As filed with the Securities and Exchange Commission on April 27, 2007

Registration No. 333-________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(AMENDMENT NO. ____)

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.
(Name of small business issuer in its charter)

NEVADA 6799 56-2146925
------ ---- ----------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

6 YOUPENG ROAD
QUFU, SHANDONG, CHINA
(86) 537-442999
(Address and telephone number of principal executive offices)

SAME AS ABOVE

(Address of principal place of business or intended principal place of business)

MS. DONDONG LIN
CHIEF EXECUTIVE OFFICER
SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.
6 YOUPENG ROAD
QUFU, SHANDONG, CHINA
(86) 537-442999
(Name, address and telephone number of agent for service)

with a copy to:
JAMES M. SCHNEIDER, ESQ.
SCHNEIDER WEINBERGER & BEILLY, LLP
2200 CORPORATE BOULEVARD N.W.
SUITE 210
BOCA RATON, FLORIDA 33431
TELEPHONE (561) 362-9595
TELECOPIER (561) 362-9612

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________________

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [ ] ___

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]

CALCULATION OF REGISTRATION FEE

PROPOSED
DOLLAR MAXIMUM PROPOSED
TITLE OF EACH AMOUNT OFFERING MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- ---------------------- ---------- -------- -------------- ------------
Common stock,
par value $0.001 (1) 10,452,500 $0.50 $5,226,250 $160
Common stock,
par value $0.001 (2) 10,793,750 $0.65 7,015,938 215
---------- ----
Totals 21,246,250 $375
========== ====

(1) Includes issued and outstanding shares of common stock. Estimated solely for
purposes of calculating the registration fee pursuant to Rule 457 under the
Securities Act of 1933 based on the average of the high and low sale price of
the common stock as reported on the OTC Bulletin Board on April 24, 2007.

(2) Includes shares of common stock issuable upon the exercise of common stock
purchase warrants with an exercise price of $.65 per share.

To the extent permitted by Rule 416, this registration statement also covers
such additional number of shares of common stock as may be issuable as a result
of the anti-dilution provisions of the warrants in the event of stock splits,
stock dividends or similar transactions.

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED APRIL 27, 2007

PROSPECTUS

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.

21,246,250 shares of Common Stock

This prospectus relates to periodic offers and sales of 21,246,250
shares of our common stock by the selling security holders, which includes:

o 10,452,500 shares which are presently outstanding; and

o 10,793,750 shares issuable upon the exercise of common stock
purchase warrants with an exercise price of $.65 per share.

At April 11, 2007 we had outstanding 84,404,776 shares of our common
stock, of which 65,148,814 shares are held by non-affiliates. The number of
shares of our common stock covered by this prospectus, including common stock
underlying the warrants, equals approximately 25% of the shares held by
non-affiliates on a fully diluted basis. We will not receive any proceeds from
the sale of the shares by the selling security holders. The shares of common
stock are being offered for sale by the selling security holders at prices
established on the OTC Bulletin Board during the term of this offering. These
prices will fluctuate based on the demand for the shares of common stock.

For a description of the plan of distribution of these shares, please
see page 72 of this prospectus.

Our common stock is quoted on the OTC Bulletin Board under the symbol
"SUWN". On April 25, 2007 the last reported sale price for our common stock was
$0.55 per share.
____________________

Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 4 of this prospectus to read about the risks of
investing in our common stock.
____________________

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
____________________

The date of this Prospectus is _________, 2007

ABOUT THIS PROSPECTUS

You should only rely on the information contained in this document or
to which we have referred you. We have not authorized anyone to provide you with
information that is different. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not making an offer
to sell these securities in any jurisdiction where the offer or sale is not
permitted. Our business, financial condition, results of operations and
prospectus may have changed since that date.

When used in this prospectus, the terms:

o "Sunwin," "we," and "us" refers to Sunwin International
Neutraceuticals, Inc., a Nevada corporation, and our subsidiaries,

o "Sunwin Tech" refers to our subsidiary Sunwin Tech Group, Inc., a
Florida corporation,

o "Qufu" refers to our subsidiary Qufu Natural Green Engineering Co.,
Ltd., a PRC company,

o "Shengya Veterinary Medicine" refers to Qufu's subsidiary Shengya
Veterinary Medicine Co., Ltd. a PRC company formerly known as
Shangong Qufu Veterinary Medicine Plant,

o "Shengyuan Herb Extraction" refers to Qufu's subsidiary Shengyuan
Herb Extraction Co., Ltd., a PRC company,

o "Qufu Chinese Medicine" refers to Qufu's subsidiary Qufu Chinese
Medicine Factory, a PRC company,

o "Sunwin Stevia International" refers to our subsidiary Sunwin Stevia
International Corp., a Florida corporation,

o "Sunwin California" refers to our subsidiary Sunwin California,
Inc., a California corporation, and

o "Sunwin Canada" refers to our subsidiary Sunwin (Canada)
Pharmaceutical Ltd., a Canadian corporation.

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

o "Pharmaceutical Corporation" refers to Shandong Shengwang
Pharmaceutical Corporation Limited, a Chinese company which is
controlled by Mr. Laiwang Zhang, our President, Chairman and a
principal shareholder of our company,

o "Group Corporation" refers to Shandong Shengwang Group Corporation,
a Chinese company controlled by Mr. Zhang.

The information which appears on our web sites at www.sunwin.biz and
www.onlysweet.com is not part of this prospectus.

PROSPECTUS SUMMARY

THE COMPANY

We manufacture a group of neutraceutical products in the People's
Republic of China ("China" or "PRC"). Our operations are organized into three
main product groups which include:

o Stevioside, a 100% natural sweetener which we extract from the leaves
of the Stevia rebaudiana plant. We are one of the leading manufacturers of
Stevioside in the PRC. We sell this product on a wholesale basis to domestic
food manufacturers and larger foreign trade companies which export the product
to Japan, Korea and Southeast Asia,

o a comprehensive group of veterinary medicines including both
Traditional Chinese medicine and Western medicine, feed additives, feeds and
disinfectants. These products are sold domestically on both a wholesale and
retail basis to livestock and poultry farmers, retail veterinary product outlets
and large scale cultivating business. We are one of the top 50 companies in this
product category in the PRC, and

o traditional Chinese medicine formula extracts which we sell on a
wholesale basis to domestic traditional Chinese medicine manufacturers and large
animal pharmaceutical companies.

We strive to work closely with consumers to provide a quality, value,
and a hybrid mix of agricultural products and services that meet growing demand
in the PRC.

We were incorporated in Nevada in August 1987. Our executive offices
are located at 6 Youpeng Road, Qufu, Shandong, China, and our telephone number
is (86) 537-442999.

ABOUT THE OFFERING

This prospectus covers the resale of a total of 21,246,250 shares of
our common stock by selling security holders. Of those shares covered by this
prospectus, 10,452,500 shares have been issued and are currently outstanding and
the remaining 10,793,750 shares are issuable upon the exercise of outstanding
common stock purchase warrants with an exercise price of $0.65 per share.
Selling security holders may resell their shares from time-to-time, including
through broker-dealers, at prevailing market prices. We will not receive any
proceeds from the resale of our shares by the selling security holders. We will
pay all of the fees and expenses associated with registration of the shares
covered by this prospectus.

COMMON STOCK:

OUTSTANDING PRIOR TO THIS OFFERING: 84,404,776 shares of common stock and
no shares of preferred stock as of
April 11, 2007

COMMON STOCK RESERVED: 10,793,750 shares issuable upon
exercise of outstanding warrants with
an exercise price of $0.65 per share,
the resale of which is covered by
this prospectus.

OUTSTANDING AFTER THIS OFFERING: 95,198,526 shares of common stock and
no shares of preferred stock,
assuming the exercise of all
outstanding warrants.

SELECTED FINANCIAL DATA

The following summary of our financial information for the years ended
April 30, 2006 and 2005 and the nine months ended January 31, 2007 and 2006 has
been derived from, and should be read in conjunction with, our financial
statements included elsewhere in this prospectus.

INCOME STATEMENT:

FOR THE NINE MONTHS
FISCAL YEAR ENDED APRIL 30, ENDED JANUARY 31,
--------------------------- --------------------------
2006 2005 2007 2006
---- ---- ---- ----
(unaudited)

Net Revenues .................. $15,490,013 $ 12,114,006 $11,562,948 $11,065,853
Gross Profit .................. 4,624,096 3,735,168 3,044,343 3,510,780
Total Operating Expenses ...... 2,195,955 2,110,340 2,559,505 1,542,858
Income From Operations ........ 2,428,141 1,624,828 484,838 1,967,922
Total Other Income (Expense) .. 68,337 (2,960) 66,256 122,450
Income Before Minority Interest 3,020,959 1,107,495 551,094 2,614,372
Net Income .................... $ 2,429,814 $ 829,114 551,094 2,025,104
Comprehensive Income .......... - - $ 1,220,718 $ 2,208,115

BALANCE SHEET DATA:

JANUARY 31, 2007 APRIL 30, 2006
---------------- --------------
(UNAUDITED)

Working capital ............... $ 13,634,219 $ 8,908,577
Cash .......................... $ 7,152,142 $ 5,433,691
Total current assets .......... $ 15,319,611 $ 10,789,326
Property and equipment, net ... $ 5,184,666 $ 5,375,849
Total assets .................. $ 20,504,277 $ 16,165,175
Total current liabilities ..... $ 1,685,392 $ 1,880,749
Total liabilities ............. $ 1,823,948 $ 2,105,197
Total stockholders' equity .... $ 18,680,329 $ 14,149,978

RISK FACTORS

An investment in our common stock involves a significant degree of
risk. You should not invest in our common stock unless you can afford to lose
your entire investment. You should consider carefully the following risk factors
and other information in this prospectus before deciding to invest in our common
stock.

RISKS RELATED TO OUR COMPANY

THE MANAGEMENT OF OUR COMPANY IS LOCATED IN THE PRC AND WE ARE MATERIALLY
DEPENDENT UPON ADVISORY SERVICES OF A U.S. COMPANY.

None of the current members of our management have any experience in
U.S. public companies and other than our President, Mr. Zhang, none these
individuals are fluent in English. We have engaged China Direct Investments,
Inc. to provide us with various advisory and consulting services, including U.S.

business methods and compliance with SEC disclosure requirements. We selected
China Direct Investments, Inc. to provide these services to us in part because
its staff includes Chinese-speaking individuals with experience in the operation
and regulatory framework applicable to U.S. public companies. Until such time as
we are able to expand our board of directors to include English-speaking
individuals who have experience with the operation and regulatory framework
applicable to U.S. public companies, we are materially dependent upon our
relationship with China Direct Investments, Inc. Our contract with that company
expires in January 2009. If for any reason China Direct Investments, Inc. should
fail to provide the contracted services at the anticipated levels or fails to
extend its services and we have not added members to our board of directors with
the requisite experience, the abilities of our board of directors to do business
as a U.S. public company could be materially and adversely affected. In such
instances, we may be unable to prepare and file reports as required by the
Securities Exchange Act of 1934 on a timely basis which could lead to our common
stock being removed from the OTCBB.

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

We are dependent upon the services of Mr. Laiwang Zhang, our President,
and his affiliated companies Pharmaceutical Corporation and Group Corporation,
for the continued growth and operation of our company because of his experience
in the industry and his personal and business contacts in China. We do not have
an employment agreement with Mr. Zhang and we do not anticipate entering into an
employment agreement in the foreseeable future. We also do business with several
companies which are affiliated with Mr. Zhang as described later in this
prospectus 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. 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 effect our ability to effectively run our
business and pursue our business strategy as well as our results of operations.

THE MANAGEMENT FEE WHICH WE PAY A RELATED PARTY IS SUBJECT TO INCREASE FROM YEAR
TO YEAR. THE AMOUNT WE PAY MAY NOT BE AS ADVANTAGEOUS TO US AS TERMS WE COULD
NEGOTIATE WITH AN UNRELATED PARTY.

We pay Pharmaceutical Corporation, a related party, an annual
management fee. These management services include 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. We do not have a contract with
Pharmaceutical Corporation and the amount of annual management fee is subject to
increase at Mr. Zhang's discretion. The management fee paid increased from
approximately $85,000 in fiscal 2005 to approximately $123,000 in fiscal 2006.
For the nine months ended January 31, 2007, we have paid a management fee of
$144,337. While we believe that the terms and costs of this fee are fair to our
company, 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 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, including the increase of the stevia leaves in the later half of

2003 due to the plants being adversely affected by weather conditions. For
instance, in 2003 the South China planting bases were adversely affected as a
result of a drought in the Jiangxi Province and excessive rains in the Henan,
Jiangsu and Anhui Provinces. We have continued to witness an increase in costs
of certain raw materials. For example, in our Stevioside segment the cost of
sales as a percentage of revenues increased from 76.8% for the nine months ended
January 31, 2006 to 79.3% for the nine months ended January 31, 2007. We may not
be able to adjust our product prices, especially in the short term, to recover
the costs of increases in these raw materials. Our future profitability may be
adversely affected to the extent we are unable to pass on higher raw material
costs to our customers.

WE DEPEND ON CERTAIN SUPPLIERS, AND ANY DISRUPTION WITH THOSE SUPPLIERS COULD
DELAY PRODUCT PRODUCTION AND SALES AND ADVERSELY AFFECT OUR RELATIONSHIPS WITH
CUSTOMERS.

The stevioside finished product and certain materials used in products
we manufacture are available from a limited number of suppliers. Further, we may
elect to develop relationships with a single or limited number of suppliers for
materials that are otherwise generally available. We have planting and purchase
agreements with our major suppliers of the stevia leaves. Although we believe
that alternative suppliers are available to supply materials and the stevioside
finished product, any interruption in the supply from any supplier could delay
product shipments and sales and adversely affect our relationships with
customers.

OUR BUSINESS IS HIGHLY DEPENDENT UPON PROPRIETARY TECHNOLOGIES.

Our success depends on the knowledge, ability, experience and
technological expertise of our employees and on the legal protection of
proprietary rights. We claim proprietary rights in various unpatented
technologies, know-how, trade secrets and trademarks relating to extraction
processes used to make Stevioside as well as certain of the traditional Chinese
medicine herbal extracts we sell. We believe these proprietary processes
increase the quality of our products and give us a competitive advantage in the
marketplace. We do not have any patents nor have we filed any patent application
for patents on our technologies and proprietary processes. If our competitors
independently develop technologies that are substantially equivalent or superior
to our processes, the resulting increased competition could reduce the demand
for our products. During the past five years we had three of our traditional
Chinese medicine products and five of our veterinary medicine products copied by
competitors which have been related to us losing approximately 6% to 8% of our
revenues in this segment.

We protect our proprietary rights in our products and operations
through contractual obligations, including nondisclosure agreements. There can
be no assurance as to the degree of protection these contractual measures may or
will afford. If these contractual measures fail to protect our proprietary
rights, any advantage those proprietary rights provided to us would be negated.

EACH OF OUR THREE MAIN PRODUCT GROUPS OPERATE IN HIGHLY COMPETITIVE BUSINESSES.

Each of our product groups is subject to competition from other
manufacturers of those products. There are approximately 30 Stevioside
manufacturers in China, but only approximately 10, including our company,
operate on a continuous basis with the remainder of the companies periodically
entering the market in times of increased demand. 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. We compete against a greater number
of companies in the production of veterinary medicines and our ability to attain
a competitive position in this product market is dependent upon our ability to
change our existing product delivery system from tablets and injections to
sprays to increase ease of use. Because there are no assurances we will be

successful in this endeavor, we may never attain a competitive position in this
product group. Finally, 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
better market their products than our products, 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.

OUR HOLDING COMPANY STRUCTURE CREATES RESTRICTIONS ON THE PAYMENT OF DIVIDENDS.

We have no direct business operations, other than our ownership of our
subsidiaries. While we have no current intention of paying dividends, should we
decide in the future to do so, as a holding company, our ability to pay
dividends and meet other obligations depends upon the receipt of dividends or
other payments from our operating subsidiaries. In addition, our operating
subsidiaries, from time to time, 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. If future dividends are paid in Renminbi, fluctuations
in the exchange rate for the conversion of Renminbi into U.S. dollars may
adversely affect the amount received by U.S. stockholders upon conversion of the
dividend payment into U.S. dollars. We do not presently have any intention to
declare or pay dividends. You should not purchase shares of our common stock in
anticipation of receiving dividends in future periods.

OUR OPERATIONS ARE SUBJECT TO GOVERNMENT REGULATION. IF WE FAIL TO COMPLY WITH
THE APPLICATION 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.

WE HAVE NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN
THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE REDUCED 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, and the
adoption of a code of ethics. 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. If we expand our board membership in
future periods to include additional independent directors, we may seek to
establish an audit and other committees of our board of 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, decisions concerning matters such as
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.

WE MAY BE EXPOSED TO POTENTIAL RISKS RELATING TO OUR INTERNAL CONTROLS OVER
FINANCIAL REPORTING AND OUR ABILITY TO HAVE THOSE CONTROLS ATTESTED TO BY OUR
INDEPENDENT AUDITORS.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX
404"), the Securities and Exchange Commission adopted rules requiring public
companies to include a report of management on the company's internal controls
over financial reporting in their annual reports, including Form 10-KSB. In
addition, the independent registered public accounting firm auditing a company's
financial statements must also attest to and report on management's assessment
of the effectiveness of the company's internal controls over financial reporting
as well as the operating effectiveness of the company's internal controls.
Presently, we will become subject to compliance with SOX 404 for our fiscal year
ending April 30, 2008. While we have yet to being evaluating our internal
control systems in order to allow our management to report on, and our
independent auditors attest to, our internal controls, as a required part of our
annual report on Form 10-KSB beginning with our report for the fiscal year
ending April 30, 2008, we expect to expend significant resources in developing
the necessary documentation and testing procedures required by SOX 404. At
present, there is no precedent available with which to measure compliance
adequacy. Accordingly, there can be no positive assurance that we will receive a
positive attestation from our independent auditors.

In the event we identify significant deficiencies or material
weaknesses in our internal controls that we cannot remediate in a timely manner
or we are unable to receive a positive attestation from our independent auditors
with respect to our internal controls, investors and others may lose confidence
in the reliability of our financial statements and our ability to obtain equity
or debt financing could suffer.

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.

As described later in this prospectus under "Certain Relationships and
Related Transactions," we historically have engage in a number of transactions
with affiliated entities and we anticipate that we will continue to engage in
such transactions in future periods. 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. Purchasers of our common stock are reliant upon
management's judgment as to the reasonableness and fairness of the terms of the
various transactions.

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 may be adversely affected 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
reforms program, 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 have material and negative impact on the market
price of our stock

THE CHINESE GOVERNMENT EXERTS SUBSTANTIAL INFLUENCE OVER THE MANNER IN WHICH WE
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 thereof, and could require us to divest ourselves of
any interest we then hold in Chinese properties.

FUTURE INFLATION IN CHINA MAY INHIBIT ECONOMIC ACTIVITY IN CHINA.

In recent years, the Chinese economy has experienced periods of rapid
expansion and high rates of inflation. During the past 10 years, the rate of
inflation in China has been as high as 20.7% and as low as -2.2%. These factors
have led to the adoption by the PRC government, from time to time, of various
corrective measures designed to restrict the availability of credit or regulate
growth and contain inflation. While inflation has been more moderate since 1995,
high inflation may in the future cause the PRC government to impose controls on
credit and/or prices, or to take other action, which could inhibit economic
activity in China, and thereby adversely affect the market for our products.

ANY RECURRENCE OF SEVERE ACUTE RESPIRATORY SYNDROME, OR SARS, OR ANOTHER
WIDESPREAD PUBLIC HEALTH PROBLEM, COULD ADVERSELY AFFECT OUR OPERATIONS.

