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 endingended April 30, 2011 is referred to as “fiscal 2011”., and the coming fiscal year ending April 30, 2012 is referred to as “fiscal 2012.”

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 20102011 our operations were organized ininto two operating segments related to our product lines:

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 willmedicines exit a llall 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.

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 2010,2011, our Stevioside Segment generated revenues of $10.7$7.3 million, representing 74%76% 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.

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 mademan-made chemical based sweetener replacements are not suitable. As of the date of this report, steviosideStevioside 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, France, Brazil, Paraguay, Malaysia, Russia, Switzerland Australia and Switzerland.New Zealand. 

WeConcern over rising levels of obesity and diabetes has spurred the development of new sweeteners, and food consultancy Zenith International expects the global market for stevia-derived products to reach $825 million by 2014.  In addition, 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”)EU and Canada permit the use of stevioside only as a dietary supplement.

Efforts to eliminate the European Union’sEU’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 ESCThese organizations have determined that stevia is housed at the Laboratory of Functional Biology at the Katholieke Universities Leuven (“KU Leuven”)safe for use 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.

In April 2010, at the request from the European Commission, the European Food Safety Authority’s scientific Panel on additives known as 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. TheThis assessment has been sent tois being considered by the European Commission which will considerin deciding whether or not to authorize the substances in the European UnionEU for their proposed use, in particularparticularly in sugar free or reduced energy foods such as certain flavored drinks, confectionery with no added sugar or energy reduced soups.

EUSTAS believes that the current EU ban on stevia is out of sync with the current global regulatory environment andIn July 2011, the EU could grant approvalStanding Committee on Food Chain and Animal Health announced that steviol glucoside derived from the stevia plant was safe for use in food ingredients throughout the 27 counties of the EU.  The matter now goes before the European Parliament which is expected to decide by the end of 2011 whether stevia can be sold in 2010 based on the FDA’s decisions and JECFA's decision on the acceptable daily intake of stevia.EU for use in foods.

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 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 representsrepresented a significant advancement in quality resulting in a sweeter withand more natural taste compared to other manufacturers of stevioside based sweeteners. We believe consumers will beare 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 2009February 2011 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 3,5003,000 stores in the U.S. and is generally located in the sweetener aisle with all natural and alternative sweeteners. We intendare evaluating our OnlySweet marketing strategy in light of our plans to continueenter into a more comprehensive business relationship with Domino Sugar which we expect to focus on marketing OnlySweet aslead to the distribution of a zerowide range of all natural, low calorie sweetener alternative; as well as a “green” alternative.and no calorie sweetening solutions that contain Sunwin Stevia™. Natural products are one of the fastest growing segments in the grocery industry.

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%74.9% of our stevioside sales in fiscal 2010. Chengdu Wagott Pharmaceutical Co., Ltd. represented 24%2011. We do not have long term supply agreements with our customers and sales are generally made under a purchase order arrangement. The payment terms are generally 60 to 90 days after receipt of our total revenues from this segment in fiscal 2010.products.  We control the default risk by conducting due diligence on a customers’ credit record before acceptance of a purchase order.

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%9%. We believe there is ample supplyAlthough we experienced shortages of lower grade stevia leaves as farmers elected to grow higher grade stevia leaves to meet expected demand for this grade of stevia coupled with unfavorable weather conditions in China in the marketspring and summer months of 2010, we believe ample supplies of all grades of stevia leaves with stevioside contentwill be available in excess of 12%.fiscal 2012. In fiscal 2010,2011, no supplier accounted for more than 10% of our purchases of raw materials used in our Stevioside Segment. 

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 500300 metric tons annually which reflects a production capacity decrease of 100200 metric tons from fiscal 2009.2010. 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 (GMP) 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 2010,2011, we manufactured approximately 280125 tons of stevioside, a decrease of 15777 tons from the prior year, mainly due to a reduction instevia sales..in stevia sales.

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 20102011 this segment generated revenues of $3.8$2.3 million, representing 26%24% of our total consolidated revenues.

