitation on our rights provide for Wild Flavors to effectively participate in all significant decisions that would be expected to be made in the ordinary course of business. In accordance with FASB Accounting Standards Codification 810-10-25-5 and after assessment of these rights individually and in aggregate, we note that the presence of such rights in favor of Wild Flavors and the absence of our rights overcome our presumption of consolidation. Based on these factors we began to account for Sunwin USA as an equity method investment beginning in our first quarter ended July 31, 2009.

The balance of such investment is made up of the following:

Balance at April 30, 2009	$	-
Initial investment on May 11, 2009		423,493
Loss on equity investment		(275,966	)
Balance at April 30, 2010	$	147,527

We did not recognize any gain or loss upon the deconsolidation of this entity.

The following unaudited pro forma results of operations have been prepared as if Sunwin USA had been accounted for under the equity method of accounting in the following periods:

	For the Year Ended April 30,
	2010			2009
				(Unaudited)
	Sunwin USA			Sunwin USA
Loss in investment under the equity method	$	(275,966	)	$	(189,520	)

NET LOSS	$	(275,966	)	$	(189,520	)

NOTE 10 – STOCKHOLDERS’ EQUITY

We recognized $750,000 and $350,047 in stock-based compensation and consulting expense during fiscal 2010 and fiscal 2009, respectively. These amounts are reported as a component of general and administrative expense. Specific transactions for each class of shareholders’ equity are discussed below.

PREFERRED STOCK

We are 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 April 30, 2010 and 2009, there were no shares of preferred stock issued or outstanding.

F - 21

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

COMMON STOCK

During the first quarter of fiscal 2010, we issued 1,300,000 shares of our common stock valued at $0.20 per share to China Direct Investments, Inc. for consulting services to be provided during the period beginning May 1, 2009 through April 30, 2010.

In March 2010, we issued China Direct Investments, Inc. 1,400,000 shares of our common stock valued at $0.35 per share as a bonus for its performance in fiscal 2010.

STOCK OPTIONS

As of April 30, 2010 or 2009, no options were outstanding under either the 2005 Plan or 2006 Plan.

COMMON STOCK PURCHASE WARRANTS

In March 2007 as a component of a unit equity capital raise, we 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 772,380 of the warrants that remain issued and outstanding as of April 30, 2010. The shares of common stock issuable upon the exercise of the warrants are covered by an effective registration statement.

On February 20, 2009, our Board of Directors approved the permanent reduction in the exercise price of these warrants to $0.15 per share. The last sale price of our 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.

In February 2009, we issued 20,000,000 shares of our 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 in connection with a securities purchase agreement in which subsequently Wild Flavors owned approximately 15.7% of the issued and outstanding of our common stock. As part of the securities purchase agreement, we also entered into a stockholders agreement with Wild Flavors and certain of our stockholders, including Laiwang Zhang, Dongdong Lin, Xingyuan Li, Junzhen Zhang, Xiangsheng Kong, Weidong Chai, and Fanjun Wu who then owned approximately 34.12% of our common stock. The stockholders agreement provides that so long as Wild Flavors owns at least 4,000,000 shares of our common stock, the parties will vote or cause their shares of our common stock to be voted to elect two members of our Board of Directors designated by Wild Flavors and three members designated by our stockholders who are a party to the stockholders agreement.

Wild Flavors has a right of first refusal with respect to subsequent offers, if any, by us for the sale of our securities or debt obligations up until February 5, 2011. The right of first refusal does not apply with respect to certain limited exceptions, including strategic license agreements, mergers and similar acquisitions and certain option programs.

During fiscal 2010, we issued 7,637,900 shares of our common stock upon the exercise of purchase warrants at $0.15 per share providing proceeds to us of $1,145,685. During fiscal 2009, we issued 1,286,310 shares of our common stock upon the exercise of purchase warrants at $0.15 per share providing proceeds of $192,946.