A renewed outbreak of SARS or another widespread public health problem
in China, where all of our revenue is derived, and in Shandong, where our
operations are headquartered, could have a negative effect on our operations.
Our operations may be impacted by a number of health-related factors, including
the following:

o quarantines or closures of some of our offices which would severely
disrupt our operations,

o the sickness or death of our key officers and employees, and

o a general slowdown in the Chinese economy.

Any of the foregoing events or other unforeseen consequences of public
health problems could adversely affect our operations.

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
introduced regulations in 1996 to allow 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 China, 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.

THE VALUE OF OUR SECURITIES WILL BE AFFECTED BY THE FOREIGN EXCHANGE RATE
BETWEEN U.S. DOLLARS AND RENMINBI.

The value of our common stock will be affected by the foreign exchange
rate between U.S. dollars and Renminbi. For example, to the extent that we need
to convert U.S. dollars into Renminbi for our operational needs and should the
Renminbi appreciate against the U.S. dollar at that time, our financial position
and the price of our common stock may be adversely affected. Conversely, if we
decide to convert our Renminbi into U.S. dollars for the purpose of declaring
dividends on our common stock or for other business purposes and the U.S. dollar
appreciates against the Renminbi; the U.S. dollar equivalent of our earnings
from our subsidiaries in China would be reduced.

Until 1994, the Renminbi experienced a gradual but significant
devaluation against most major currencies, including U.S. dollars, and there was
a significant devaluation of the Renminbi on January 1, 1994 in connection with
the replacement of the dual exchange rate system with a unified managed floating
rate foreign exchange system. Since 1994, the value of the Renminbi relative to
the U.S. Dollar has remained stable and has appreciated slightly against the
U.S. dollar. Countries, including the United States, have argued that the
Renminbi is artificially undervalued due to China's current monetary policies
and have pressured China to allow the Renminbi to float freely in world markets.
On July 21, 2005 the PRC reported that it would have its currency pegged to a
basket of currencies rather than just tied to a fixed exchange rate to the
dollar. It also increased the value of its currency 2% higher against the
dollar, effective immediately.

If any devaluation of the Renminbi were to occur in the future, returns
on our operations in China, which are expected to be in the form of Renminbi,
will be negatively affected upon conversion to U.S. dollars. Although we attempt
to have most future payments, mainly repayments of loans and capital
contributions, denominated in U.S. dollars, if any increase in the value of the
Renminbi were to occur in the future, our product sales in China and in other
countries may be negatively affected.

REVISED TAX STRUCTURE PROPOSED BY THE NATIONAL PEOPLES CONGRESS COULD HAVE A
MATERIAL IMPACT ON OUR PERFORMANCE.

On December 24, 2006, the Chinese government officially submitted a
draft of the new Enterprise Income Tax Law which seeks to unify China's dual tax
system. Presently China has a dual tax

policy with different rates of taxation for domestic enterprises as opposed to
foreign investment enterprises. The new unified tax rate is proposed to be 25%
for all entities, which is higher than the 15% rate currently applied to foreign
investment entities. However low profit enterprises, whether foreign investment
enterprises or domestic enterprises, may be subject to a lower tax rate of 20%.
It is uncertain how this new policy, if adopted, would impact our subsidiaries,
as all the components of the revised policy have not been determined.

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.

We are a Chinese company and all of our business and operations are
conducted in China. We are a party to certain material contracts, including the
planting agreements with the farmers who supply the stevia rebaudiana used in
our products and the leases for the facilities used by our stevioside,
veterinary medicine and Traditional Chinese medicine extract formula product
groups. 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. China'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.

All of our assets are located outside the United States and all of our
current operations are conducted in China. Moreover, all of our directors and
officers are nationals or residents of China. 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 China 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 China against us or
such persons predicated upon the securities laws of the United States or any
state thereof.

RECENT PRC REGULATIONS RELATING TO ACQUISITIONS OF PRC COMPANIES BY FOREIGN
ENTITIES MAY CREATE REGULATORY UNCERTAINTIES THAT COULD RESTRICT OR LIMIT OUR
ABILITY TO OPERATE, INCLUDING OUR ABILITY TO PAY DIVIDENDS.

The PRC State Administration of Foreign Exchange, or SAFE, issued a
public notice in January 2005 concerning foreign exchange regulations on mergers
and acquisitions in China. The public notice states that if an offshore company
controlled by PRC residents intends to acquire a PRC company, such acquisition
will be subject to strict examination by the relevant foreign exchange
authorities. The public notice also states that the approval of the relevant
foreign exchange authorities is required for any sale or transfer by the PRC
residents of a PRC company's assets or equity interests to foreign entities for
equity interests or assets of the foreign entities.

In April 2005, SAFE issued another public notice further explaining the
January notice. In accordance with the April 2005 notice, if an acquisition of a
PRC company by an offshore company controlled by PRC residents has been
confirmed by a Foreign Investment Enterprise Certificate prior to the
promulgation of the January 2005 notice, the PRC residents must each submit a
registration form to the local SAFE branch with respect to their respective
ownership interests in the offshore company, and must also file an amendment to
such registration if the offshore company experiences material events, such as
changes in the share capital, share transfer, mergers and acquisitions, spin-off
transaction or use of assets in China to guarantee offshore obligations. The
April 2005 notice also provides that failure to comply with the registration
procedures set forth therein may result in restrictions on our PRC resident
stockholders and our subsidiaries. Pending the promulgation of detailed
implementation rules, the relevant government authorities are reluctant to
commence processing any registration or application for approval required under
the SAFE notices.

In addition, on August 8, 2006, the Ministry of Commerce ("MOFCOM"),
joined by the State-Owned Assets Supervision and Administration Commission of
the State Council, State Administration of Taxation, State Administration for
Industry and Commerce, China Securities Regulatory Commission and SAFE, amended
and released the Provisions for Foreign Investors to Merge and Acquire Domestic
Enterprises, new foreign-investment rules which took effect September 8, 2006,
superseding much, but not all, of the guidance in the prior SAFE circulars.
These new rules significantly revise China's regulatory framework governing
onshore-offshore restructurings and how foreign investors can acquire domestic
enterprises. These new rules signify greater PRC government attention to
cross-border merger, acquisition and other investment activities, by confirming
MOFCOM as a key regulator for issues related to mergers and acquisitions in
China and requiring MOFCOM approval of a broad range of merger, acquisition and
investment transactions. Further, the new rules establish reporting requirements
for acquisition of control by foreigners of companies in key industries, and
reinforce the ability of the Chinese government to monitor and prohibit foreign
control transactions in key industries.

These new rules may significantly affect the means by which
offshore-onshore restructurings are undertaken in China in connection with
offshore private equity and venture capital financings, mergers and
acquisitions. It is expected that such transactional activity in China in the
near future will require significant case-by-case guidance from MOFCOM and other
government authorities as appropriate. It is anticipated that application of the
new rules will be subject to significant administrative interpretation,

and we will need to closely monitor how MOFCOM and other ministries apply the
rules to ensure its domestic and offshore activities continue to comply with PRC
law. Given the uncertainties regarding interpretation and application of the new
rules, we may need to expend significant time and resources to maintain
compliance.

It is uncertain how our business operations or future strategy will be
affected by the interpretations and implementation of the SAFE notices and new
rules. Our business operations or future strategy could be adversely affected by
the SAFE notices and the new rules. For example, we may be subject to more
stringent review and approval process with respect to our foreign exchange
activities.

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.

RISKS RELATED TO THIS OFFERING

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.

THIS PROSPECTUS PERMITS SELLING SECURITY HOLDERS TO RESELL THEIR SHARES. IF THEY
DO SO, THE MARKET PRICE FOR OUR SHARES MAY FALL AND PURCHASERS OF OUR SHARES MAY
BE UNABLE TO RESELL THEM.

It is possible that selling security holders will offer all of there
shares for sale. To the extent that these shares are sold into the market, there
may be an oversupply of shares and an undersupply of purchasers. If this occurs
the market price for our shares may decline significantly and investors may be
unable to sell their shares at a profit, or at all.

CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING INFORMATION

Certain statements in this prospectus contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to implement our strategic
initiatives, economic, political and market conditions and fluctuations,
government and industry regulation, interest rate risk, Chinese and global
competition, and other factors. Most of these factors are difficult to predict
accurately and are generally beyond our control. You should consider the areas
of risk described in connection with any forward-looking statements that may be
made herein. Readers are cautioned not to place undue reliance on these
forward-looking statements and readers should carefully review this prospectus
in its entirety, including the risks described in "Risk Factors". Except for our
ongoing obligations to disclose material information under the Federal
securities laws, we undertake no obligation to release publicly any revisions to
any forward-looking statements, to report events or to report the occurrence of
unanticipated events. These forward-looking statements speak only as of the date
of this prospectus, and you should not rely on these statements without also
considering the risks and uncertainties associated with these statements and our
business.

MARKET FOR COMMON STOCK AND DIVIDEND POLICY

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 2005

May 1, 2004 through July 31, 2004 $0.74 $0.17
August 1, 2004 through October 31, 2004 $0.74 $0.25
November 1, 2004 through January 31, 2005 $0.27 $0.12
February 1, 2005 through April 30, 2005 $0.19 $0.12

High Low
Fiscal 2006

May 1, 2005 through July 31, 2005 $0.18 $0.09
August 1, 2005 through October 31, 2005 $0.22 $0.09
November 1, 2005 through January 31, 2006 $0.87 $0.18
February 1, 2006 through April 30, 2006 $1.69 $0.59

Fiscal 2007

May 1, 2006 through July 31, 2006 $1.23 $0.65
August 1, 2006 through October 31, 2006 $1.00 $0.55
November 1, 2006 through January 31, 2007 $0.87 $0.60

On April 25, 2007, the last reported sale price of the common stock on
OTC Bulletin Board under the symbol "SUWN" was $0.55 per share. As of April 11,
2007 there were approximately 779 stockholders of record of the common stock.

DIVIDENDS

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 be 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, we 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, our operating subsidiaries, from time
to time, 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.
Finally, the subscription agreements for our most recently concluded financing
prohibit us from paying dividends until the earlier of March 23, 2009, or when
all shares of common stock covered by this prospectus have been sold.

CAPITALIZATION

The following table sets forth our capitalization as of January 31,
2007. This table gives no effect to the sales of the securities by us subsequent
to January 31, 2007as described later in this prospectus. The table should be
read in conjunction with the financial statements and related notes included
elsewhere in this prospectus.

JANUARY 31, 2007
(UNAUDITED)
----------------
Long term liabilities: ........................................ $ 0
Preferred Stock, $0.001 par value, 1,000,000 authorized,
none issued and outstanding ................................. -
Common stock, $0.001 par value, 200,000,000 shares authorized,
73,942,276 issued and outstanding ........................... 73,942
Additional paid-in capital .................................... 12,025,899
Retained Earnings ............................................. 7,452,976
Deferred compensation ......................................... (969,212)
Subscription receivable ....................................... (602,900)
Other comprehensive income-foreign currency ................... 699,624
------------
Total stockholders' equity ........................... $ 18,680,329

Total capitalization .......................................... $ 18,680,329

USE OF PROCEEDS

We will not receive any proceeds upon the sale of shares by the selling
security holders. Any proceeds that we receive from the exercise of the common
stock purchase warrants will be used by us for general working capital. The
actual allocation of proceeds realized from the exercise of the warrants will
depend upon the amount and timing of such exercises, our operating revenues and
cash position at such time and our working capital requirements. There can be no
assurances that any of the outstanding warrants will be exercised. Pending
utilization of the proceeds we may receive from the exercise of the warrants,
they will be deposited in interest bearing accounts or invested in money market
instruments, government obligations, certificates of deposits or similar
short-term investment grade interest bearing investments.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following analysis of our consolidated financial condition and
results of operations for the years ended April 30, 2006 and 2005, and the third
quarter ended January 31, 2007 and 2006 (unaudited) should be read in
conjunction with the consolidated financial statements, including footnotes, and
other information presented elsewhere in this prospectus. When used in this
section, "fiscal 2006" means our fiscal year ended April 30, 2006 and "fiscal
2005" means our fiscal year ended April 30, 2005.

OVERVIEW

Through our subsidiaries, we manufacture and sell neutraceutical
products which can be classified into three main product groups including;
Stevioside, a 100% natural sweetener, veterinary medicines and animal feed
additives, and traditional Chinese medicine formula extracts. For accounting
purposes, however, we report our revenues in two segments, Stevioside and
Chinese and animal medicines. All of our business and operations are located in
the People's Republic of China.

The majority of our revenues are derived from our Stevioside product,
and our principal customers for this product are located in Asia, primarily
China and Japan where Stevioside is approved for use as both a food additive as
well as a nutritional supplement.

This product group represented approximately 54% of our net sales for
the nine months ended January 31, 2007 and approximately 46% of our net sales
for fiscal 2006. China has emerged as the world's largest producer of
Stevioside, with volume exceeding 80% of the world's supply. We believe that we
are one of the top three Stevioside manufacturers in China.

We also manufacture and sell a comprehensive group of veterinary
medicines including seven series of more than 200 products. These veterinary
medicines include traditional Chinese medicine as well as western medicine, feed
additives, feeds and antibiotics.

We are an advocate of developing animal medicine from Chinese herbs,
especially antivirus and feed additives. We are concentrating our efforts in
this product category on developing and producing medicines which are relevant
to the needs of the animal stock industry in the PRC, and developing special
veterinary medicines made from pure traditional Chinese medicines combined with
Western medicine. This product group represented approximately 21% of our net
sales for the nine months ended January 31, 2007. Our last product group
includes the manufacture and sale of traditional Chinese medicines formula
extracts that are used in products made for use by both humans and animals. This
product group represented approximately 25% of our net sales for the nine months
ended January 31, 2007.

Our ability to significantly increase our revenues in any of these
groups faces a number of challenges. In addition to the existing laws which
limit the sale of Stevioside to Western countries, we face competition in the
manufacture and sale of Stevioside. There are approximately 30 Stevioside
manufacturers in China, with approximately 10 companies operating on a
continuing basis. Our other two product groups operate in highly competitive
environments. We estimate that there are more than 5,000 companies in China
selling animal medicines and more than 200 companies in China that produce
Chinese traditional medicines and extracts and refined chemical products. The
sale of our products in these two product groups are concentrated on domestic
customers therefore our ability to expand our revenues in these product groups
are limited to a certain extent by economic conditions in the PRC. In addition,
since we are dependent upon raw materials which are harvested and farmed, our
ability to produce our products and compete in our markets is also subject to
risks including weather and similar events which may reduce the amount of raw
materials we are able to purchase from farmers as well as increased competition
or market pressure which may result in reduced prices for our products. Our
ability, however, to expand our revenues from the sale of Stevioside is limited
as the product is not approved for use as a food additive in most Western
countries, including the United States, Canada and the European Union. In these
countries forms of Stevioside can be marketed and sold as a nutritional
supplement. In an effort to increase our competitive position within our market
segment, we have built an additional Stevioside manufacturing line in order to
expand our Stevioside production, upgraded our existing manufacturing Stevioside
line, and we relocated to a larger facility. In January 2007, Sunwin Stevia
International launched its website, www.onlysweet.com and during fiscal 2007 we
launched five new products in our veterinary medicine division as described
later in this prospectus.

Through January 31, 2007, we have invested an aggregate of
approximately $2,005,489 for leasehold improvements and equipment related to an
additional veterinary medicine manufacturing line and $1,214,777 towards the
construction and development of a new Stevioside facility.

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

FOREIGN EXCHANGE CONSIDERATIONS

Since revenues from our operations in the PRC accounted for 100% of our
net revenues for fiscal 2006 and fiscal 2005, how we report net revenues from
our PRC-based operations is of particular importance to understanding our
financial statements. Transactions and balances originally denominated

in U.S. dollars are presented at their original amounts. Transactions and
balances in other currencies are converted into U.S. dollars in accordance with
Statement of Financial Accounting Standards (SFAS) No. 52,"Foreign Currency
Translation," 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.

Revenues and expenses are translated at weighted average exchange rates
for the period to approximate translation at the exchange rates prevailing at
the dates those elements are recognized in the financial statements. Translation
adjustments resulting from the process of translating the local currency
financial statements into U.S. dollars are included in determining comprehensive
loss.

The functional currency of our Chinese subsidiaries is the local
currency or the RMB. 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 and were not material during the
periods presented. The translation adjustment and effect of exchange rate
changes on cash for the nine month period ending January 31, 2007 was $185,158.
Until 1994, the Renminbi experienced a gradual but significant devaluation
against most major currencies, including the U.S. dollar. There was a
significant devaluation of the Renminbi on January 1, 1994 in connection with
the replacement of the dual exchange rate system with a unified managed floating
rate foreign exchange system. Since 1994, the value of the Renminbi relative to
the U.S. dollar has remained stable; appreciating slightly against the U.S.
dollar. Countries, including the United States, have historically argued that
the Renminbi is artificially undervalued due to China's current monetary
policies and have pressured China to allow the Renminbi to float freely in world
markets. On July 21, 2005, the PRC announced that the Renminbi would be pegged
to a basket of currencies rather than just tied to a fixed exchange rate to the
U.S. dollar. It also increased the value of its currency 2% higher against the
U.S. dollar, effective immediately

As of the period ending January 31, 2007 we held cash of $78,816 in
banks in Canada. The functional currency of our Canadian subsidiary is the
Canadian Dollar. We periodically evaluate the credit quality of the financial
institutions at which it holds deposits. 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
and were not material during the period presented.

If any devaluation of the Renminbi were to occur in the future, returns
on our operations in China, which are expected to be in the form of Renminbi,
will be negatively impacted upon conversion to U.S. dollars. Although we attempt
to have most future payments, mainly repayments of loans and capital
contributions denominated in U.S. dollars, if any increase in the value of the
Renminbi were to occur in the future, our product sales in China and in other
countries may be negatively affected.

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 prospectus.
Management believes that the application of these policies on a consistent basis
enables us to provide useful and reliable financial information about our
company's operating results and financial condition.

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 in accordance with the
FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement
No. 123" ("FAS No. 123R"). FAS No. 123R requires companies to recognize in the
statement of operations the grant- date fair value of stock options and other
equity-based compensation issued to employees. We adopted FAS No.123R in the
second quarter of fiscal 2006.

REVENUE RECOGNITION

We follow the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, we record
revenue when persuasive evidence of an arrangement exists, services have been
rendered or product delivery has occurred, the sales price to the customer is
fixed or determinable, and collectability is reasonably assured. Our revenues
from the sale of products are recorded when the goods are shipped, title passes,
and collectibility is reasonably assured.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2004, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and
its Application to Certain Investments". The EITF reached a consensus about the
criteria that should be used to determine when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement
of an impairment loss and how that criteria should be applied to investments
accounted for under SFAS No. 115, "Accounting In Certain Investments In Debt and
Equity Securities". EITF 03-01 also included accounting considerations
subsequent to the recognition of other-than-temporary impairment and requires
certain disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. Additionally, EITF 03-01 includes new
disclosure requirements for investments that are deemed to be temporarily
impaired. In September 2004, the Financial Accounting Standards Board (FASB)
delayed the accounting provisions of EITF 03-01; however the disclosure
requirements remain effective for annual reports ending after June 15, 2004. We
believe that the adoption of this standard will have no material impact on our
financial statements.

amounts of idle facility expense, freight, handing costs, and spoilage. This
statement requires that those items be recognized as current period charges
regardless of whether they meet the criterion of "so abnormal" which was the
criterion specified in ARB No. 43. In addition, this Statement requires that
allocation of fixed production overheads to the cost of production be based on
normal capacity of the production facilities. This pronouncement is effective
for our company beginning October 1, 2005. We do not believe adopting this new
standard will have a significant impact on our consolidated financial
statements.