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 280325 different extracts of the estimated 400in fiscal 2011compared to 288 traditional Chinese medicine extracts in fiscal 2010, which can be divided into the following three general categories:

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 purchasedpurchase raw materials for our veterinary medicines and traditional Chinese medicine formula extracts on the open market at market prices.  For products which are based onWe experienced significant increase in prices during fiscal 2011 primarily as a result of increased market demand, supply shortages due to natural disasters, higher prices resulting from commodities speculators, and higher costs associated with purchasing through distributors. According to the China Association of Traditional Chinese Medicine (“CATCM”), the price surge affected 84% of 537 traditional Chinese medicines, we used extract formulas produced by our own traditional Chinese medicine formula extract group. Since we purchased our rawmedicinal materials at spot prices in the open market, an increase in the market with the average increase of 109%, and the prices of 96 medicinal materials have increased by over 100% in 2010 compared to the previous year. Since March 2011, the surge has gained additional momentum and CATCM anticipates it will continue in fiscal 2012. The unusual price for these raw materials could havesurge has had an adverse impact on our cost structure and related margins in this segment. W e 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, no2011, three suppliers Heze Zhongshun Pharmaceutical Co., Ltd., Qufu Longheng Materials Co., Ltd., and Bozhou Weitao Pharmaceutical Co., Ltd. respectively accounted for over 10%41.93%, 14.29%, and 14.11 of our purchases of raw materials used in thisour Chinese medicines segment.

We manufactured approximately 280325 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.

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

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 ourthe North American distribution of theour stevia 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.

Our business and operations are primarily located in the People’s Republic of China.PRC. 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. Weextracts and steviosides. In addition, 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.

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 crucialessential to our.our business. 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 o fof our products, including but not limited to fines, injunctions, product recalls, seizures and criminal prosecution.

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”).

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.

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 mul tiplyingmultiplying (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.

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, 20082008.

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.Agreement and eliminated the requirement for the earnings Target Amount provided for in the Stock Sale Agreement Amendment.  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.

On February 5, 2009, we entered into a Securities Purchase Agreement with WildWILD Flavors to purchase 20,000,000 shares of our common stock at $.15 per share (the “Wild“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 completedcompany 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 WildWILD Flavors. In addition, WildWILD Flavors agreed to provideprovides 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.$1,000,000 over the two year period. In addition, WildWILD Flavors agreed to act as the sole manager of Sunwin USA and will be responsible for al lall of its business and affairs. WildWILD 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 WildWILD Flavors.

Under the terms of the Securities Purchase Agreement, WildWILD 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”). WildWe are in discussions with WILD Flavors regarding the Exchange Option, among other aspects of the May 2009 Sunwin USA Operating Agreement and distribution agreement discussed below as part of our plans to enter into a business relationship with Domino Sugar as discussed in Item 1 Business – Recent Developments. 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 WildWILD 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) WildWILD Flavors has not exercised its Exchange Option (the “Bonus Option”). Upon exercise of the Bonus Option, WildWILD 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 WildWILD 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 WildWILD Flavors and certain of our shareholders who owned approximately 34.12% of our common stock. The stockholders agreement provides that so long as WildWILD 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 WildWILD 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 WildWILD Flavors, we received net proceeds of approximately $2,885,000. The net proceeds offrom this offering will betransaction were used for expansion of our production facilities in China and general corporate purposes.

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.