A summary of the changes to our outstanding common stock warrants granted during fiscal 2010 and fiscal 2009 is as follows:

	Shares			Weighted Average Exercise Price

Outstanding at April 30, 2008		9,696,590			0.65	*
Granted		26,666,666			0.35
Exercised		(1,286,310	)		0.15
Forfeited		-			-
Outstanding at April 30, 2009		35,076,946			0.30
Granted		-			-
Exercised		(7,637,900	)		0.15
Forfeited		-			-
Warrants exercisable at April 30, 2010		27,439,046			0.34

* The warrant exercise price was permanently reduced to $0.15 on February 20, 2009.

F - 22

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

The following information applies to all warrants outstanding at April 30, 2010:

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

$	0.15		772,380		1.92	$	0.15		772,380	$	0.15
$	0.35		26,666,666		3.77	$	0.35		26,666,666	$	0.35
			27,439,046			$	0.31		27,439,046	$	0.31

NOTE 11 - AGREEMENTS AND COMMITMENTS

AGREEMENTS

On April 29, 2009 we entered into a consulting agreement with China Direct Investments, Inc. (“CDI”) to provide services during the period beginning May 1, 2009 through April 30, 2010. Under the terms of the agreement, CDI will provide advice regarding general business matters, evaluate potential sources of investment capital, manage professional resources, coordinate filings with the SEC, assist in the implementation of internal controls, translation services, and assist in the coordination of investor road shows, or investment conferences. As compensation for services we issued CDI 1.3 million shares of our common stock within 30 days of signing the agreement, and paid them $150,000 within 45 days of signing the agreement. On March 26, 2010 our board of directors approved the issuance of 1.4 million shares of our common stock valued at $490,000 to CDI as a bonus for its performance during fiscal 2010 under the terms of the April 29, 2009 consulting agreement.

In October 2009 we signed an exclusive distribution agreement with Hunan Fuhui Flavors Co. Ltd. to distribute our stevia extract within Hunan province in China. Under the terms of the one year agreement, we will provide marketing support and technical staff to support Hunan Fuhui’s sales efforts within the province.

F - 23

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

In December 2009 Qufu Natural Green signed an agreement for general legal services in China with Mr. Yefu Sun. The term of the agreement is from January 1, 2010 to December 31, 2011. Mr. Sun shall act as counsel for Qufu with respect to legal opinions, due diligence, legal documents review, disputes settlement, and other legal matters requested by Qufu. As the compensation for the legal services, we agreed to pay Mr. Sun 1,000,000 shares of our common stock with a fair value of $210,000.

On March 16 2010, Qufu Natural Green amended its legal counsel agreement with Mr. Yefu Sun. Under the terms of Amendment of legal counsel agreement, the stock consideration of 1,000,000 shares shall be earned on a prorate basis over the period from January 1, 2010 to December 31, 2011. In the event that Mr. Sun does not perform the services based on the terms of the agreement to the satisfaction of Qufu Natural Green, Mr. Sun shall return the unearned shares which have been issued. Both parties shall negotiate to determine the amount of shares that need to be returned. During fiscal 2010, we have not issued any shares in connection with this agreement, while we have accrued legal expenses of $78,723 for services rendered during fiscal 2010.

OPERATING LEASES

We lease office and manufacturing space under leases in Shandong, China that expire through 2014.

All facilities related to traditional Chinese medicine are leased from Shandong Shengwang Pharmaceutical Group Corporation (“Shandong Group”) a related party. The term of this lease will expire on October 1, 2012 and provides for annual lease payments of $23,400. Shandong Group agreed to waive the lease payments due in fiscal 2010.

In October 2002, Qufu Natural Green entered into a lease agreement with Qufu LuCheng Chiya Resident Community, an unaffiliated local governmental owned entity, which covers approximate 25,200 square feet facilities used by our veterinary medicine product group. This lease, which expires on August 20, 2012, provides for annual rent of $26,325, payable in a lump sum annually.

Future minimum rental payments required under these operating leases are as follows:

Period:	Total

Period Ended April 30, 2011	$	23,400
Period Ended April 30, 2012	$	23,400
Period Ended April 30, 2013	$	9,750

Thereafter	$	0

Rent expense included in general and administrative expenses for fiscal 2010 and fiscal 2009 totaled to $33,638 and $26,214, respectively.