In March 2006, the FASB issued SFAS No. 156: "Accounting For Servicing
of Certain Financial Instruments- an amendment of SFAS No. 140". This statement
establishes, among other things, the accounting for all separately recognized
servicing assets and servicing liabilities. This statement amends SFAS No. 140
to require that all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable. SFAS No. 156
permits, but does not require, the subsequent measurement of separately
recognized servicing assets and servicing liabilities at fair value. An entity
that uses derivative instruments to mitigate the risks inherent in servicing
assets and servicing liabilities is required to account for those derivative
instruments at fair value. Under SFAS No. 156, an entity can elect subsequent
fair value measurement to account for it's separately recognized servicing
assets and servicing liabilities. By electing that option, an entity may
simplify its accounting because this statement permits income statement
recognition of the potential offsetting changes in fair value of those servicing
assets and servicing liabilities and derivative instruments in the same
accounting period. SFAS No. 156 is effective for financial statements for fiscal
years beginning after September 15, 2006. Earlier adoption of SFAS No. 156 is
permitted as of the beginning of an entity's fiscal year, provided the entity
has not yet issued any financial statements for that fiscal year. The adoption
of SFAS No 156 is not expected have a significant impact on our consolidated
financial statements.

In July 2006, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No.48, "Accounting for Uncertainty in Income Taxes--an
interpretation of FASB Statement No.109" ("FIN 48"), which clarifies the
accounting for uncertainty in tax positions. FIN 48 requires that entities
recognize the impact of a tax position in their financial statements, if that
position is more likely than not to be sustained on audit, based on the
technical merits of the position. The provisions of FIN 48 are effective for
fiscal years beginning after December 15, 2006. We believe that the adoption of
FIN 48 will not have a material effect on our financial statements.

In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This Statement defines
fair value as used in numerous accounting pronouncements, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosure related to the use of fair value measures in financial
statements. The Statement is to be effective for our financial statements issued
in 2008; however, earlier application is encouraged. We are currently evaluating
the timing of adoption and the impact that adoption might have on our financial
position or results of operations.

In September 2006, the Staff of the SEC issued SAB No. 108:
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements". SAB No. 108 provides
guidance on the consideration of the effects of prior year misstatements in
quantifying current year misstatements for the purpose of determining whether
the current year's financial statements are materially misstated. The SEC staff
believes registrants must quantify errors using both a balance sheet and income
statement approach and evaluate whether either approach results in quantifying a
misstatement that, when all relevant quantitative and qualitative factors are
considered, is material. This Statement is effective for fiscal years ending
after November 15, 2006. The adoption of SAB No. 108 did not have a significant
impact on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities-including an amendment of FAS
115" (Statement 159). Statement 159 allows entities to choose, at specified
election dates, to measure eligible financial assets and liabilities at fair
value that are not otherwise required to be measured at fair value. If a company
elects the fair value option for an eligible item, changes in that item's fair
value in subsequent reporting periods must be recognized in current earnings.
Statement 159 is effective for fiscal years beginning after November 15, 2007.
We are currently evaluating the potential impact of Statement 159 on our
financial statements. We do not expect the impact will be material.

RESULTS OF OPERATIONS

FOR THE NINE MONTHS ENDED JANUARY 31, 2007 AS COMPARED TO THE NINE MONTHS ENDED
JANUARY 31, 2006

The following table provides certain comparative information on our
results of operations for the nine months ended January 31, 2007 and the nine
months ended January 31, 2006.

NINE MONTHS ENDED JANUARY 31,
2007 2006
---- ---- $ %
(UNAUDITED) (UNAUDITED) CHANGE CHANGE
----------- ----------- ----------- -------

Net Revenues .......................... $11,562,948 $11,065,853 $ 497,095 4.5%
Cost of sales ......................... 8,518,605 7,555,073 963,532 12.8%
Stock-based consulting expense ........ 414,693 278,517 136,176 48.9%
Selling expenses ...................... 1,314,792 1,371,548 (56,756) -4.1%
General and administration(GA) expenses 830,020 (107,208) 937,228 -874.2%
Total operating expenses .............. 2,559,505 1,542,857 1,016,648 65.9%
Operating income ...................... 484,838 1,967,923 (1,483,085) -75.4%
Total other income .................... 66,256 122,449 (56,193) NM
Income taxes .......................... - 523,907 (523,907) -100.0%
Minority interest ..................... - (589,174) 589,174 NM
Net income ............................ $ 551,094 $ 2,025,104 $(1,474,011) -72.8%
Comprehensive Income .................. $ 1,220,718 $ 2,208,115 $ (987,397) NM

NM = not meaningful

Other key indicators:

NINE MONTHS ENDED JANUARY 31,
2007 2006
---- ---- %
(UNAUDITED) (UNAUDITED) CHANGE
----------- ----------- ------

OTHER KEY INDICATORS:
Cost of sales as a percentage of revenues .......... 74% 68% 5.4%
Gross profit margin ................................ 26% 32% -5.4%
Selling expenses as a percentage of revenues ....... 11% 12% -1%
GA expenses as a percentage of revenues ............ 7% -1% 8.1%
Total operating expenses as a percentage of revenues 22% 14% 8.2%

REVENUES

For the nine months ended January 31, 2007, our total net sales were
$11,562,948 as compared to total net sales of $11,065,853 for the nine months
ended January 31, 2006, an increase of $497,095 or approximately 4.5%. For nine
months ended January 31, 2007, sales from our Stevioside segment represented
approximately 54% of our net sales and sales from our traditional Chinese
medicine extracts and veterinary medicine segment represented approximately 46%
of our total net sales. For the nine months ended January 31, 2006, sales from
our Stevioside segment represented approximately 40% of our total net sales and
sales from our traditional Chinese medicine extracts and veterinary medicine
segment represented approximately 60% of our total net sales.

Our sales related to the manufacture and sale of Stevioside increased
from $4,443,062 for the nine months ended January 31, 2006 to $6,243,196 for the
nine months ended January 31, 2007, an increase of $1,800,134, or approximately
41%. The increase in the sales of our natural sweetener, Stevioside, reflects
the completion in fiscal 2006 of a new Stevioside manufacturing facility. The
new facility could enable us to capture a larger market share. We manufactured
107 tons of Stevioside and resold 123 tons during fiscal year 2006. For the nine
months ended January 31, 2007, we manufactured 145 tons and resold 248 tons of
Stevioside, while for the nine months ended January 31, 2006, we manufactured 75
tons and resold 167 tons of Stevioside. We continue to witness growing demand
for Stevioside. We credit this growth to increased awareness of the attributes
of Stevioside.

Our sales related to our veterinary medicine products was $2,470,168
for the nine months ended January 31, 2007 as compared to $3,274,677 for the
nine months ended January 31, 2006, a decrease of $804,509 or approximately 25%.
The decrease in the sale of our veterinary medicine products was due in part to
reduced demand for animal medicine products as a result of heightened health
standards which were enforced from February 2006 through May 2006. One such
measure mandates that farmers and breeders euthanize livestock upon confirmation
of avian flu symptoms. Our primary clients are veterinary facilities. This
policy resulted in a decline in market demand for animal medicine products.
Management is cognizant of this market reaction. There can no assurances that
sales will return to their historical levels.

Our sales related to our traditional Chinese medicine products was
$2,837,229 for the nine months ended January 31, 2007 as compared to $3,348,114
for the nine months ended January 31, 2006, a decrease of $510,885 or
approximately 15%. Sales of our traditional Chinese medicine products include
sales of products to third party animal medicine producers who use our products
as a component of their own product. Sales of traditional Chinese medicine
products to these animal medicine producers were sluggish due to reduced demand
for animal medicine products as a result of heightened health standards which
the Chinese government instituted in response to increased reports of the avian
flu. These measures were strictly enforced from February 2006 through May 2006.
One such measure mandates that farmers and breeders euthanize livestock upon
confirmation of avian flu symptoms. This policy has caused a decline in the
demand for animal medicine products in the market. There can no assurances that
sales will return to their historical levels. Accordingly, in addition to
seasonality of sales, as a result of the heightened health standards following
the incidences of avian flu in fiscal 2006 discussed above we also experienced a
decrease in demand for traditional Chinese medicine products by third party
animal medicine producers. There are no assurances sales will return to historic
levels.

COST OF SALES AND GROSS PROFIT

For the nine months ended January 31, 2007, cost of sales amounted to
$8,518,605 or approximately 73.8% of net sales as compared to cost of sales of
$7,555,073 or approximately 68.3% of net sales for the nine months ended January
31, 2006, an increase of 12.8%. The cost of sales increased due to the increase
in the cost of raw materials in each of our segments. For traditional Chinese

medicine, the cost of sales as a percentage of revenues increased from 58.4% for
the nine months ended January 31, 2006 to 65.1% for the nine months ended
January 31, 2007. We have witnessed an increase in the general cost of raw
materials in this product segment due to reduced supply. The supply of raw
materials has been reduced due to seasonal variances. We expect that the cost of
raw materials employed in the process and manufacture of traditional Chinese
medicine will continue to increase in the future. As a precaution we have
increased our inventory levels for the raw materials employed in the process and
manufacture of traditional Chinese medicine.

In our veterinary medicine segment, the cost of sales as a percentage
of revenues increased from 66.8% for the nine months ended January 31, 2006 to
69.5% for the nine months ended January 31, 2007. We have witnessed an increase
in the general cost of raw materials in this product segment due to a reduced
veterinary medicine raw material market after the avian flu disruption in fiscal
2006 described elsewhere herein.

In our Stevioside segment, the cost of sales as a percentage of
revenues increased from 76.8% for the nine months ended January 31, 2006 to
79.3% for the nine months ended January 31, 2007. We have witnessed an increase
in the general cost of raw materials in this product segment. As demand for
Stevioside grows, the cost of raw materials utilized in the production of
Stevioside will continue to rise. Due to circumstances relating to the
availability of the raw materials which comprise Stevioside we have increased
its inventory levels for the raw materials employed in the process and
manufacturing of Stevioside.

Gross profit for the nine months ended January 31, 2007 was $3,044,343
or approximately 26.3% of net sales, as compared to $3,510,780, or approximately
31.7% of net sales for the nine months ended January 31, 2006.

OPERATING EXPENSES

Total operating expenses were $2,559,505 for the nine months ended
January 31, 2007 as compared to operating expenses of $1,542,857 for the nine
months ended January 31, 2006, an increase of $1,016,648, or approximately
65.9%. Included in this increase were:

o For the nine months ended January 31, 2007, we recorded non-cash
compensation expense of $414,693 as compared to $278,517 for the nine months
ended January 31, 2006, an increase of $136,176 or approximately 48%. This
amount represented the value of shares of our common stock we issued as
compensation for consulting services and professional services being rendered to
us. This increase primarily represents fees related to our Canadian and
California subsidiaries. While we anticipate that we will enter into additional,
similar agreements during the balance of fiscal year 2007, we cannot predict the
amount of expense which will be attributable to such agreements.

o For the nine months ended January 31, 2007, selling expenses amounted
to $1,314,792 compared to $1,371,548 for the nine months ended January 31, 2006
a decrease of $56,756 or approximately 4.1%. For the nine months ended January
31, 2007 selling expenses were approximately 11.4% of our net sales, as compared
to approximately 12.4% for the nine months ended January 31, 2006. For the nine
months ended January 31, 2007 we experienced an increase in marketing expenses
for Stevia products in the North American market of $130,000; these costs are
associated with the introduction of our products to the North American market.
As discussed elsewhere herein we formed new subsidiaries in Florida, Canada, and
California. The purpose of these subsidiaries is to establish a North American
distribution network for a proprietary blend of Stevioside, as well as for our
traditional Chinese medicine products. We have experienced increased
expenditures related to these efforts. As a result, we have been granted a
trademark, UPC bar code certification, retained the services of Blue Chip

Marketing and Communications to conduct extensive market research studies,
created an interactive web site, and hired a chief executive officer for our
Sunwin Stevia International subsidiary. There is no assurance that these
subsidiaries will generate substantial revenues in the near term.

o For the nine months ended January 31, 2007 we incurred a decrease in
commission expenses of approximately $77,000, a decrease in the local sales tax
of approximately $131,000, a decrease in travel expenses of approximately
$31,000. Commission expenses decreased as a larger portion of our sales are
processed directly from the factory as opposed to sales consummated through our
salespeople. Local sales tax is exempt by local government for fiscal year 2007.

o For the nine months ended January 31, 2007 we incurred an increase in
shipping and freight expenses of approximately $51,000. The increase in freight
charges are related to an increase in sales and related fuel surcharges realized
by us during the period ending January 31, 2007.

o For the nine months ended January 31, 2007, general and
administrative expenses were $830,020 as compared to negative expenses of
$(107,208) for the nine months ended January 31, 2006, an increase of $937,228
or approximately 874.2%. We formed a wholly owned subsidiary, Sunwin California,
on April 11, 2006. We incurred expenses related to Sunwin California which are
included in the general and administrative costs of approximately $50,000 for
the nine months ended January 31, 2007 which reflects expenses associated with
our efforts to expand distribution of Chinese herbs in Chinese communities
within California. We formed a wholly owned subsidiary in Canada, Sunwin Canada,
on April 20, 2006. The Canadian subsidiary's related expenses included in the
general and administrative costs were approximately $45,000 for the nine months
ended January 31, 2007 which reflects expenses associated with our efforts to
expand distribution of Stevioside into Canada. We also incurred expenses related
to Sunwin Tech which are included in the general and administrative costs of
approximately $60,000 for the nine months ended January 31, 2007 which reflects
expenses associated with consultants and professional resources for the
marketing the proprietary blend of Stevioside, "Only Sweet" in the U.S. market

o For the nine months ended January 31, 2007 our subsidiary Qufu
incurred general and administrative expenses of $635,670 as compared to negative
expenses of $(160,280) for the nine months ended January 31, 2006, an increase
of $795,950 or 497%. For the nine months ended January 31, 2006, we incurred a
one time bad debt expense recovery of $867,323. Furthermore, the difference is
widened by the abatement of management fees for the Stevioside factory and the
veterinary medicine factory which was waived by Pharmaceutical Corporation for
the nine months ended January 31, 2006 due to the construction of the new
Stevioside facility.

o During the nine months ended January 31, 2007, we completed the
upgrade of the facility and incurred management fees of $144,337 as compared to
$55,200 in management fees for the nine months ended January 31, 2006, an
increase of $89,137, or 161%. Included in the management fees for the nine
months ended January 31, 2007 are approximately $104,376 related to the
operations of our Stevioside and veterinary medicine factories. During fiscal
2006 we were undertaking an upgrade of our Stevioside factory and veterinary
medicine factory and we did not pay management fees on those operations during
the period of the upgrade.

o These increases were offset by a decrease of approximately $760,507
in bad debt expenses, $19,530 in rent expenses, $24,795 in travel expenses and
overall decrease in other general and administrative expenses of approximately
$12,000. Bad debt expenses decreased for the nine months ended January 31, 2007
as compared to the nine months ended January 31, 2006. For the nine months ended
January 31, 2006 we incurred a one time bad debt expense recovery of $867,323.
During the nine months ended January 31, 2007, we formed a delinquent accounts
receivable department whose objective is to resolve overdue accounts receivable.

We established an initiative to resolve outstanding accounts receivable; the
goal is to improve our collection rate for outstanding accounts receivable. As a
result, the bad debt expenses were decreased by approximately $760,507 for the
nine months ended January 31, 2007 as compared to the nine months ended January
31, 2006. For the nine months ended January 31, 2006, we incurred rental expense
of $41,313 while we upgraded the traditional Chinese medicine factory. We
required additional space to warehouse goods while the upgrade was in process.
During the nine months ended January 31, 2007, we completed the upgrade of the
facility and the rental expense decreased accordingly. Travel expenses decreased
for the nine months ended January 31, 2007 as compared to the nine months ended
January 31, 2006. We expect travel expenses will increase in the near term as
our salespeople are beginning to service their customers on a more frequent
basis since the government mandates have eased related to the Avian flu, and we
plan to bolster our sales efforts of our veterinary medicine products.

FOR THE YEAR ENDED APRIL 30, 2006 AS COMPARED TO YEAR ENDED APRIL 30, 2005

2006 2005 $ DIFFERENCE % CHANGE
------------ ------------ ------------ --------

Net Revenues .......................... $ 15,490,013 $ 12,114,006 3,376,007 28%
Cost of Sales ......................... 10,865,917 8,378,838 2,487,079 30%
------------ ------------
Stock-based consulting expense ........ 9,581 220,000 349,581 159%
Selling expenses ...................... 615,348 923,114 (307,766) -33%
General and administrative ............ 1,011,026 967,226 43,800 5%
------------ ------------
Total Operating Expenses .............. 2,195,955 2,110,340 85,615 4%
------------ ------------
Operating Income ...................... 2,428,141 1,624,828 803,313 49%
Total Other Income (Expense) .......... 68,337 (2,960) 71,297 -2,409%
------------ ------------
(Benefit) Provision for Income Taxes .. (524,481) 513,373 (1,037,854) -202%
------------ ------------
Minority Interest ..................... (591,145) (279,381) (311,764) 112%
------------ ------------
Net Income ............................ $ 2,429,814 $ 829,114 1,600,700 193%
============ ============

Other key indicators:

FISCAL YEAR ENDED APRIL 30,
2006 2005 % CHANGE
---- ---- --------

Cost of sales as a percentage of revenues .......... 70% 69% 1%
Gross profit margin ................................ 43% 45% -2%
Selling expenses as a percentage of revenues ....... 4% 8% -4%
GA expenses as a percentage of revenues ............ 7% 8% -1%
Total operating expenses as a percentage of revenues 14% 17% -3%

REVENUES

For fiscal 2006, our revenues were $15,490,013 as compared to
$12,114,006 for fiscal 2005, an increase of $3,376,007 or approximately 27.9%.
For fiscal 2006, revenues from our stevioside segment represented approximately
47% of our net revenues and revenues from our traditional Chinese medicine
extracts and veterinary medicine segment represented approximately 53% of our
total net revenues. We attribute our overall increase in net revenues to an
increase in revenues from each of our product lines;

o revenues from the sale of our natural sweetener, stevioside
increased $1,660,953,

o revenues from the manufacture and sale of our traditional Chinese
medicine increased $796,425, and

o revenues from our veterinary medicine increased $918,629

The increase in the sale of our natural sweetener, stevioside, was due
to the completion of our manufacturing equipment upgrade. Our revenues related
to the manufacture and sale of stevioside increased from approximately
$5,540,567 to $7,201,520, a 30% increase from fiscal 2005 to fiscal 2006. In
September 2005 we commenced operations on our new manufacturing line; the
facility became fully operational in November 2005. The new facility improves
the quality of our stevioside and allows to acquire a larger market share. We
manufactured 107 tons of stevioside and resold 123 tons during fiscal 2006. We
anticipate manufacturing 300 tons of stevioside during fiscal 2007. We believe
that the market for stevioside remains strong as we continue to witness growing
demand for the product from consumers based in Japan resulting in increased
exports to Japan. In order to ensure we have a sufficient supply of raw
materials for production next year, we have prepaid farmers to harvest
stevioside leaves, which increased our prepaid expenses by approximately
$117,593 on our consolidated balance sheet as of April 30, 2006.