On June 29, 2010 Qufu Natural Green entered into a Stock Sale and Purchase Agreement (the “Shengya Agreement”(the “Agreement”) to sell its 100% ownership interest in Shengya Veterinary Medicine to Mr. Laiwang Zhang, our president and chairman of our Boardboard of Directors.directors.  Shengya Veterinary Medicine manufactures and sells a variety of veterinary medicines in the PRC that historically represented less than 20% of our total revenues and represented approximately 12% of our total revenues in fiscal 2010, compared to 16.7% in fiscal 2009.  The transaction closed on July 31, 2010, and we have exited all business activities related to the veterinary medicines business.  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 cancellingtendered to us for cancellation 7,818,545 shares of our common stock he owns (the “Cancelled Shares”).owned, valued at $3,674,716, based on the closing stock price at July 31, 2010.  The carrying value of our common stock for purposesShengya Veterinary Medicine’s net assets totaled $4,906,747 at July 31, 2010 and we recognized a foreign currency translation gain of computing$1,243,481 that had previously been reflected in accumulated other comprehensive income.  As a result, we booked a gain on sale of subsidiary of $11,450.  Upon the number of Cancelled Shares was the averageclosing of the c losing pricetransaction, Shengya Veterinary Medicine became a related party of the stock over the 10 trading days priorours due to the dateMr. Zhang’s position as chairman of the Shengya Agreement.  The transaction is expected to close on July 31, 2010.our board of directors. 

In JuneAugust 2010, we elected to dissolvedissolved 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 subsidiaryWe recorded no revenues from this subsidiary.subsidiary in fiscal 2011 and fiscal 2010.

As of July 26, 2010,22, 2011, we employed 211224 people in the following areas:

All of our employees are primarily based in Qufu, China while some managerial and sales staff occasionally workswork 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.

The risk factors in this section describe the majorcertain 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.

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 se gmentsegment are relatively low. If these other companies successfully market their products or market their products better than we market ours, we may have a 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 dependent upon the services of Mr. Laiwang Zhang, our President,president and his affiliated companies Pharmaceutical Corporation and Shandong Group,chairman of the board of directors, 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, wePRC. We do not have an employment agreement with Mr. Zhang. We also dohave done 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.

Our principal raw materials are stevia used to make 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 ourOur cost of sales as a percentage of revenues in our Stevioside segment increased by 6%was 84.9% and 84.9% in fiscal 2011 and 2010, compared to fiscal 2009, the increases could berespectively, and we may experience significantly higher costs in the future. Because of increased competition in all of our business segments, we may not be able to pass along potential raw material price increases to our customers and, accordingly, our gross profit margins would be adversely impacted.

We are subject to state and local environmental laws related to certification of water release. We are subject to registration and inspection under the PRC Food Safety Laws 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)SFDA with respect to the manufacturing and distribution of traditional Chinese medicine extracts.extracts and steviosides. 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,these laws, inspections and licenses and have no reason to believe that theyany licenses will not be renewed as required by the applicable rules of the PRC Central Government and the Shandong Province, any non-renewal of these authoritieslicenses 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.

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. Netnet 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, doescould have a material impact on our financial statements.

Recent Federal legislation, including theThe Sarbanes-Oxley Act of 2002 and other federal legislation 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 Euronext 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 Boardboard of Directors’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 a nyany 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 committee or other independent committees of our Boardboard of Directorsdirectors 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 n omineesnominees 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.

On July 26, 2010,22, 2011, the last reported sale price of the common stock on OTC Bulletin Board was $0.50$1.31 per share. As of July 26, 201022, 2011 there were 751750 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.

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.

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 we 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.

 

Not applicable to smaller reporting companies.

The following discussion and analysis of our consolidated financial condition and results of operations for the fiscal years ended April 30,2011 and 2010 and 2009 should be read in conjunction with the consolidated financial statements, including footnotesnotes thereto and other information presented elsewhere in this Form 10-K.

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

During 20102011 and 20092010 our operations were organized in two operating segments related to our product lines:

Domino Sugar is the largest marketer of refined sugar in the United States and other countries.its affiliates produce and market the nationally recognized Domino®, C&H® and Florida Crystals® brands.  In addition to the most comprehensive assortment of refined cane sugar products, Domino Sugar also produces brown rice syrup, evaporated cane juice, fondants, honey, invert sugar, malt, molasses, as well as flavor and texture modifiers.  Based on this wide assortment of sweeteners, Domino Sugar has built long-term, outstanding business relationships with many consumer product companies, retailers, foodservice operators and distributors.

We record propertyrevenue 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 equipment at cost. Depreciation and amortization are provided using the straight-line method over the estimated economic lives of thecollectability is reasonably assured.