NOTE 12 - SEGMENT INFORMATION

The following information is presented in accordance with ASC subtopic 280-10 Segment Reporting - Overall. In fiscal 2010 and fiscal 2009, we operated in two reportable business segments - (1) sale of stevioside and (2) the sale of essential traditional Chinese medicine, organic herbal medicine, neutraceutical products, and animal medicines prepared from organic herbal ingredients. Our reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations. Condensed information with respect to these reportable business segments for fiscal 2010 and fiscal 2009 is as follows:

F - 24

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

Fiscal 2010:

Year Ended April 30, 2010
	Stevioside			Chinese and Veterinary Medicines			Corporate and Other			Consolidated
Net revenues	$	10,730,828		$	3,762,131			-		$	14,492,959
Gross profit		1,509,751			1,052,181			-			2,561,932
Depreciation and amortization		1,574,595			290,010			-			1,864,605
Operating income		1,633,686			(2,355,298	)		908,785			187,173
Interest income		26,670			26,466			172			53,308
Net loss attributable to
Sunwin International Neutraceuticals, Inc.		(1,454,213	)		(2,343,270	)		(1,131,017	)		(4,928,500	)
Segment assets	$	29,879,999		$	10,239,710		$	1,197,761		$	41,317,470

Fiscal 2009:

	Stevioside		Chinese and Veterinary Medicines		Corporate and Other			Consolidated
Revenues	$	14,513,553	$	7,696,359	$	-		$	22,209,912
Gross Profit		2,930,910		2,149,128		-			5,080,038
Depreciation and amortization		1,343,012		317,903		-			1,660,915
Operating income		606,121		306,660		(355,414	)		557,367
Interest income		2,941		49,153		108			52,202
Net income attributable to Sunwin International Neutraceuticals, Inc.		547,973		265,260		(312,937	)		500,296
Segment assets	$	27,659,284	$	15,830,475	$	129,478		$	43,619,237

NOTE 13 - SUBSEQUENT EVENTS

DISPOSITION OF SHENGYA VERTERINARY MEDICINE CO., LTD.

On June 29, 2010 Qufu Natural Green Engineering Co., Ltd. (“Qufu Natural Green”), our wholly owned subsidiary, entered into a Stock Sale and Purchase Agreement (the “Agreement”) to sell its 100% ownership interest in Shengya Veterinary Medicine Co., Ltd. (“Shengya”) to Mr. Laiwang Zhang, our President and Chairman of our Board of Directors.

Shengya manufactures and sells a variety of veterinary medicines in China that historically represents less than 20% of our total revenues and represented approximately 12% of our total revenues in our fiscal year ended April 30, 2010 compared to 16.7% in the fiscal year ended April 30, 2009. We have determined to streamline its product offerings to focus on our core business of producing and selling stevia and other herb-based products including herb extracts and herb medicines. Consequently, subsequent to April 30, 2010 we have determined to exit all business activities related to its veterinary medicines and sell our 100% interest in Shengya to Mr. Zhang.

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SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

Under the terms of the Agreement, the purchase price for the 100% ownership interest in Shengya is $5,003,869, the net book value of Shengya’s assets (total assets minus total liabilities) as set forth on its consolidated balance sheet as of April 30, 2010 (the “Purchase Price”). Upon closing of the transaction, Mr. Zhang will pay the Purchase Price by cancelling 7,818,545 shares of the Company’s common stock he owns (the “Cancelled Shares”). The value of the Company’s common stock for purposes of computing the number of Cancelled Shares was the average of the closing price of the stock over the 10 trading days prior to the date of the Agreement. The transaction is expected to close on July 31, 2010.

DISSOLUTION OF SUNWIN CANADA

ISSUANCE OF COMMON STOCK

During May and June 2010, 737,750 stock purchase warrants were exercised at $0.15 resulting in net proceeds to us of $112,448.

On June 2, 2010 we issued unregistered shares of our common stock as follows: 1,000,000 shares to Mr. Lin Hou pursuant to a November 2009 stevia extraction consulting agreement; 684,000 shares to Mr. Xiangtao Kong pursuant to a December 2009 agreement to develop high grade stevia production processes and to provide implementation services; and 666,672 shares to Mr. Yefu Sun pursuant to a March 2010 legal services agreement. These agreements are described in Note 11 – Agreements and Commitments – Agreements.

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