Our revenues related to traditional Chinese medicine increased from
approximately $3,420,000 to $4,217,000, a 23% increase from fiscal 2005 to
fiscal 2006. Our gross profit rate has grown from 39% to 41% from fiscal 2005 to
fiscal 2006 on this product line due to the introduction of new products and
improved sales. The Chinese central government issued a new rule for the Chinese
Medicine industry that all manufactures should satisfy good manufacturing
practices (GMP) standards in their production process before December 31, 2005.
We completed our manufacturing equipment upgrade and as a result currently
satisfy the GMP standards requirements in December 2005. As a result of these
new regulations, we believe there was a significant market vacancy left by
competitors who did not conform to the heightened standards. We believe that the
new rules implemented by the central government of China helped us to establish
a reputation within this field and acquire a larger market share. In December
2005, we completed the expansion and upgrade of our traditional Chinese medicine
production facility and following this upgrade we launched five additional
traditional Chinese medicine products. In January 2006, we introduced new
products into the market and established a new products series, natural dietary
health food. We expect to achieve growth in our traditional Chinese medicine
division in our fiscal 2007.

Our revenues related to veterinary medicine increased from
approximately $3,153,000 to $4,072,000, a 29% increase from fiscal 2005 to
fiscal 2006. Furthermore our gross profit has grown from approximately
$1,007,319 to $1,357,270, an approximate 35% increase from fiscal 2005 to fiscal
2006 due to the introduction of new products and improved sales skills. Similar
to the rules which effected our production of Traditional Chinese medicine
extracts described above, the Chinese central government also issued a new rule
for the veterinary industry mandating that all manufacturers satisfy GMP
standards in their production process on or before December 31, 2005. We
completed the construction and finished the inspection process of our facilities
in December 2005. As a result of these new regulations, we also believe a
significant market vacancy was left by competitors who did not conform to the
heightened standards and that this void enabled us to acquire a larger market
share. From January 2006, we introduced five new products into the market. We
expect to achieve growth in our veterinary medicine division in our fiscal 2007.

In December 2005, we completed the expansion and upgrade of the
veterinary medicine production facility. As a result, we have launched five
additional veterinary medicine products; Amoxicillin, Cephalosporium,
Ampicillin, Sodium oxacillin, and penbritin. These five new products are
employed as antiviral agents, to combat fever and treat respiratory tract
infections. In fiscal 2006, these new products accounted for approximately 1.71%
of our revenue.

COST OF SALES AND GROSS PROFIT

For fiscal 2006, cost of sales amounted to $10,865,917 or 70% of net
revenues as compared to cost of sales of $8,378,838 or 69% of net revenues for
fiscal 2005, a percentage increase of 1%. Gross profit for fiscal 2006 was
$4,624,096 or 30% of revenues, as compared to $3,735,168, or 31% of revenues for
fiscal 2005.

TOTAL OPERATING EXPENSES

Our total operating expenses increased for fiscal 2006 from fiscal
2005. Total operating expenses were $2,195,955 for fiscal 2006 while total
operating expenses were $2,110,340 for fiscal 2005 an increase of $85,625, or
approximately 4.1%. Included in this increase were:

o For fiscal 2006, we recorded non-cash compensation expense of
$569,581 as compared to $220,000 for fiscal 2005, an increase of $349,581 or
159%. This amount represented the value of shares of our common stock we issued
as compensation for consulting services and professional services being rendered
to us. While we anticipate that we will enter into similar agreements during
fiscal 2007, we cannot predict the amount of expense which will be attributable
to such agreements;

o For fiscal 2006, selling expenses amounted to $615,348 compared to
$923,114 for fiscal 2005 a decrease of $307,766 or 33%. For fiscal 2006 we
experienced an increase in commission expenses of approximately $173,000,
increased marketing expenses of approximately $53,000 increased shipping and
freight costs of approximately $84,000 and an overall increase in other selling
expenses of $22,300. These increases were offset by bad debt recovery of
approximately $640,090 from the collection of previously reserved receivable
balances; and

o For fiscal 2006, general and administrative expenses were $1,011,026
as compared to $967,226 for fiscal 2005, an increase of $43,800 or 4.5%. Travel
related expenses included in the general and administrative costs increased from
$25,000 for fiscal 2005 to $110,000 for fiscal 2006 which reflects expenses
associated with our efforts to expand distribution of stevioside into North
America. As well, we recognized increased general and administrative costs which
are primarily due to the increase in our operations. As a result of our
manufacturing upgrades, we realized a decrease in repairs, maintenance and
retooling expenses. The repairs and maintenance expense amounted to $8,752 for
fiscal 2006, a decrease from the $19,374 incurred in fiscal 2005. We expect
expenditures for repairs, maintenance and facility upgrades to decrease in
future periods as much of our upgrade and renovation projects was completed in
December 2005.

We experienced an increase in management fees from approximately
$44,000 in fiscal 2005 to approximately $123,000 in fiscal 2006, an increase of
approximately $79,000. Pharmaceutical Corporation, a company controlled by Mr.
Zhang, our CEO, provides management services to us 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. We do not have a
contract with Pharmaceutical Corporation and the amount of annual management fee
is subject to increase at Mr. Zhang's discretion. We also reported an overall
increase in other general and administrative expenses of approximately $20,700
associated with an increase in operations; this increase was offset by a

decrease of approximately $56,200 in research and development expenses. Finally,
we reported a decrease in advertising expenses for fiscal 2006 of approximately
$41,000, from $212,865 in fiscal 2005 to $171,896 in fiscal 2006. This decrease
is reflects a reduction in funds spent on advertising our veterinary medicines
in fiscal 2006. We incurred a decrease in advertising costs related to its
veterinary medicine division. Industry regulations adopted by the central
government regarding GMP have limited competition in the industry. As such we
have reduced our advertising expenditures in the veterinary medicine department.

o Legal and accounting fees increased to approximately $62,000 in
fiscal 2006 from approximately $53,000 in fiscal 2005. This increase is
primarily attributable to costs associated with our annual audit and a
registration statement we filed during fiscal 2006 with the SEC and other
required filings with the SEC. During fiscal 2007 we anticipate further
increases in legal and accounting fees associated with our continued compliance
with provisions of the Sarbanes-Oxley Act of 2002, including new provisions
related to internal controls which will phase in during our fiscal 2008 period.

TOTAL OTHER INCOME (EXPENSE)

For fiscal 2006 we reported total other income of $68,337 as compared
to total other expense of $2,960 for fiscal 2005. This change included:

o Other income amounted to $103,675 for fiscal 2006 as compared to
other income of $59,094 for fiscal 2005. Other income for fiscal 2006 was
associated with income recognized from the over accrual of value-added taxes on
certain of our animal medicine products which had not been assessed to our
customers. Certain of our animal medicine products are not subject to value
added taxes. However until we received notification of such position from the
respective tax authority, we had accrued additional value added taxes. Upon
notification from the tax authority, the accrued taxes were recorded as other
income for fiscal 2006.

o Interest expense was $35,338 in fiscal 2006 as compared to $62,054 in
fiscal 2005. Interest expense for fiscal 2006 and fiscal 2005 was associated
with our borrowings. The amount of loans payable was $255,487 and $592,541 and
for fiscal 2006 and fiscal 2005 respectively, a decrease of $337,054,
accordingly, the interest expense decreased. Given our current cash flow from
our operations, we expect we are able to meet the obligation of the debt
services from our existing working capital.

Our income before minority interest was $3,020,959 for fiscal 2006 as
compared to $1,108,495 for fiscal 2005, an increase of $1,912,464 or 172.5%. On
February 7, 2006, we acquired the remaining 20% of Qufu and, as a result, Qufu
is now our wholly-owned subsidiary effective on February 1, 2006. The
acquisition of the remaining 20% of Qufu was a non cash transaction, whereby we
issued 5,000,000 shares of our common stock to acquire the remaining 20% of
Qufu.

For fiscal 2006, we reported a minority interest in income of
subsidiary (Qufu) of $591,145 as compared to $279,381 for fiscal 2005. The
minority interest for fiscal 2006 represents the minority interest's
proportional share of Qufu's net income up until the date we acquired the
minority interest ownership in Qufu.

As a result of these factors, we reported net income of $2,429,814 or
$.05 per share for fiscal 2006 as compared to net income of $829,114 or $.02 per
share for fiscal 2005.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate funds to support its
current and future operations, satisfy its obligations and otherwise operate on
an ongoing basis. The following table provides certain selected balance sheet
comparisons between January 31, 2007 (unaudited) and April 30, 2006:

JANUARY 31, APRIL 30, $ OF % OF
2007 2006 CHANGE CHANGE
----------- ----------- ---------- -------
(UNAUDITED)
----------- ----------- ---------- -------

Working capital ..................... $13,634,219 $ 8,908,577 4,725,642 53.0%
Cash ................................ $ 7,152,142 $ 5,433,691 1,718,451 31.6%
Accounts receivable, net ............ $ 2,947,568 $ 2,608,873 338,695 13.0%
Inventories ......................... $ 4,264,049 $ 1,778,870 2,485,179 139.7%
Prepaid expenses and other .......... $ 955,852 $ 967,892 (12,040) -1.2%
Total current assets ................ $15,319,611 $10,789,326 4,530,285 42.0%
Property and equipment, net ......... $ 5,184,666 $ 5,375,849 (191,183) -3.6%
Loans payable ....................... $ 0 $ 255,487 (255,487) -100.0%
Accounts payable and accrued expenses $ 1,684,095 $ 1,579,402 104,693 6.6%
Due to related party ................ $ 1,297 $ 8,497 (7,200) -84.7%
Advances from customers ............. $ 0 $ 37,363 (37,363) -100.0%
Total current liabilities ........... $ 1,685,392 $ 1,880,749 (195,357) -10.4%
Total liabilities ................... $ 1,823,948 $ 2,015,197 (191,249) -9.5%

At January 31, 2007, we had working capital of $13,634,219 and cash and
cash equivalents of $7,152,142. At January 31, 2007, our cash position by
geographic area is as follows:

United States $ 428,103
Canada ...... 78,816
China ....... 6,645,223
----------
Total $7,152,142

At January 31, 2007 we had prepaid expenses and other of $955,852 as
compared to $967,892 at April 30, 2006, a decrease of $12,040 or approximately
1.2%. As reported in Prepaid expenses and other, advances to vendors for fiscal
2006 was $80,224 while the advances to vendors for the period ending January 31,
2007 was $0; a decrease of $80,224. We advanced funds to farmers in the region
as a down payment to grow Stevia leaves for the production of our Stevioside.
Prepayment to farmers is dependent on the supply of Stevioside in the market.
For the first six months of fiscal 2007 we increased our inventory of Stevia
leaves in response to tightening market conditions. During the three months
ended January 31, 2007, however, supply of Stevia leaves increased and we,
accordingly, decreased advances to farmers.

Our inventories, net of reserve for obsolete inventory, increased
$2,485,179 during the nine months ended January 31, 2007 from $1,778,870 at
April 30, 2006 to $4,264,049 at January 31, 2007. It is the harvest season for
Stevia leaves. We reserve adequate Stevia leaves for our increased sales of
Stevioside. We believe the inventory will be maintained at this level for the
next quarter as well.

As of January 31, 2007, we had approximately $1,297 in due to related
party. We pay management fees to Pharmaceutical Corporation, a related entity.
The management fees which are included in general and administrative expenses
for the nine months ended January 31, 2007 and January 31, 2006 were $144,337

and $55,200, respectively. At January 31, 2007, we owed Pharmaceutical
Corporation $1,297 for management fees. We do not have a contract with
Pharmaceutical Corporation and the amount of annual management fee is subject to
increase at Mr. Zhang's discretion.

Net cash provided by (used in) operating activities decreased to
$(1,256,832) for the nine months ended January 31, 2007 from $2,314,557 for the
nine months ended January 31, 2006. This decrease is primarily attributable to:

o a decrease of $1,474,010 in our net income,

o an increase of $288,112 in depreciation and amortization as a result
of the fact that during fiscal 2006 we upgraded a portion of our facilities to
satisfy heightened GMP standards.

o an increase of $98,382 in stock based compensation which reflects the
increase in the amortization of the payments of non-cash compensation to
consultants during fiscal 2006. We paid stock based compensation to consultants
for business development services, management services, and investor relations
services. The total payments are amortized over the life of the service period.
Most of the amortization expense of stock based compensation commenced in fiscal
2006, therefore for the nine months ended January 31, 2007 amortization has been
recorded for the full nine month period as compared to the three months of
amortization expenses which appeared during the comparable period ending January
31, 2006.

o a decrease of $589,174 in minority interest which represents that
portion of our net income which is attributable to the remaining 20% interest in
Qufu we did not own for the nine months ended January 31, 2006.

o a decrease of $704,798 in allowance for doubtful accounts which
represents a decrease in our allowance for bad debts based on the increased
credit worthiness of our customers and our historical collections. At present we
have dedicated additional labor and support in our credit and accounts
receivable department and this initiative has significantly reduced our bad debt
expense

o a decrease of $401,117 in accounts receivable as a result of
collecting our receivables in a more timely manner. We have been more focused on
our credit and collection procedures and as a result has witnessed faster
payment by its customers.

o an increase of $2,485,179 in inventory for the nine months ended
January 31, 2007 as compared to the change in inventory for the nine months
ended January 31, 2006. Our inventory level increased due to our increased
Stevioside production. As well we have increased our inventory for raw materials
used in Stevia production and traditional Chinese medicine production; however
we have decreased our raw material inventory levels for veterinary medicine
production. Presently during the harvest season for Stevia leaves, we have
reserved adequate Stevia leaves for our increased sales of Stevioside. The
management also expects that the availability of the raw materials used in our
veterinary medicine division will decrease and the cost of raw materials used in
our Traditional Chinese medicine division will increase. Therefore, for the nine
months ended January 31, 2007 the inventory for stevioside is $2,640,340, a 92%
increase from the inventory for the nine months ended January 31, 2006 of
$1,374,144. For the nine months ended January 31, 2007 the inventory for Chinese
medicine is $650,467, a 46% increase from the inventory for the nine months
ended January 31, 2006 or $444,723.

o a decrease of $12,040 in prepaid and other current assets, as a
result of advances made to consultants in preparation of our marketing and
business development efforts. We made approximately $252,000 in advances to
consultants and professional resources for the marketing of our proprietary
blend of Stevioside, "Only Sweet" during the three months ended January 31,
2007. These expenses to various professional resources for the marketing of our
products is a continual practice, we expect to witness these expenses in the
foreseeable future.

o a decrease of $74,649 in amounts due to related parties for
management fees which are discussed elsewhere in this section.

o an increase of $230,139 in accounts payable and accrued expenses
which represents the increase in inventory,

o an increase of $523,906 in income tax payable as a result of the
receipt of a tax waiver during the current period which will impact fiscal 2007.
For the nine months ended January 31, 2006 we recorded a benefit from income tax
in the amount of $523,906. For the nine months ended January 31, 2007 we did not
record a provision for tax expenses due to the tax waiver. There is no income
tax payable as of January 31, 2007. We received the tax waiver from the
government for the period from November 2005 to October 2006, and

o a decrease of $100,442 in advances from customers which includes a
reduction in prepayments from our animal medicine customers due to a slow down
in production and shipments as a result of reduced demand of animal medicine
products as discussed earlier in this section.

Net cash used in investing activities decreased to $36,181 for the nine
months ended January 31, 2007 as compared to $2,156,597 for the nine months
ended January 31, 2006. This change is primarily the result of a decrease of
$2,120,416 in capital expenditures for the acquisition of manufacturing
equipment during the nine months ended January 31, 2006 as compared to the nine
months ended January 31, 2007.

Net cash provided by financing activities was $2,826,306 for the nine
months ended January 31, 2007 as compared to net cash provided by financing
activities of $1,763,544 for the nine months ended January 31, 2006. This change
is primarily attributable to proceeds of $3,077,100 from subscriptions
receivable during the nine months ended January 31, 2007. In February 2006 we
issued options to purchase an aggregate of 4,000,000 shares of our common stock
to four employees as additional compensation for their services to us under the
terms of our 2006 Equity Compensation Plan. Of this amount, options to purchase
3,200,000 shares were exercisable at $0.90 per share and the remaining 800,000
options were exercisable at $1.00 per share. The fair market value of our common
stock on the date of grant was $0.56 per share. On March 30, 2006 these
employees exercised these options and delivered to us unsecured promissory notes
due April 30, 2007 in the amount of the option exercises. The amount of these
notes was reflected on our balance sheet as a subscription receivable in the
amount of $3,680,000. During the nine months ended January 31, 2007 $3,077,100
of these subscription receivables has been paid. This increase was offset by
$720,000 of short term loans which satisfied during the period.

We currently have no material commitments for capital expenditures.
During fiscal 2007, however, we may seek to raise additional working capital to
further augment our cash position and to provide additional funds for marketing
and distribution as we seek to bring distribution of Stevioside to North
American markets. We do not have any firm commitments for any additional capital
and there are no assurances we will obtain a commitment upon terms and
conditions which are acceptable to us.

OFF BALANCE SHEET ARRANGEMENTS

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

o Any obligation under certain guarantee contracts;

o Any retained or contingent interest in assets transferred to an
unconsolidated entity or similar arrangement that serves as credit, liquidity or
market risk support to that entity for such assets;

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

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

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.

2007 UNIT OFFERING

On March 23, 2007, we completed the sale of 9,812,500 shares of our
common stock, at an offering price of $0.42 per share, to approximately 18
institutional and accredited investors, and issued the purchasers five year
common stock purchase warrants to purchase 9,812,500 shares of common stock at
an exercise price of $0.65 per share. We received gross proceeds of $4,121,250
in the offering. The net proceeds from the offering will be used for working
capital purposes.

BUSINESS

We sell stevioside, a natural sweetener, as well as veterinary products
and herbs used in traditional Chinese medicine. All of our operations are
located in the People's Republic of China (PRC). As an industry leader in
agricultural processing, we have built an integrated firm with the sourcing and
production capabilities to meet the needs of our customers. The Sunwin family
works closely with consumers to provide a quality, value, and a hybrid mix of
agricultural products and services that meet growing demand.

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

o Stevioside - a natural sweetener, and

o Veterinary medicines and Traditional Chinese medicine formula
extracts.

The products manufactured and sold by these operating groups are as
follows.

STEVIOSIDE - A NATURAL SWEETENER

We manufacture and sell stevioside, a 100% natural sweetener which is
extracted from the leaves of the Stevia rebaudiana plant, a green herb plant of
the Aster/Chrysanthemum family. We also purchase and resell finished stevioside
product from third party manufacturers. For fiscal 2006 and fiscal 2005 revenues
from this segment represented approximately 47% of our total net revenues, and
for the nine months ended January 31, 2007 revenues from this segment
represented approximately 54% of our total net revenues.

We believe we are one of the leading manufacturers of stevioside in the
PRC. We have been engaged in the continuous production of stevioside since 1998.
Our present capacity is approximately 300 tons annually, following the
completion of an expansion of our manufacturing facilities in December 2005
which included the upgrade of our stevioside facilities in accordance with
recently implemented GMP standards. According to the China Stevioside Sugar
Association, in 2004, worldwide demand for stevioside exceeded 1,200 tons and
China supplied more than 1,000 tons, accounting for 80% of worldwide consumption
of stevioside.

We are a perennial member of China Stevioside Sugar Association which
was established in November 1988. The association seeks to contribute its
efforts, and the strength of its members to harmonize the relationships among
other participants of this industry, to promote the technology innovation, to
supervise the quality control, to set self-discipline market prices, to assist
the association to set long-term goals, industrial policy and technical
standard, and to collect information on the domestic and foreign stevioside
industry and supply the information to its members.

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. In
1931 French chemists extracted the compounds which give stevia its sweet taste.
According to several sources these extracts, called steviosides, were found to
be 250 times to 300 times sweeter than sucrose (ordinary table sugar). (1)(2)

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 wide harvesting of stevia started in the
mid-1980's. 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 country wide harvesting of stevia started in the
mid-1980's. There are two major species of stevia grown in China; one which was
cultured by Chinese researchers and the other was introduced from Japan.
According to the China Stevioside Sugar Association as of 2004, China has grown
into the world's largest exporting country of stevioside, with a volume
exceeding 80% of the overall amount of stevioside used in the world. Most
stevioside is exported by Chinese manufacturers to Asia, primarily to Japan and
South Korea. At present, some Asian countries and areas like Japan, Korea, the
Mainland and Taiwan, and a few South American countries allowed the use of
stevioside as a sweetener in food. In these places, stevioside may be used in a
wide variety of products, including soft drinks, tabletop sweeteners,
confectioneries, fruit products, medicines, and processed foods. (3)

We believe that the worldwide demand for healthy sugar is rising, and
we estimate that the demand for stevioside in recent years is increasing at a
rate of 15% to 20% every year. According to the China Stevioside Sugar
Association, in 2004 worldwide demand for stevioside exceeded 1,200 tons and
China supplied more than 1,000 tons, accounting for 80% of worldwide consumption
__________________
(1) http://www.food.gov.uk/multimedia/webpage/stevia
(2) http://www.fehd.gov.hk/safefood/report/stevioside/stevioside.html
(3) "The Stevia Story: A tale of incredible sweetness & intrigue." by Donna
Gates http://www.stevia.net/history.htm

of stevioside. For the fiscal 2006 and fiscal 2005, our stevioside production
reached approximately 107 tons and approximately 150 tons, respectively.

From June 2004 to September 2005 we implemented a significant
renovation project. The project entailed upgrading our facilities to comply with
heightened standards implemented by the central government. The heightened
standards mandated the manufacturing facilities to adopt GMP standards and
receive approval from the central government upon inspection. In December 2005
we received approval as a GMP facility. During the implementation of the
upgrade, we moved our stevioside production line to a new location, which
interrupted our manufacturing capacity, resulted in decreased output during this
period. Following the completion of this new manufacturing facility we now have
an aggregate production capacity of 300 tons of stevioside per year. The main
facilities are comprised of extraction technology and spray towers for high
temperature drying. During the first year of operations under the new facility,
we anticipate manufacturing no more than 200 tons of stevia and purchasing and
reselling from other manufactures any amounts we require in excess thereof to
meet customer demand.

THE USE OF STEVIOSIDE

Generally, no large scale mechanized production has been established
and stevia sweeteners are not yet found in mainstream food products in most
countries of the world. Progress towards large scale commercialization has been
slow, largely due to difficulties in producing the crop, the poor quality of
stevia extracts and the absence of regulatory approvals essential for stevia
sweeteners in the North American and European markets.

While 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 (GB2760), the number of countries in the world which permit the use of
stevioside as a food additive is limited. As of the date of this annual report,
Japan, Korea, China, Taiwan, Indonesia, Israel, Germany, Brazil and Paraguay
permit the use of stevioside as a sweetener and food additive. In these
countries stevioside may be used in a wide variety of products including soft
drinks, Japanese-style processed vegetable products, tabletop sweeteners,
confectioneries, fruit products and processed seafood products. The countries,
however, which do not permit the use of stevioside as a food additive, include
most Western nations.(4)

While stevioside may be used as a dietary supplement in the U.S. since
the mid-1980's the United States Food and Drug Administration (FDA) has labeled
stevia as an "unsafe food additive." The FDA's position is that available
toxicological information on stevia is inadequate to demonstrate its safety as a
food additive or to affirm its status as generally recognized as safe. When sold
as a dietary supplement, dietary ingredients, including stevia, are not subject
to the food additive regulations of the FDA.

Canada and Australia also permit the use of stevioside as a dietary
supplement but not as a food additive. In 1999, the Canadian Food Inspection
Agency, the equivalent of the FDA, issued a notice of detention to companies in
Canada who attempt to move, sell or dispose of stevia products. Stevia is also
not approved for use in the European Union, Singapore or Hong Kong.

The Joint FAO/WHO Expert Committee on Food Additives is an
international scientific committee that is administered by the Food and
Agriculture Organization of the United Nations (FAO) and the World Health
Organization (WHO). Since 1956 the committee has evaluated the use of food
additives as well as other food hazards and is recognized as an international
authority in the risk assessment of food hazards. In 1998 the committee
conducted an evaluation of the safety of stevioside. As a result of
incompleteness in search findings, the committee has not yet reached a
__________________
(4) http://www.fehd.gov.hk/safefood/report/stevioside/stevioside.html

conclusion as to the safety of stevioside as a food additive. In addition, the
committee could not allocate an acceptable daily intake to stevioside because of
the shortcomings of the research findings. The committee recommended that new
studies should be performed before re-reviewing the toxicity of stevioside and
asked that additional information regarding the pharmacological effects of
stevioside on humans be provided by 2007.

In 1999, the Scientific Committee on Food of the European Commission
(now the European Union), citing both the findings of the Joint FAO/WHO Expert
Committee on Food Additives and its own conclusions that additional studies on
the safety of stevioside are needed, issued its opinion that stevioside is not
acceptable as a sweetener on the then presently available data. Countries in
both Central America and South America generally adhere to the European Union's
guidelines, as do the countries of the European Union.

In response to the request by the European Commission for more research
on the safety of stevioside, in 2003, Professors Jan Geuns of the Laboratory for
Functional Biology and Johan Buyse of the Laboratory of Physiology and
Immunology of Domestic Animals of the Katholieke Universiteit Leuven in Belgium
set up the European Stevia Research Centre at K.U. Leuven in order to coordinate
research on stevia and stevioside. One of the centre's goals is to develop a
European quality label for stevioside which would hopefully lead to the eventual
lifting of the European ban on stevioside. The European Stevia Research Centre
held the first international symposium on the safety of stevioside in April
2004. Foreign specialists and K.U. Leuven scientists were invited to give an
overview of the recent stevioside research. The proceeding of the symposium
reached the general conclusion that the use of stevioside as a sweetener is
safe. It is presently unknown, however, if or when the European Union will alter
its initial findings and determine that the use of stevioside as a food additive
is safe for humans. As of 2004, U.S., the European Union (EU) and Australia,
where stevioside is permitted only as a dietary supplement, remain largely
inaccessible to producers of stevia-based sweeteners. (5)

OUR CUSTOMERS

We sell stevioside on a wholesale basis to customers primarily located
in China and Japan. Our target market for customers of our stevioside product is
domestic food manufacturers and larger foreign trade companies which export the
products from the PRC to Japan, Korea and Southeast Asia. For fiscal 2006
revenues from two of customers in this segment represented approximately 12.5%
and approximately 10.3% of our total net revenues from this segment. We do not
have contracts with our customers and sales are made under a purchase order
arrangement with payment in full on the order due prior to shipment. We do not
provide any discounts to customers on Stevia sales.

RAW MATERIALS

The Shandong Province is a primary harvesting base of stevia leaves as
well as the main production of stevioside in China. To ensure the supply of raw
material, we primarily acquire raw materials through harvesting contracts with
local farmers and purchases from local farmers. Approximately 30% of our supply
of stevia comes from harvesting contracts with several large plantations in
China covering approximately 277 acres used to grow stevioside rebaudiana. In
fiscal 2006 we advanced funds in the amount of $80,224 to these plantations for
harvesting contracts, as compared to $4,949 for fiscal 2005, an increase of
$75,300. Under the terms of these contracts we generally pay the farmer 30% of
the contract price at the time the seed is planted, generally in March of each
year, and the remaining 70% upon delivery of the leaves. As well, we will secure
raw materials from local farmer markets. In this instance we pay for leaves
purchased at the time of purchase. In order to improve quality
__________________
(5) http://www.food.gov.uk/multimedia/webpage/stevia

of the stevia and management to avoid degeneration, our company has set up a
fine breed base so that we can enhance the control and correspond the prices of
stevia raw material, seed and stevioside production.

Based upon our historical experience, the average price of dry leaves
of stevia generally ranged from 5,500 Renminbi to 6,000 Renminbi per ton, or
approximately $695 per ton, and the price of stevioside was approximately
200,000 Renminbi per ton, or approximately $24,160 per ton. In the later half of
2003, the raw material market in China was adversely affected by weather
conditions. The South China harvesting bases were adversely affected as a result
of a drought in the Jiangxi Province and excessive rains in the Henan, Jiangsu
and Anhui Provinces. Certain agriculture policies enacted in North China had the
effect of limiting the farmer's initiative to plant crops, including stevia. As
a result, since September 2003, declining supply of raw materials has resulted
in a steady increase in the market price of dry leaves and finished product and
the cost of stevioside has increased. Currently the price of stevia leaves is
approximately 15,000 Renminbi per ton, or approximately $1,812 per ton, and the
price of stevioside ranges from approximately 270,000 Renminbi to approximately
280,000 Renminbi per ton, or approximately $35,000 to approximately $33,750 per
ton. As a result of the harvesting contracts we have entered into with local
farmers and our inventory of dry leaves at the time of the price increases, we
have been able to ensure our supply of stevia leaves at reasonable prices.

Stevioside products are graded by the quality and the prices vary
depending on the grade of quality. Each grade has a national reference price
which is fixed upon the national average cost of goods sold for a certain
period. Taking into account slight cost differences associated with production,
process for similar grades may float within a 3% to 5% range. As a
representative of the whole industry and a member of National Price
Corresponding Team, our company also participates in establishing the national
reference price of the stevia seeds, dry leaves and stevioside.

MANUFACTURING, EXTRACTION AND PACKAGING; AND RESALE DISTRIBUTION

We use the traditional extraction technology of a natural "aqueous
extraction" process which involves the use of purified water extraction and air
dehydration to produce our stevioside. This all natural method results in a pure
white stevia crystal, with no brownish coloring. We set our production schedules
based on the market demand and our capability. In 2001, we increased our annual
productivity of stevioside from 100 tons to 200 tons by utilizing an advanced
technology alteration that improves the purity and production of the stevioside.
In September 2005, we acquired new technology which enhances the extraction
process enabling us to increase the purity of our stevioside which results in a
more flavorful product. We are cooperating with the China Agriculture Institute
and other national research facilities to increase the output of stevioside by
improving the manufacturing protocol and developing new products.

The extraction process for stevioside generally takes seven days. The
plant leaves are first dried and then undergo a quality control inspection to
ensure only good quality leaves are used in the extraction process. We then use
a combined process involving a solid/liquid extraction step, followed by a
liquid/liquid-purifying step that is traditionally used to extract the
steviosides from stevia. 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 kilo packages, two per box.

We generally maintain an inventory of approximately 200 tons of stevia
leaves, which equals approximately one year of finished product, to maintain a
regular production schedule. We generally maintain an inventory of finished
product equal to approximately one month's average sales.

We purchase the stevioside finished product directly from other
manufacturers. We have four unaffiliated suppliers to obtain the lowest cost. We
do not have any contracts with these suppliers. We generally place orders for

stevioside products with our suppliers based upon our internal estimates of the
amounts we can manufacture and the remaining amount we will need to fill an
order of a customer.

During fiscal 2006, approximately 51% of our total net revenues from
this segment were generated from reselling approximately 123 tons of stevioside
purchased from third party manufacturers, of which four primary manufacturers
supplied us with approximately 93 tons. The resale of the 93 tons purchased from
four primary manufacturers accounted for approximately 38% of our total net
revenues from this segment. During fiscal 2005, approximately 52% of our total
net revenues from this segment were generated from reselling approximately 96
tons of stevioside purchased from third party manufacturers, of which our four
primary manufacturers supplied us with substantially all of our resold
stevioside.

EXPANSION INTO THE U.S. AND CANADA

During fiscal 2006 we determined to expand the distribution of our
stevioside into the U.S. and Canada. On February 7, 2006, we formed Sunwin
Stevia International. Sunwin Stevia International responsible for the mainstream
distribution of our brand of Stevia within North America. Our objective is to
compete within the mainstream alternative sweetener market. This project entails
developing a brand of Stevia acceptable in taste to the mainstream consumer, and
conducting various taste tests to gauge the response to the brand of Stevia.
Thereafter a comprehensive marketing campaign must be devised for the purpose of
developing brand awareness. This will include, all forms of media; print,
television, radio, and online.

Furthermore, Sunwin Stevia International will seek to establish
relationships with specialty food brokers to distribute the product within North
America. Our goal is to place our product on shelves of national grocers
competing within the alternative sweetener market. Furthermore this project will
entail sourcing relationships for blending, packaging, storage, and shipment of
our product. We are also developing a website for direct sales.

In order to facilitate our expansion efforts into new markets, we have
engaged Mr. Patrick Mak to provide us with services related to the distribution
of stevioside in California. Specifically Mr. Mak will seek to distribute our
brand of stevia within the Chinese community in California. Mr. Mak has
extensive experience operating with the Chinese community in California,
primarily San Francisco. Mr. Mak will market the product to local Chinese food
markets within the Asian community. Mr. Mak will be paid a commission of 5% on
the net margins generated by Sunwin California.

Presently we have adopted the name of Only Sweet as a product name and
the tag line of "Make Life Sweeter". This name and tag line have been submitted
for trademark with the U.S. Patent and Trademark Office. Sunwin Stevia
International received several purchase orders from multiple grocery chains,
both national and regional, to carry the company's OnlySweet(TM) dietary
supplement product line beginning in June 2007. We estimate that the total
number of locations that will sell OnlySweet (TM) nationwide will be
approximatley 2,000.

We have also formed Sunwin Canada on April 20, 2006 to explore the
possibility of distributing our stevia products to the Canadian market. Sunwin
Canada's related expenses included in general and administrative costs were
approximately $45,000 for the nine months ended January 31, 2007 which reflects
expenses associated with our efforts to expand distribution of Stevioside into
Canada. In April 2007 we received approval from Health Canada for the
distribution of four of our Chinese herbal medicine, including Angelica (300 mg
capsule), Milk Thistle (200 mg capsule), Astragalus (200 mg capsule), and
Mugwort (200 mg capsule).

VETERINARY MEDICINES AND TRADITIONAL CHINESE MEDICINE FORMULA EXTRACTS

We also manufacture and sell a comprehensive group 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. For each of fiscal 2006 and fiscal 2005 this
segment represented approximately 53% of our total net revenues.

VETERINARY MEDICINES

According to the China Animal Health Association, we are one of the top
three companies in this product category in Shandong Province and one of the top
50 in the PRC. We are a leading advocate of preparing animal medicine from
Chinese herbs, especially in antivirus and feed additives. We are concentrating
our efforts in this product category on developing and producing medicines which
are relevant to the needs of the animal stock industry in the PRC, and
developing special veterinary medicines made from pure traditional Chinese
medicines or combining traditional Chinese medicine with Western medicine. Our
products in this group include veterinary medicine (traditional Chinese medicine
and Western medicine), feed additives, feeds and disinfectants. These products
are sold throughout 28 Provinces in China.

We also manufacture and sell animal feed additives. Historically,
antibiotics were added to animal feed in an effort to produce healthier animals.
However, scientists now believe that this practice can produce some unforeseen
and unwanted effects. Some studies indicate that the antibiotics and chemical
compound medicines that are contained in feeds will accumulate in the animal
body, and can possibly cause harm to human beings. Penicillin, streptomycin and
sulfanilamide medicines often emit allergic and abnormal reactions; aureomycin
can lead to allergic reactions; chloromycetin can arouse anti-regenerating
anemia, hemoblast reducing, and liver damnification; olaquindox can cause
abnormal gene development; and furazolidone can create cancerous cells in animal
organisms.

Scientists also believe that incorporating antibiotics into animal
feeds could, over a long period of time, convert some bacteria into antibiotic
resistant bacteria. Under this assumption, these antibiotic resistant bacteria
then spread the antibiotic resistant genes to other sensitive bacteria,
generating the resistance to some medicines which then inhibit or prevent the
cure of certain diseases that originally could be prevented and cured by such
medicines.

The use and/or abuse of antibiotics has affected countries around the
world. For example, in Belgium, France, Germany and Holland, dioxins polluted
the feeds and in turn caused damage to the livestock population. The outbreak of
bovine spongiform encephalopathy (BSE or Mad Cow disease) in Britain not only
decimated the British livestock markets but had a worldwide effect on beef
production. It was reasoned that a certain population of virus in these cows
might have developed a drug-resistant strain. In recent years, many countries
have regulated the use of antibiotics additives through legislation. In the
middle of the 1970's, the European Economic Council adopted regulations
prohibiting the use of penicillin and acheomycin as feed additives. In 1977,
U.S. Food and Drug Administration limited using bacteriophage as the feed
additive and regulated the zinc-bacitracin as the special feed additive for the
livestock and birds. Since olaquindox, furazolidone and chloromycetin were
forbidden as applications on edible animals in the European Community, the EU
began to forbid four antibiotics including zinc-bacitracin and tylosin to use in
feeds at the end of 1998.

Animal feed additives based upon traditional Chinese medicine are
increasingly being regarded as desirable as they lack the drawbacks of chemical
compounds, even though these traditional Chinese medicines may not be as potent
as chemical compounds in terms of stimulating growth of livestock.

Many traditional Chinese medicines have double functions of nourishment and
medicament, which not only accelerate the sucrose metabolism of the organism and
synthesis of the protein and enzyme, but also increase the efficiency of the
antibody and the growth of the sex gland. The health growth of the sex gland
would in turn enhance muscular system development. The traditional Chinese
medicines have the effect of sterilizing and resisting the bacteria and
adjusting the organism immunity function. As a result of these benefits, many
countries are developing and researching the natural traditional Chinese
medicine feed additives.

Compared with antibiotics and chemical compounds feed additives, the
natural traditional Chinese medicine feed additives have the following
advantages:

o non-diathesis antibacterial function which can not only sterilize
and resist bacteria, but also adjust organism immunity function;

o no or little harmful remains; pathogenic microbe can not generate
the anti-medicine character easily; and the materials are abundant
and can be used locally.

We manufacture and sell a polysaccharid and flavonoid extraction
compound feed additive that is all natural with little or no side effects which
can be substituted for antibiotics and chemical compounds often found in animal
feeds. We believe our product provides a number of benefits, including:

o Producing safe and healthy animal foods,

o Reducing fat and cholesterol contents, improving the quality of
animal feeds, and in turn improving the taste of livestock and
birds,

o Reducing toxicity associated with antibiotic and chemical compounds
which reduce the levels of medicines which are present in animal
feeds,

o Improving growth of the livestock,

o Improving the disease-resistance of the animal. The product can
regulate the intestines which in turn prevent or aids in the
resistance to diseases. Specifically, the plant Oligosaccharide
which is contained in our product can greatly promote the
multiplication of the lactobacilli and bifidus and adjust the PH
parameter in intestines. Alkaloid, which is also present in the
product, can restrain the growth of the pathogeny in intestines in
an effort to prevent the occurrence of intestinal deceases, and

o Reduced labor cost. The product contains plant active substances
such as flavonoid, and multi-hydroxybenzene. The additives serve a
binary 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.

We also sell our brand of CIO2 food disinfectant. ClO2, a chemical
employed in both industrial and commercial applications, was developed
successfully in 1985 by American Baihexing Company. It was regarded as a food
disinfector by the European Environmental Protection Unit and the U.S.
Environmental Protection Agency and was sanctioned as a food additive by the
U.S. Food and Drug Administration. Japan, Australia, and the European countries
followed and regarded it as the fourth generation of safe disinfectant and food
additive that substituted the chlorine serial disinfectants. Due to its good
character, it was regarded as the A-grade safe additive by the World Health
Organization and was strongly promoted on a global scale.

China began to expand the use of the ClO2 disinfectant at the beginning
of the 1990s. In 1992, it was listed in health standard by the China National
Food Additive Standard Committee. On February 19, 2004, we attended the bird flu
convention conference organized by the Ministry of Agriculture in Beijing. The
Ministry of Agriculture sanctioned our new ClO2 disinfectant as a Ministry
recommended product for the prevention of the spread of bird flu virus.

Our Sunwin brand ClO2 disinfectant is a steady ClO2 disinfectant and
can be used directly without activation and dilution. The traditional ClO2
disinfectant requires a stability dose to stabilize it after production and
needs to be activated and diluted before use. If it is not used in time after
activation, the effective substances will be depleted thoroughly in four to six
hours. Our product can restrain the chemical activity of the activated ClO2 and
can control the ClO2 to release the effective compounds slowly. The product has
a storage life of 18 months after dilution. At present, this steady ClO2
disinfectant product has been used in a wide variety of disinfectant and
sterilization applications including waste and sewage disposal and sterilization
of food utensils.

During fiscal 2006 we also launched five additional veterinary medicine
products; Amoxicillin, Cephalosporium, Ampicillin, sodium oxacillin, and
penbritin. These five new products are employed as an antiviral agent, to combat
fever and treat respiratory tract infections, and accounted for approximately
1.7% of revenues from this product group. As a result of the recent upgrade in
our facilities we now have the ability to manufacture these products in various
forms including a liquid injection, pulvis, pre-mixed powder, a tablet and an
oral liquid.

HYPERICIN

Recently, scientists from Ha'erbing Veterinary Institute of the Chinese
Academy of Agricultural Sciences, Animal Influenza Laboratory of the Ministry of
Agriculture, and National Bird Flu Reference Laboratory performed an independent
study of our veterinary disinfectant products. The disinfectants were produced
with Hypericin as a root compound which is a derivative of St. Johns Wort.

The tests were performed on chicken embryos infected with the H5N1
strand of the Avian flu. The veterinary disinfectants contained Hypericin at a
diluted ratio of 1:5, 1:10, 1:25 and 1:50. The test results demonstrated that in
the case of embryos artificially infected with the H5N1 strand of the avian flu;
the veterinary disinfectants can effectively eliminate 100% of the H5N1 strand
within 10 minutes of treatment by injection.

In November 2005, the Department of Livestock Farming for Shandong
Province Government submitted an application to the Livestock Farming Bureau of
China Ministry of Agriculture for approval of Hypericin related products as a
class one new veterinary medicine to treat strands of the avian flu virus. This
independent study was a requirement of the approval process for the application
which remains ongoing. We cannot predict at this time if the application will be
approved.

OUR CUSTOMERS

We sell our veterinary medicine products on a wholesale and retail to
livestock and poultry farmers, retail veterinary product outlets and large scale
cultivating businesses. Our principal customers include Chengde Chengxing Animal
Hospital, Ha'erbin Donghui Veterinary Products Store, Xiantan Golddragon
Veterinary Co. Ltd., Gao'an Aquatic Bureau, Shandong Veterinary Supervision
Office and Hebei Veterinary Station. No customer accounts for more than 10% of
our net revenues in this product category. We do not have contracts with our
customers and sales are made under a purchase order arrangement. General payment
terms for our veterinary medicine products range from prepaid prior to shipment
to net 60. We will provide certain discounts to our veterinary medicine
customers in the event a customer pays us full payment 60 days in advance. The
discount ranges from 2% to 3% and is only applicable to items not currently in
inventory. In fiscal 2006 and fiscal 2005, such discounts that we gave were
minimal. The accounts receivable generated by our veterinary medicine product
group represents approximately 49% and approximately 50% of our total accounts
receivable at April 30, 2006 and April 30, 2005, respectively.

RAW MATERIALS

We purchase the raw materials for medicines and feed additives produced
by us on the open market from a number of suppliers to ensure best price and
high quality ingredients. For products which are based on traditional Chinese
medicines, we use extract formulas produced by our traditional Chinese medicine
formula extract group described below. We have not experienced any difficulty in
obtaining the necessary raw materials for our veterinary medicine products.

TRADITIONAL CHINESE MEDICINE FORMULA EXTRACTS

Traditional Chinese medicine is based on a "five element theory" and
those elements are wood, earth, metal, fire, and water. Our bodies have two
energy channels (meridians) representing organ systems in each of those five
elements of nature. Optimally, these all work in balance and in synchronized
harmony. In the process of defending against diseases for thousands of years,
Chinese herbal medicine has been developed and systemized based upon theoretical
principles as a means of both the prevention and treatment of illness and
disease. A complex system of diagnostic methods takes into consideration the
person as a whole, not just isolated symptom. A "pattern of disharmony" is
discovered and treated accordingly. The aim is not necessarily to eliminate or
alleviate symptoms, the objective is to increase both the ability to function
and the quality of life. The restoration of harmony is integral to Chinese
herbal medicine. After a diagnosis is made, herbs are selected and combined, or
a well-known traditional formula is prescribed and the formula is adjusted to
fit the patient's symptoms and diagnosis.

Modern medical science is experiencing a change from biological
research to biological-psychological-social research with traditional medical
science playing a more important role than ever. Many modern chemical medicines
contain high toxicities and present numerous side-effects. Purely chemical
medicines are difficult, time consuming and expensive to develop. We believe
that natural Chinese traditional medicines represent advantages over a variety
of chemical medicines and that 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.

According to our research, there are over 400 different commonly used
types of traditional Chinese medicine extracts. We manufacture and sell
approximately 120 different extracts which can be divided into the following
three categories:

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

The following formula extracts and single extracts are our main
products.

VETERINARY MEDICINE PRODUCTS

o pimedium powder which is used to tonify the kidney, invigorate yang,
strengthen muscles and bones and as anantiheumaitc,
o mixed powder which is used to prevent and cure chronic respiratory
failure caused by septicemia and infective bronchitis,
o Sihuang mixed powder which is used to cure colibacillois and
hypercathasis of poultry, and
o mixed powder used to cure seasonal febrile diseases of poultry and
bursa of fabricius and epiornitic bursitis.

MEDIUM PRODUCTS FOR HUMAN MEDICINE

o Astragalus root extracted powder which is used to replenish qi and
keep yang-qi ascending, to consolidate superficial resistance to
cause diuresis and to promote pus discharge and tissue regeneration,
o Scutellaria root extracted powder which is used to remove heat,
dampness and toxic substances, to purge intense heat and to prevent
miscarriage,
o Honeysuckle flower extracted powder which is used to remove heat and
toxic substance and to dispel wind-heat,
o Liquorice extracted powder which is used to tonify the middle-jiao
and replenish qi to remove heat and toxic substance, to moisturize
the lung and arrest cough, and to relieve spasm and pain, and
o Hawthorn fruit extracted powder which is used to remove food
stagnancy and blood stasis.

OUR CUSTOMERS

We sell our traditional Chinese medicine formula extracts on a
wholesale basis to domestic traditional Chinese medicine manufacturers and large
animal pharmaceutical manufacturers. Our primary customers include Zhucheng
Xinde Foreign Trade Co., Ltd., Shangdong Liuhe Feed Co., Ltd., Najing
Traditional Chinese Medicine University, Taiyuan Hengfengqiang Bio-Tech
Development Co., Ltd., Beijing Xiangshang Veterinary Factory and Hefei Huarui
Co., Ltd. For fiscal 2006 we did not have any customers in this product group
which represented more than 10% of our total net revenues, however, and in
fiscal 2005 one of our customers in this product group accounted for
approximately 10% of our total net revenues. We do not have contracts with our
customers and sales are made under a purchase order arrangement. We generally
require 10% to 30% deposit at the time when the order is submitted, and offer
payment terms of between six months to one year for the balance of the order.

RAW MATERIALS

The business of extraction of Chinese herbs is a fast growing industry
in China following its membership in the WTO. Many industries, including
pharmaceutical companies, chemical companies, health products companies,
biological engineering companies and research and development institutions, have
entered the field. A key factor to success in this industry is where the herb
grows. "San Qi", a very popular herb, grows in Yun Nan province so many
companies engaging in extraction have established operations there. For the same
reason, the companies in Inner Mongolia are focusing on production of

"Gan Cao" extraction, and most companies in Ji Lin province are preparing the
extraction of ginseng while in Xin Jiang province, companies are extracting the
"Ma Huang Su" and "Gan Cao".

Currently, most raw material purchases are from the country's
well-known herbal harvesting bases in the Shangluo Area of Shanxi Province which
is located in Qinlin Area and nicknamed the Chinese Traditional Medicine
Treasury, as well as the Haozhou Area of Anhui Province and the Anguo Area of
Hebei Province, which are the two largest herbal markets of China. We purchase
raw materials from a number of suppliers to ensure favorable pricing, steady
supplies as well as quality materials.

FORMULATION, MANUFACTURING AND PACKAGING

We manufacture approximately 120 extracts used in traditional Chinese
medicine. The production time is generally seven days. These formulas are either
commonly used formulas published in the National Medicine Dictionary or
utilizing the Shandong Province industry standards, as well as formulas which
may have been developed by university research scientists or internally
developed by our research and development personnel. Formulas developed by our
company must first be approved by the Shandong Bureau of Quality and Technical
Supervision prior to use in our products.

The raw materials are subjected to a combined process involving a
solid/liquid extraction step, followed by a liquid/liquid-purifying step to
obtain the purified extract. Once the purification process has been completed,
the extract is concentrated and re-filtered at which time it is ready for
packaging and shipment to our customers. The extracts are bulk packaged in 25
kilogram barrels. We utilize just in time manufacturing for our traditional
Chinese medicine extracts and do not maintain an inventory of finished products.

PENDING ACQUISITION OF QUFU PHARMACEUTICALS FACTORY

In June 2006 we entered into an oral agreement with Shandong Yulong
Group Company, Limited, an unaffiliated third party, to acquire 100% of the
ownership of Qufu Pharmaceuticals Factory, a manufacturer of herb-based
medicines. The final terms of the proposed acquisition will be determined upon
the audit of Qufu Pharmaceuticals Factory. The purchase price will be based on
the net tangible assets of Qufu Pharmaceuticals Factory and we do not estimate
that the purchase price should not be more than the total net tangible assets of
Qufu Pharmaceuticals Factory for the most recent fiscal period. As consideration
in the transaction we will issue shares of our common stock to acquire Qufu
Pharmaceuticals Factory. It is expected the transaction will close during the
first quarter of fiscal 2008, however, until the audit has been completed, a
definitive purchase price agreed upon and a definitive agreement entered into by
the parties there are no assurances we will consummate this pending transaction.

Qufu Pharmaceuticals Factory was established in January 1995 in the
Shandong Province of China and located in the western section of the Shanjia
Village within Qufu City of the Shandong Province. Its registered capital is
$423,750 (approximately RMB 3.39 million).

Qufu Pharmaceuticals Factory manufactures and distributes various
medicinal products in China. The medicines are derived from chemical compounds
as opposed to herbal based remedies. The primary product is Metformin
Hydrochloride, a treatment for type II diabetes. Metformin Hydrochloride has
been approved by the Chinese central government as a treatment for type II
diabetes in China. The product received permit # H32021625 issued by the China
Pharmaceutical Association.

NEW PRODUCT DEVELOPMENT

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

o Shandong Medical University where we are engaged in a project in the
joint development of molecular absorption purified rutoside,
o Kelong Bio-Tech Co., Ltd. Biology and Physics Research Center of
Chinese Academy of Science where the project is the joint
development of soy bean oligosaccharide, and
o Tianfulai Bio-Tech Technology Co. Ltd. (Beijing) where the project
is the joint development of traditional Chinese medicine
polysaccharide anthone extracted powder for forage.

We also utilize the research facilities of Beijing Medical University,
China Agriculture University and Taiwan Renshan Bio-Tech Co. We pay for the use
of these facilities on an as needed basis and the costs are included in our
research and development expenses. For fiscal 2006 and fiscal 2005 we spent
approximately $115,000 and approximately $171,000, respectively, on research and
development.

Our research findings which were developed jointly with Kelong Bio-Tech
Co. Ltd., Biology and Physics Research Center of the Chinese Academy of Science
and other findings in Chinese traditional medicine have been industrialized over
the course of history. Since 2000 we have successfully developed in excess of 40
veterinary medicines used to treat a variety of infectious diseases. In fiscal
2006 we introduced five new products in the traditional Chinese medicine
segment.

NAME PURPOSE CAPACITY (KG) FORM

Chinese thorowax radix Bupleurum Regulate metabolism 32.84 Powder

Rhizoma gastrodiae extract Treat liver 3 Powder

Honeysuckle powder antioxidant 11 Powder

forsythia injection antioxidant 10 Powder

Pearl Powder Sedative, treat anxiety 3 Powder

COMPETITION

All of our product groups operate in highly competitive markets. There
are approximately 30 stevioside manufacturers in China, with only approximately
10 companies operating on a continuing basis. Of these 10 companies, our primary
competitors are Huaxian Stevia Factory and Julong Stevia Company who, like our
company, have an annual output of stevioside in excess of 100 tons. Other
companies periodically enter the industry depending upon the market demand.
These short term participants may choose to stop production when the market is
in its downturn and raw materials are not readily available. This sporadic
oversupply of product can adversely affect our market share. In addition to
competing with other Chinese companies, we also compete with growers and
processors in Japan, the world's largest market for stevioside. We believe we
compete in this product segment based upon our production capabilities and
product quality. In order to maintain our industry position and as we seek to
increase our market share in both the domestic and international market, we have
undertaken certain personnel reorganizations to improve our operations which
which have increased our general and administrative expenses during fiscal 2006.

Our principal competitors in the sale of veterinary medicine products
are China Animal Husbandry Industry Co., Ltd., Qilu Animal Health Products
Factory Co., Ltd. and Shinjaizhuang Huamu Animal Husbandry Co. Ltd. In addition,
as China is a member of the WTO many good quality competitive products are
imported into the Chinese market at reasonable prices. We believe we hold
certain competitive advantages in this product segment based mainly on our
manufacturing capacity and advanced technology. We have developed a number of
new products for targeted markets and we have invested approximately $3,952,000
and $982,000, respectively, during fiscal 2006 and fiscal 2005, respectively in
improvements in our manufacturing facility. We also focus on expanding our
product offerings and improving quality control. In order to maintain what we
believe to be a competitive position within this product segment we will need to
continually develop new products and applications. We also are challenged to
broaden our product line to meet consumer demand and compete with foreign made
products. Two of the new products introduced in fiscal 2006 are injection based.

The market in China for traditional medicine extracts is extremely
competitive. According to official statistics, at peak time, there are more than
500 companies engaged in herb extraction in China. Companies in many different
industries, including pharmaceutical companies, chemical companies, healthy
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 that we are able to effectively compete in our market
segment in China based upon the quality of the exclusive harvesting bases we
have under contract and our reputation in the market place. Globally, as demand
for our types of products expand we believe that we will be able to effectively
compete against similar companies from other countries as a result of the lower
costs of doing business in China, in particular the lower labor rates, and
China's soil and growing conditions which enable us to produce high quality
products.

However, because the barriers to entry in the market are relatively low
and the size of the potential market, we expect continued growth of our existing
competitors in each of our product groups and the entrance of new competitors in
the future. Many of our current and potential competitors have significantly
longer operating histories and significantly greater managerial, financial,
marketing, technical and other competitive resources, as well as greater name
recognition, than we do.

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. Qufu has registered the Shengwang trademark with China National
Patent, Trademark and Intellectual Property Office. In 2006 we filed a trademark
application with the U.S. Patent and Trademark Office covering the trade name
"Only Sweet" and the tag line "Make Life Sweeter" which we intend to use the
product name for our stevioside in our efforts to secure North American
distribution of the product.

To protect our proprietary rights, in our dealings outside the PRC we
rely generally 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. During the past three years we had three of our traditional

Chinese medicine products and four of our veterinary medicine products 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 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 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. In addition, our operations must conform to general
governmental regulations and rules for private (non-state owned) companies doing
business in China.

The current GMP requirements set forth in the Quality System (QS)
regulation are promulgated under section 520 of the Food, Drug and Cosmetic
(FD&C) Act. They require that domestic or foreign manufacturers have 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. The regulation requires that various specifications and
controls be established for devices; that devices be designed under a quality
system to meet these specifications; that devices be manufactured under a
quality system; that finished devices meet these specifications; that devices be
correctly installed, checked and serviced; that quality data be analyzed to
identify and correct quality problems; and that complaints be processed. Thus,
the QS regulation helps assure that medical devices are safe and effective for
their intended use. The Food and Drug Administration (FDA) monitors device
problem data and inspects the operations and records of device developers and
manufacturers to determine compliance with the GMP requirements in the QS
regulation.(6)

Qufu has received the permanent license from the Chinese government
agency to operate as a Sino-U.S. joint venture. Our management believes this
license will provide Qufu with certain advantages in its business and
operations. Joint ventures are generally perceived to be more financially stable
enterprises. Furthermore, as a Sino - U.S. joint venture income taxes at the
corporate level are waived for the first two years of operation, and then income
taxes at the corporate level are reduced by 50% in the third, fourth and fifth
year of operation. There were minimal expenses associated with the process to
upgrade the status of Qufu to a Sino - U.S. joint venture. Certain capital
requirements were necessary to qualify as a Sino - U.S. joint venture; however,
as a result of our capital raising activities during fiscal 2006 and our
acquisition of the remaining 20% of Qufu we were able to demonstrate that Qufu
had the necessary capital requirements to register as a Sino - U.S. joint
venture.

PRC LEGAL SYSTEM

Since 1979, many laws and regulations addressing economic matters in
general have been promulgated in the PRC. Despite development of its legal
system, the PRC does not have a comprehensive system of laws. In addition,
enforcement of existing laws may be uncertain and sporadic, and implementation
and interpretation thereof inconsistent. The PRC judiciary is relatively
inexperienced in enforcing the laws that exist, leading to a higher than usual
degree of uncertainty as to the outcome of any litigation. Even where adequate
law exists in the PRC, it may be difficult to obtain swift and
__________________
(6) http://www.fda.gov/cdrh/devadvice/32.html#introduction

equitable enforcement of such law, or to obtain enforcement of a judgment by a
court of another jurisdiction. The PRC's legal system is based on written
statutes and, therefore, decided legal cases are without binding legal effect,
although they are often followed by judges as guidance. The interpretation of
PRC laws may be subject to policy changes reflecting domestic political changes.
As the PRC legal system develops, the promulgation of new laws, changes to
existing laws and the preemption of local regulations by national laws may
adversely affect foreign investors. The trend of legislation over the past 20
years has, however, significantly enhanced the protection afforded foreign
investors in enterprises in the PRC. However, there can be no assurance that
changes in such legislation or interpretation thereof will not have an adverse
effect upon our business operations or prospects.

ECONOMIC REFORM ISSUES

Since 1979, the Chinese government has reformed its economic systems.
Because many reforms are unprecedented or experimental, they are expected to be
refined and improved. Other political, economic and social factors, such as
political changes, changes in the rates of economic growth, unemployment or
inflation, or in the disparities in per capita wealth between regions within
China, could lead to further readjustment of the reform measures. We cannot
predict if this refining and readjustment process may negatively affect our
operations in future periods.

Over the last few years, China's economy has registered a high growth
rate. Recently, there have been indications that rates of inflation have
increased. In response, the Chinese government recently has taken measures to
curb this excessively expansive economy. These measures have included
devaluations of the Chinese currency, the RMB, restrictions on the availability
of domestic credit, reducing the purchasing capability of certain of its
Japanese and Korean customers, and limited re-centralization of the approval
process for purchases of some foreign products. These austerity measures alone
may not succeed in slowing down the economy's excessive expansion or control
inflation, and may result in severe dislocations in the Chinese economy. The
Chinese government may adopt additional measures to further combat inflation,
including the establishment of freezes or restraints on certain projects or
markets.

To date reforms to China's economic system have not adversely impacted
our operations and are not expected to adversely impact operations in the
foreseeable future; however, there can be no assurance that the reforms to
China's economic system will continue or that we will not be adversely affected
by changes in China's political, economic, and social conditions and by changes
in policies of the Chinese government, such as changes in laws and regulations,
measures which may be introduced to control inflation, changes in the rate or
method of taxation, imposition of additional restrictions on currency conversion
and remittance abroad, and reduction in tariff protection and other import
restrictions.

OUR HISTORY

We were incorporated in Nevada on August 27, 1987 under the name
Network USA, Inc. for the purposes of completing a merger or other business
combination with an operating entity. From our inception through April 2002 we
did not conduct business. On April 9, 2002, we acquired 20% of One Genesis,
Inc., a privately-held Texas real estate corporation, from one of our then
principal stockholders in exchange for approximately 4,333,332 shares of our
common stock. The shares of One Genesis, Inc. were sold on July 31, 2002 for
$120,000 in cash.

Following this transaction, we continued to direct our efforts towards
the investment and development of real estate, initially in the Houston, Texas
market and also considered possible transactions in which a privately held
business would merge into our company in a transaction in which control of our

company would change hands. During fiscal 2003, we entered into a letter of
intent with Aerospace Technologies Limited; however, the letter of intent was
eventually terminated prior to the closing of any transaction.

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 and before
its acquisition of 80% of Qufu as described below it did not have any business
and operations. Concurrent with the closing of this transaction, our officers
and directors resigned and our current officers and directors 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 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 included Pharmaceutical Corporation (17%) and
Group Corporation (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, Group Corporation
acquired the 17% interest of Qufu owned by Pharmaceutical Corporation , and
ultimately the Group Corporation acquired the 0.5% Qufu interest owned by Qufu
Veterinary Medicine Company, Ltd., after it was dissolved. These events resulted
in Group Corporation owning 20% of Qufu.

In February 2006, we acquired the remaining 20% of Qufu from Group
Corporation 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 Group
Corporation, 2,000,000 shares which issued to Ms. Dongdong Lin, our Chief
Executive Officer, and the remaining 3,000,000 shares where 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.

EMPLOYEES

As of March 31, 2007, we employed the following:

No. of
Function Employees
-------- ---------

Management and administration .......................... 22
Manufacturing, including quality control, and production 250
Research and development ............................... 46
Sales and marketing .................................... 77
---
Total .................................................. 395

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.

PROPERTY

Our principal executive offices and research and development facilities
are located in a building we share with Pharmaceutical Corporation an affiliate,
under an oral agreement. The cost for this facility is included in the annual
management fee we pay Pharmaceutical Corporation.

In October 2002 Qufu entered into a lease agreement with Pharmaceutical
Corporation, an affiliate, which covers the approximately 54,000 square foot
facilities used by our traditional Chinese medicine formula extract product
group. This lease, which expires in October 2012, provides for an annual rent of
approximately $20,000, payable in a lump sum annually.

In October 2002 Qufu entered into a lease agreement with Qufu LuCheng
Chiya Resident Commitment, an unaffiliated local governmental owned entity,
which covers the approximate 25,200 square foot facilities used by our
veterinary medicine product group. This lease, which expires in August 2012,
provides for annual rent of approximately $22,500, payable in a lump sum
annually.

In April 2004 Qufu entered into a lease agreement with Qufu ShengDa
Industry Co., Ltd., an unaffiliated local governmental owned entity, which
covers the approximate 36,000 square foot facilities used by our stevioside
product group. This lease, which expires in April 2014, provides for annual rent
of approximately $3,750, for the first three years of the term and thereafter
increases to approximately $6,250 for the balance of the lease term, payable in
a lump sum annually.

We believe that these facilities are sufficient for our needs.

LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding, nor are we aware of
any legal proceedings being contemplated against us by any governmental
authority. We are not aware of any legal proceeding in which any of our
officers, directors, affiliates or security holders is a party adverse to us or
in which any of them have a material interest adverse to us.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table includes the names, positions held and ages of our
executive officers and directors.

Name Age Position
---- --- --------

Laiwang Zhang 43 President and Chairman
Dongdong Lin 31 CEO, Secretary and director
Fanjun Wu 31 Chief Financial Officer
Chengxiang Yan 37 Director

LAIWANG ZHANG. Mr. Zhang has served as our President and Chairman since
April 30, 2004 and he has served as Chairman of Qufu 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 Group Corporation, 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 a 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 CEO, 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 Group Corporation 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 Haerbing 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 , serving as Director of Finance
Section from 1997 to 1998 and thereafter as Chief Financial Officer. From 1992
to 1996, she was Director of Finance Section for our subsidiary Shengya
Veterinary Medicine.

CHJENGXIANG YAN. Mr. Yan has been a member of our Board of Directors
since April 30, 2004. Since 2001, he has served as a Director of Pharmaceutical
Corporation, a company engaged in the sale and distribution of Chinese herb
medicines. From 1999 to 2004, he was the Director of the Marketing Department
for that company. From 1996 to 1998, Mr. Yan was Director of the Marketing
Department for Group Corporation, 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. Mr. Yan graduated from Shandong Agriculture
University in 1993 with a Bachelor's Degree in Farming.

There are no family relationships between any of our officers and
directors.

KEY EMPLOYEE

JEFFREY REYNOLDS. Mr. Reynolds, 43, has served as CEO of our Sunwin
Stevia International subsidiary since October 2006. From 2004 to 2006 Mr.
Reynolds was CEO and President of Alpha One General Contractors, a commercial
general contracting firm in North Texas and from 2001 to 2004 he was Executive
Vice President and Chief Planning Officer with Blue Chip Marketing and
Communications, a marketing and communications services company for consumer
products. From 1999 to2001 Mr. Reynolds served as President and Managing
Director of Markatec, Inc. a privately owned marketing services company
primarily focused on creating and implementing account specific co-marketing
promotions in the consumer product industry, and from 1992 to 1999 he was
employed with Crossmark, Inc. a marketing organization in the consumer packaged
goods industry, where he served as Senior Vice President of Corporate Sales
Development and Marketing from 1997 until leaving the company. From 1989 to 1992
Mr. Reynolds was employed with Nestle Foods Company, serving as Non Grocery

Region Manager from 1991 to 1992, as National Non Grocery Category Manager from
1990 to 1991, and as Regional Manager from 1989 to 1990. From 1984 to 1989 Mr.
Reynolds was employed with Procter and Gamble; serving as a Unit Sales Manager
from 1986 to 1989 and as Territory Sales Manager from 1984 to 1989.

U.S. ADVISOR

In May 2005 and June 2005, under two separate agreements, we engaged
China Direct Investments, Inc to assist us with operation and regulatory
framework applicable to U.S. public companies. In January 2006 we entered into a
three year agreement with China Direct Investments, Inc. which superceded the
remaining term of an agreement signed in June 2005. Under the terms of the
current agreement, China Direct Investments has been engaged to provide support
to us in a variety of areas, including general business consulting, translation
services, management of professional resources, identification of potential
acquisition targets and investment sources, development of marketing plans and
coordination of our public disclosure. As compensation for its services, in
fiscal 2006 we issued China Direct Investments and its designees an aggregate of
3,760,000 shares of our common stock, which included shares to be issued to it
as compensation under the June 2005 agreement, for an aggregate compensation
value of $558,900. The agreement also provides that we will pay China Direct
Investments, or its designees discretionary award fees. The discretionary award
fee for fiscal 2006 was to be at least 1,190,000 shares of our common stock,
which is part of the 3,760,000 shares issued to China Direct Investments, Inc.
To date, as compensation under the current agreement in fiscal 2007 we have
issued China Direct Investments and its designees, which includes Capital One
Resources Co., Ltd., an affiliate, as well as certain employees of China Direct
Investment's parent company, an aggregate of 500,000 shares of our common stock
valued at $220,000. The agreement may be terminated by either party upon 30 days
notice, however, the compensation paid to China Direct Investments is not
refundable by it. China Direct Investments is a wholly owned subsidiary of China
Direct, Inc., a public company (OTCBB: CHND). Capital One Resources Co., Ltd. is
also a wholly-owned subsidiary of China Direct, Inc.

DIRECTOR COMPENSATION

We have not established standard compensation arrangements for our
directors and during fiscal 2006 we did not compensate our directors for their
service. In the future, we may elect to compensate directors for their service,
which such amount will be determined from time to time by our Board of Directors
based upon the amount of time expended by each of the directors on our behalf.

CODE OF 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:

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

A copy of our Code of Ethics is filed as an exhibit to the registration
statement of which this prospectus forms a part, 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.

COMMITTEES OF THE BOARD OF DIRECTORS

Our Board of Directors has not yet established an Audit Committee, a
Compensation Committee or a Nominating Committee, 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.

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 401(e) of Regulation S-B. In general, an "audit committee
financial expert" is an individual member of the audit committee or Board of
Directors who:

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

EXECUTIVE COMPENSATION

The following table summarizes all compensation recorded by us in each
of the last two completed fiscal years for our principal executive officer, each
other executive officer serving as such whose annual compensation exceeded
$100,000 and up to two additional individuals for whom disclosure would have
been made in this table but for the fact that the individual was not serving as
an executive officer of our company at April 30, 2006. The value attributable to
any option awards is computed in accordance with FAS 123R.

SUMMARY COMPENSATION TABLE

NON- NON-
EQUITY QUALIFIED
INCENTIVE DEFERRED ALL
PLAN COMPEN- OTHER
NAME AND STOCK OPTION COMPEN- SATION COMPEN-
PRINCIPAL SALARY BONUS AWARDS AWARDS SATION EARNINGS SATION TOTAL
POSITION YEAR ($) ($) ($) ($) ($) ($) ($) ($)
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
- ------------------- ---- ------ ----- ------ ------ --------- --------- -------- --------

Dongdong Lin (1,3) 2006 $7,500 $ 0 $ 0 $ 0 $ 0 $ 0 $ 71,976 $ 79,476
2005 $6,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 6,000

Laiwang Zhang (2,3) 2006 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $107,964 $107,964
2005 $4,500 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 4,500

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

(2) Mr. Zhang is our President and Chairman.

(3) In February 2006, we acquired the remaining 20% of Qufu from Group
Corporation in exchange for 5,000,000 shares of our common stock valued at
$2,775,000 based on the fair market value of our common stock. Our president and
Chairman, Mr. Laiwang Zhang, is a control person of Group Corporation. At Mr.
Zhang's request, 2,000,000 shares were issued to Ms. Dongdong Lin, our CEO, 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. Accordingly, in fiscal
2006 129,725 shares of common stock valued at $71,976 was recorded as
compensation to Ms. Lin and 194,588 shares of our common stock valued at
$107,964 was recorded as compensation to Mr. Zhang.

HOW MS. LIN'S COMPENSATION IS DETERMINED

Ms. Lin, who as served as our CEO since February 2005, is not a party
to an employment agreement with our company. Her compensation is determined by
our Board of Directors, of which she is a member. The Board of Directors
considered a number of factors in determining Ms. Lin's compensation including
the scope of her duties and responsibilities to our company, compensation levels
of executives with comparable duties in similar companies such as ours and the
time she devotes to our business. The Board of Directors did not consult with
any experts or other third parties in fixing the amount of Ms. Lin's

compensation. During fiscal 2006 Ms. Lin's compensation package included a base
salary of $7,500. She does not receive any other form of compensation from our
company. The amount of compensation payable to Ms. Lin can be increased at any
time upon the determination of the Compensation Committee of our Board of
Directors.

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 the date hereof:

OPTION AWARDS STOCK AWARDS
------------------------------------------------------------- ------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Market Plan Market
Number Value Awards: or
Equity of of Number Payout
Incentive Shares Shares of Value of
Plan or or Unearned Unearned
Awards: Units Units Shares, Shares,
Number of Number of Number of of of Units or Units or
Securities Securities Securities Stock Stock Other Other
Underlying Underlying Underlying That That Rights Rights
Unexercised Unexercised Unexercised Option Have Have that That
Options Options Unearned Exercise Option Not Not Have Not Have Not
Name (#) (#) Options Price Expiration Vested Vested Vested Vested
Exercisable Unexercisable (#) ($) Date (#) ($) (#) (#)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
- -------- ----------- ------------- ----------- -------- ---------- ------ ------ --------- ---------

Dongdong - - - N/A N/A - - - -
Lin(1)
Laiwang - - - N/A N/A - - - -
Zhang

STOCK OPTION PLANS

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 April 11, 2007, there are no available shares to
be issued, or options granted, under the 2005 Equity Compensation Plan. Under

this Plan a total of 2,660,000 common shares were issued to satisfy our
requirements under a service consulting agreement from June 2005, a total of
1,430,000 common shares were issued to satisfy our requirements under a service
consulting agreement from January 2006, and we granted options to purchase
910,000 shares for a consulting agreement entered into in November 2005. These
options granted for the purchase of 910,000 shares of common stock were
exercised in the year ended April 30, 2006.

The 2005 Equity Compensation Plan is administered by our Board of
Directors or an underlying committee. The Board of Directors or the committee
determines from time to time those of our officers, directors, key employees and
consultants to whom stock grants or plan options are to be granted, the terms
and provisions of the respective option agreements, the time or times at which
such options shall be granted, the type of options to be granted, the dates such
plan options become exercisable, the number of shares subject to each option,
the purchase price of such shares and the form of payment of such purchase
price. All other questions relating to the administration of the plan, and the
interpretation of the provisions thereof and of the related option agreements,
are resolved by the Board or committee.

Plan options may either be options qualifying as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified options. Our officers, directors, key employees and consultants
are eligible to receive stock grants and non-qualified options under the plan;
only our employees are eligible to receive incentive options. In addition, the
plan allows for the inclusion of a reload option provision which permits an
eligible person to pay the exercise price of the option with shares of common
stock owned by the eligible person and receive a new option to purchase shares
of common stock equal in number to the tendered shares. Furthermore,
compensatory stock grants may also be issued.

Any incentive option granted under the plan must provide for an
exercise price of not less than 100% of the fair market value of the underlying
shares on the date of grant, but the exercise price of any incentive option
granted to an eligible employee owning more than 10% of our outstanding common
stock must not be less than 110% of fair market value on the date of the grant.
The term of each plan option and the manner in which it may be exercised is
determined by the Board of Directors or the committee, provided that no option
may be exercisable more than ten years after the date of its grant and, in the
case of an incentive option granted to an eligible employee owning more than 10%
of the common stock, no more than five years after the date of the grant. The
exercise price of non-qualified options shall be determined by the Board of
Directors or the Committee, but shall not be less than the par value of our
common stock on the date the option is granted. The per share purchase price of
shares issuable upon exercise of a plan option may be adjusted in the event of
certain changes in our capitalization, but no such adjustment shall change the
total purchase price payable upon the exercise in full of options granted under
the 2005 Equity Compensation Plan.

All incentive stock options expire on or before the 10th anniversary of
the date the option is granted; however, in the case of incentive stock options
granted to an eligible employee owning more than 10% of the common stock, these
options will expire no later than five years after the date of the grant.
Non-qualified options expire 10 years and one day from the date of grant unless
otherwise provided under the terms of the option grant.

All plan options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution, and during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee dies while our
employee or within three months after termination of employment by us because of
disability, or retirement or otherwise, such options may be exercised, to the
extent that the optionee shall have been entitled to do so on the date of death
or termination of employment, by the person or persons to whom the optionee's
right under the option pass by will or applicable law, or if no such person has
such right, by his executors or administrators.

In the event of termination of employment because of death while an
employee or because of disability, the optionee's options may be exercised not
later than the expiration date specified in the option or one year after the
optionee's death, whichever date is earlier, or in the event of termination of
employment because of retirement or otherwise, not later than the expiration
date specified in the option or one year after the optionee's death, whichever
date is earlier. If an optionee's employment by us terminates because of
disability and such optionee has not died within the following three months, the
options may be exercised, to the extent that the optionee shall have been
entitled to do so at the date of the termination of employment, at any time, or
from time to time, but not later than the expiration date specified in the
option or one year after termination of employment, whichever date is earlier.
If an optionee's employment terminates for any reason other than death or
disability, the optionee may exercise the options to the same extent that the
options were exercisable on the date of termination, for up to three months
following such termination, or on or before the expiration date of the options,
whichever occurs first. In the event that the optionee was not entitled to
exercise the options at the date of termination or if the optionee does not
exercise such options (which were then exercisable) within the time specified
herein, the options shall terminate. If an optionee's employment shall terminate
for any reason other than death, disability or retirement, all right to exercise
the option shall terminate not later than 90 days following the date of such
termination of employment.

The plan provides that, if our outstanding shares are increased,
decreased, exchanged or otherwise adjusted due to a share dividend, forward or
reverse share split, recapitalization, reorganization, merger, consolidation,
combination or exchange of shares, an appropriate and proportionate adjustment
shall be made in the number or kind of shares subject to the plan or subject to
unexercised options and in the purchase price per share under such options. Any
adjustment, however, does not change the total purchase price payable for the
shares subject to outstanding options. In the event of our proposed dissolution
or liquidation, a proposed sale of all or substantially all of our assets, a
merger or tender offer for our shares of common stock, the Board of Directors
may declare that each option granted under the plan shall terminate as of a date
to be fixed by the Board of Directors; provided that not less than 30 days
written notice of the date so fixed shall be given to each participant holding
an option, and each such participant shall have the right, during the period of
30 days preceding such termination, to exercise the participant's option, in
whole or in part, including as to options not otherwise exercisable.

The Board of Directors or committee may amend, suspend or terminate the
plan at any time. However, no such action may prejudice the rights of any holder
of a stock grant or optionee who has prior thereto been granted options under
the plan. Further, no amendment to the plan which has the effect of increasing
the aggregate number of shares subject to the plan (except for adjustments due
to changes in our capitalization), or changing the definition of "eligible
person" under the plan, may be effective unless and until approved by our
stockholder in the same manner as approval of the plan was required. Any such
termination of the plan shall not affect the validity of any stock grants or
options previously granted thereunder. As the 2005 Equity Compensation Plan was
approved by our stockholders within one year of the Effective Date, all
incentive stock options automatically converted into non-qualified stock
options. Unless the plan shall previously have been suspended or terminated by
the Board of Directors, the plan, as it relates to grants of incentive stock
options, terminates on March 23, 2015.

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, or a committee of the Board, 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 April 11, 2007, there are 1,265,000 shares available shares to
be issued or options granted under the 2006 Equity Compensation Plan. Under this
Plan a total of 860,000 common shares were issued to satisfy our requirements
under a service consulting agreement from January 2006, we granted in February
2006 options to purchase 4,000,000 shares to employees, and we granted option to
purchase 75,000 shares under a consulting agreement entered into in February
2006. All options granted for the purchase by employees of 4,000,000 shares of
common stock were exercised in the year ended April 30, 2006. Of the options
granted to the consultant for the purchase of 75,000 shares of common stock a
total of 50,000 were exercised in the year ended April 30, 2006.

Plan options may either be options qualifying as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified options. In addition, the plan allows for the inclusion of a
reload option provision, which permits an eligible person to pay the exercise
price of the option with shares of common stock owned by the eligible person and
receive a new option to purchase shares of common stock equal in number to the
tendered shares. Any incentive option granted under the plan must provide for an
exercise price of not less than 100% of the fair market value of the underlying
shares on the date of grant, but the exercise price of any incentive option
granted to an eligible employee owning more than 10% of our outstanding common
stock must not be less than 110% of fair market value on the date of the grant.
The term of each plan option and the manner in which it may be exercised is
determined by the Board of Directors or the committee, provided that no option
may be exercisable more than 10 years after the date of its grant and, in the
case of an incentive option granted to an eligible employee owning more than 10%
of the common stock, no more than five years after the date of the grant. Unless
the plan is approved by our stockholders within one year of February 7, 2006, no
incentive stock options may be granted and all incentive stock options that may
have been previously granted shall automatically be converted into non-qualified
stock options.

Our officers, directors, key employees and consultants are eligible to
receive stock grants and non-qualified options under the Plan. Only our
employees are eligible to receive incentive options.

The Board of Directors or the committee determines from time to time
those of our officers, directors, key employees and consultants to whom stock
grants or plan options are to be granted, the terms and provisions of the
respective option agreements, the time or times at which such options shall be
granted, the type of options to be granted, the dates such plan options become
exercisable, the number of shares subject to each option, the purchase price of
such shares and the form of payment of such purchase price. All other questions
relating to the administration of the plan, and the interpretation of the
provisions thereof and of the related option agreements are resolved by the
Board or committee.

The 2006 Equity Compensation Plan provides that, if our outstanding
shares are increased, decreased, exchanged or otherwise adjusted due to a share
dividend, forward or reverse share split, recapitalization, reorganization,
merger, consolidation, combination or exchange of shares, an appropriate and
proportionate adjustment shall be made in the number or kind of shares subject

to the plan or subject to unexercised options and in the purchase price per
share under such options. Any adjustment, however, does not change the total
purchase price payable for the shares subject to outstanding options. In the
event of our proposed dissolution or liquidation, a proposed sale of all or
substantially all of our assets, a merger or tender offer for our shares of
common stock, the Board of Directors may declare that each option granted under
the plan shall terminate as of a date to be fixed by the Board of Directors;
provided that not less than 30 days written notice of the date so fixed shall be
given to each participant holding an option, and each such participant shall
have the right, during the period of 30 days preceding such termination, to
exercise the participant's option, in whole or in part, including as to options
not otherwise exercisable.

The Plan provides that, with respect to incentive stock options, the
aggregate fair market value (determined as of the time the option is granted) of
the shares of common stock, with respect to which incentive stock options are
first exercisable by any option holder during any calendar year cannot exceed
$100,000. The purchase price for shares subject to incentive stock options must
be at least 100% of the fair market value of our common stock on the date the
option is granted, except that the purchase price must be at least 110% of the
fair market value in the case of an incentive option granted to a person who is
a "10% stockholder". The 2006 Equity Compensation Plan provides that fair market
value is determined by the Board or the committee in accordance with procedures,
which it may from time to time establish. If the purchase price is paid with
consideration other than cash, the Board or the committee must determine the
fair value of such consideration to us in monetary terms. The exercise price of
non-qualified options is determined by the Board of Directors or the committee,
but cannot be less than the par value of our common stock on the date the option
is granted.

The per share purchase price of shares issuable upon exercise of a plan
option may be adjusted in the event of certain changes in our capitalization,
but no such adjustment shall change the total purchase price payable upon the
exercise in full of options granted under the plan.

All incentive stock options expire on or before the 10th anniversary of
the date the option is granted except as limited above. However, in the case of
incentive stock options granted to an eligible employee owning more than 10% of
the common stock, these options will expire no later than five years after the
date of the grant. Non-qualified options expire 10 years and one day from the
date of grant unless otherwise provided under the terms of the option grant.

disability, the optionee may exercise the options to the same extent that the
options were exercisable on the date of termination, for up to three months
following such termination, or on or before the expiration date of the options,
whichever occurs first. In the event that the optionee was not entitled to
exercise the options at the date of termination or if the optionee does not
exercise such options (which were then exercisable) within the time specified
herein, the options terminate. If an optionee's employment terminates for any
reason other than death, disability or retirement, all right to exercise the
option terminates not later than 90 days following the date of such termination
of employment.

The Board of Directors or committee may amend, suspend or terminate the
2006 Equity Compensation Plan at any time. However, no such action may prejudice
the rights of any holder of a stock grant or optionee who has prior thereto been
granted options under the Plan. Further, no amendment to this plan which has the
effect of increasing the aggregate number of shares subject to this plan (except
for adjustments due to changes in our capitalization), or changing the
definition of "Eligible Person" under the plan, may be effective unless and
until approved by our stockholders, if required, in the same manner as approval
of this plan, if required. Any such termination of the plan will not affect the
validity of any stock grants or options previously granted thereunder. Unless
the plan shall theretofore have been suspended or terminated by the Board of
Directors, the 2006 Equity Compensation Plan terminates on February 7, 2016.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

The Nevada Revised Statues allows us to indemnify each of our officers
and directors who are made a party to a proceeding if:

o the officer or director conducted himself or herself in good faith;

o his or her conduct was in our best interests, or if the conduct was
not in an official capacity, that the conduct was not opposed to our best
interests; and

o in the case of a criminal proceeding, he or she had no reasonable
cause to believe that his or her conduct was unlawful. We may not indemnify our
officers or directors in connection with a proceeding by or in our right, where
the officer or director was adjudged liable to us, or in any other proceeding,
where our officer or director are found to have derived an improper personal
benefit.

This provision limits our rights and the rights of our stockholders to
recover monetary damages against a director for breach of the fiduciary duty of
care except in the situations described above. This provision does not limit our
rights or the rights of any stockholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not alter the
liability of directors under federal securities laws. Our by-laws require us to
indemnify directors and officers against, to the fullest extent permitted by
law, liabilities which they may incur under the circumstances described above.

Our articles of incorporation further provide for the indemnification
of any and all persons who serve as our director, officer, employee or agent to
the fullest extent permitted under Nevada law.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
Sunwin pursuant to the foregoing provisions, we have been informed that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We 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 and rent for our principal
offices and the research and development facilities we use. For the fiscal year
ended April 30, 2006 and the nine months ended January 31, 2007 this management
fee was $123,000 and $144,337, respectively, which such amounts are included in
our general and administrative expenses in the respective financial statements
appearing elsewhere in this prospectus. As described elsewhere herein,
Pharmaceutical Corporation is controlled by Mr. Zhang, our President and
Chairman. We do not have a contract with Pharmaceutical Corporation and the
amount of annual management fee is subject to increase at Mr. Zhang's
discretion.

In February 2006, we acquired the remaining 20% of Qufu from Group
Corporation in exchange for 5,000,000 shares of our common stock valued at
$2,775,000 based on the fair market value of our common stock. Our president and
Chairman, Mr. Laiwang Zhang, is a control person of Group Corporation. At Mr.
Zhang's request, 2,000,000 shares were issued to Ms. Lin, our CEO, 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. Accordingly, in fiscal
2006 129,725 shares of common stock valued at $71,976 was recorded as
compensation to Ms. Lin and 194,588 shares of our common stock valued at
$107,964 was recorded as compensation to Mr. Zhang.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

At April 11, 2007 we had 84,404,776 shares of common stock issued and
outstanding. The following table sets forth information known to us as of April
11, 2007 relating to the beneficial ownership of shares of our common stock by:

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

Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is care of 6 Youpeng Road, Qufu, Shandong, China. 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 him (or certain persons whose ownership is attributed to
him) and that can be acquired by him 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 him, but not those held by
any other person, and which are exercisable within 60 days of the that date,
have been exercised or converted.

AMOUNT AND NATURE OF PERCENTAGE
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------ -------------------- ----------

Laiwang Zhang ...................... 12,539,802 14.9%
Dongdong Lin ....................... 4,984,108 5.9%
Chengxiang Yan ..................... 0 n/a
Fanjun Wu .......................... 1,732,052 2.1%
All officers and directors
as a group (four persons) ......... 19,255,962 22.8%

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth securities authorized for issuance under
2005 Equity Compensation Plan, our 2006 Equity Compensation Plan and any
compensation plans not previously approved by our stockholders as of April 30,
2006.

NUMBER OF
SECURITIES
REMAINING
NUMBER OF AVAILABLE
SECURITIES FOR
TO BE FUTURE
ISSUED WEIGHTED ISSUANCE
UPON AVERAGE UNDER
EXERCISE EXERCISE EQUITY
OF PRICE OF COMPENSATION
OUTSTANDING OUTSTANDING PLANS
OPTIONS, OPTIONS, (EXCLUDING
WARRANTS WARRANTS SECURITIES
AND AND REFLECTED
RIGHTS RIGHTS IN COLUMN
(A) (B) (A)) (C)
----------- ----------- ------------
Plan category

Plans approved by our stockholders: 0 N/A 0
Plans not approved by stockholders: 25,000 $0.50 1,265,000

Equity compensation plans not approved by stockholders is comprised of
options granted and/or restricted stock to be issued to employees and
non-employees, including directors, consultants, advisers, suppliers, vendors,
customers and lenders for purposes including to provide continued incentives, as
compensation for services and/or to satisfy outstanding indebtedness to them.

DESCRIPTION OF SECURITIES

GENERAL

The following description of our capital stock and provisions of our
Articles of Incorporation is a summary thereof and is qualified by reference to
our Articles of Incorporation, copies of which may be obtained upon request. Our
authorized capital consists of 200,000,000 shares of common stock, par value
$.001 per share, and 1,000,000 shares of preferred stock, par value $.001 per
share. As of April 11, 2007 there were 84,404,776 shares of common stock and no
shares of preferred stock were issued and outstanding.

COMMON STOCK

Holders of shares of common stock are entitled to share, on a ratable
basis, such dividends as may be declared by the board of directors out of funds,
legally available therefore. Upon our liquidation, dissolution or winding up,
after payment to creditors, our assets will be divided pro rata on a per share
basis among the holders of our common stock.

Each share of common stock entitles the holders thereof to one vote.
Holders of common stock do not have cumulative voting rights which mean that the
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors if they choose to do so, and, in such event, the

holders of the remaining shares will not be able to elect any directors. Our
By-Laws require that only a majority of our issued and outstanding shares need
be represented to constitute a quorum and to transact business at a
stockholders' meeting. Our common stock has no preemptive, subscription or
conversion rights and is not redeemable by us.

PREFERRED STOCK

We are authorized to issue up to 1,000,000 shares of preferred stock
having such designations, rights, preferences, powers and limitations as may be
determined by the board of directors at the time of designation. Our board of
directors, without further stockholder approval, may issue preferred stock in
one or more series from time to time and fix or alter the designations, relative
rights, priorities, preferences, qualifications, limitations and restrictions of
the shares of each series. The rights, preferences, limitations and restrictions
of different series of preferred stock may differ with respect to dividend
rates, amounts payable on liquidation, voting rights, conversion rights,
redemption provisions, sinking fund provisions and other matters. Our board of
directors may authorize the issuance of preferred stock which ranks senior to
our common stock for the payment of dividends and the distribution of assets on
liquidation. In addition, our board of directors can fix limitations and
restrictions, if any, upon the payment of dividends on our common stock to be
effective while any shares of preferred stock are outstanding. The rights
granted to the holders of any series of preferred stock could adversely affect
the voting power of the holders of common stock and issuance of preferred stock
may delay, defer or prevent a change in our control.

COMMON STOCK PURCHASE WARRANTS

In March 2007 in connection with our 2007 Unit Offering described later
in this prospectus under "Selling Security Holders", we issued common stock
purchase warrants to purchase an aggregate of 10,793,750 shares of our common
stock. The terms of these warrants provide:

o they are exercisable for a period of five years at an initial
exercise price of $0.65 per share,

o the warrant is exercisable on a "cashless" basis on or after the
required effective issue date, if there has been a "non-registration event" as
described below and on the automatic exercise date, also as described below. A
cashless exercise feature permits the holder, rather than paying the exercise
price in cash, the option of surrendering a number of warrants equal to the
exercise price of the warrants being exercised,

o the number of shares issuable upon the exercise and the exercise
price per share are subject to adjustment in the event of stock splits, stock
dividends, reclassifications or a merger or consolidation (where we are not the
surviving entity), and

o so long as the holder holds the warrant or shares of common stock
received upon the exercise of the warrant, the number of shares of our common
stock underlying the warrant and the exercise price of the warrant is also
subject to adjustment in the event we issue additional shares of our common
stock or any other securities which are convertible or exercisable into shares
of our common stock at a per share price less than the purchase price of the
shares included in the 2007 Unit Offering, which was $0.42 per share, or the
exercise price of the warrant without the consent of the holder, other than in
certain specific instances. In this event, the exercise price of the warrant
would be reset to the lower price. If necessary, we are obligated to issue
additional shares of our common stock to the holder to take into account the
amount paid, whether in cash or by cashless exercise, by the holder upon a
previous partial exercise of the warrant for which the holder still owns the
shares received thereupon.

Providing that the market price of our common stock is greater than the
then current exercise price of the warrants, any warrants which have not
previously been exercised on the expiration date of the warrant will be
automatically exercised on a cashless basis.

The holders contractually agreed to limit the exercise of the warrants
so that upon the exercise the holder's beneficial ownership would not exceed
4.99% of our common stock outstanding at the time of exercise, including shares
of our common stock which are beneficially owned by affiliates of the holder,
except during the 45 day period prior to the expiration date of the warrant of
while there is a tender offer outstanding for any of our shares of common stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Colonial Stock
Transfer Co., 66 Exchange Place, Salt Lake City, Utah 84111. Our transfer agent
may be reached by telephone at 801-355-5740.

SELLING SECURITY HOLDERS

2007 UNIT OFFERING

On March 23, 2007, we completed the sale of 9,812,500 shares of our
common stock, at an offering price of $0.42 per share, to approximately 18
institutional and accredited investors, and issued the purchasers five year
common stock purchase warrants to purchase 9,812,500 shares of common stock at
an exercise price of $0.65 per share in a private transaction exempt from
registration under the Securities Act of 1933 in reliance on exemptions provided
by Section 4(2) of that act and Rule 506 of Regulation D. We received gross
proceeds of $4,121,250 in the offering. The net proceeds from the offering will
be used for working capital purposes.

The placement agent for the transaction, Skyebanc, Inc., received a
cash fee of $15,960 and warrants to purchase 38,000 shares of common stock as
compensation for its services. We paid $25,000 to counsel for the investors as
reimbursement for legal services rendered in connection with the offering. We
also paid due diligence fees to certain investors or their advisors, as well as
a fee to China Direct Investments, Inc. who advised us in the offering, which
consisted of an aggregate of $151,305 in cash and common stock warrants to
purchase a total of 943,250 shares of common stock. The recipients of these fees
are as set forth below:

RECIPIENT CASH FEE PAID WARRANTS ISSUED
--------- ------------- ---------------

Alpha Capital Anstalt (1) ........... $ 12,468.75 56,425
Osher Capital Partners, LLC (1) ..... 59,482.50 280,325
Utica Advisors, LLC (2) ............. 71,951.25 336,750
Robert Prager (3) ................... 7,402.50 44,750
China Direct Investments, Inc. (4) .. 0 225,000
----------- -------
Totals ... $151,305.00 943,250
_________
(1) Investor in the offering.
(2) Advisor to Monarch Capital Fund, Ltd., an investor in the offering.
(3) Advisor to Double U Master Fund, LP, an investor in the offering.
(4) Advisor to our company.

The warrants issued to the placement agent and for the foregoing fees
are identical to the warrants issued in the offering. The terms of the warrants
are described earlier in this prospectus under "Description of Securities -
Common Stock Purchase Warrants."

Until the earlier of [INSERT DATE - 240 DAYS FROM EFFECTIVE DATE], 2008
or when all shares of common stock covered by this prospectus, including the
shares underlying the warrants, have been sold by the holders, we agreed not to
file any additional registration statements with the SEC, nor issue any equity,
convertible debt or other securities convertible into common stock or equity,
nor modify any existing securities, without the prior consent of the investors.
In addition, we agreed until the sooner of two years from the closing date of
the offering or until all shares of common stock covered by this prospectus,
including the shares underlying the warrants, have been sold by the holders not
to:

o enter into any equity line or credit or similar agreement,
o issue or agree to issue any floating or variable priced equity
linked securities with price reset rights,
o adopt any officer, director, employee or consultant stock option or
stock incentive plan,
o amend our certificate of incorporation or bylaws in a manner which
is adverse to the rights of the investors,
o repay, repurchase or otherwise acquire any of our securities or pay
any dividends, or
o prepay any financing related or other outstanding debt obligations.

We granted the purchasers a one year right of first refusal to purchase
additional offerings of securities we may undertake; however, we have agreed
that until the first anniversary of the closing date we will not enter into any
financing transactions which provide for the issuance of shares of our common
stock or securities convertible or exercisable into shares of our common stock.

In addition, the securities sold in this offering are subject to
certain anti-dilution protections. In the event we were to issue any shares of
common stock or securities convertible into or exercisable for shares of common
stock to any third party purchaser at a price per share of common stock or
exercise price per share which is less than the per share purchase price of the
shares of common stock in this offering, or less than the exercise price per
warrant share, respectively, without the consent of the investors then holding
securities issued in this offering, the purchaser is given the right to apply
the lowest such price to the purchase price of shares purchased and still held
by the purchaser and to shares issued upon exercise of the warrants and still
held by the purchaser (which will result in the issuance of additional shares to
the purchaser) and to the exercise price of any unexercised warrants. The
anti-dilution provisions and the right of first refusal do not apply with
respect to certain limited exceptions, including strategic license agreements,
mergers and similar acquisitions and certain option programs. The subscription
agreements for the offering also contained customary, cross indemnification and
contribution provisions.

We agreed to file a registration statement with the SEC covering the
public resale of the shares of common stock underlying the shares of common
stock sold in the offering, including the shares issuable upon the exercise of
the warrants, within 45 days from the closing of the offering. This prospectus
is part of that registration statement. We also agreed to use our best efforts
to cause the SEC to declare the registration statement effective within 120 days
following the closing date. If we fail to meet these deadlines, we are required
to pay the purchasers liquidated damages in cash in an amount equal to 2% of the
purchase price of the shares for each 30 days (or pro rata for any period of
less than 30 days), but not to exceed in 180 days of liquidated damages. The
transaction documents also provide for the payment of liquidated damages to the
investors in additional certain events, including our failure to maintain an
effective registration statement. We agreed to pay all expenses of the
registration statement.

THE SELLING SECURITY HOLDERS

At April 11, 2007 we had 84,404,776 shares of our common stock issued
and outstanding. This prospectus relates to periodic offers and sales of
21,246,250 shares of our common stock by the selling security holders listed
below and their pledgees, donees and other successors in interest, which
includes:

o 10,452,500 shares which are presently outstanding which were either
sold in the 2007 Unit Offering or otherwise issued by us as
described below, and
o 10,793,750 shares issuable upon the exercise of the common stock
purchase warrants issued in that transaction.

The following table sets forth:

o the name of each selling security holder,
o the number of shares owned, and
o the number of shares being registered for resale by the selling
security holder.

We may amend or supplement this prospectus from time to time to update
the disclosure set forth in this prospectus. All of the securities owned by the
selling security holders may be offered hereby. Because the selling security
holders may sell some or all of the securities owned by them, and because there
are currently no agreements, arrangements or understandings with respect to the
sale of any of the securities, no estimate can be given as to the number of
securities that will be held by the selling security holders upon termination of
any offering made hereby. If all the securities offered hereby are sold, the
selling security holders will not own any securities after the offering.

SHARES
TO BE % TO BE
NUMBER OF % OWNED SHARES OWNED OWNED
SHARES BEFORE TO BE AFTER AFTER
NAME OF SELLING SECURITY HOLDER OWNED OFFERING OFFERED OFFERING OFFERING
- ------------------------------------------- --------- -------- ---------- -------- --------

Alpha Capital Anstalt (1) ................. 2,431,425 2.84% 2,431,425 0 0 %
Alvin Siegel (2) .......................... 100,000 * 100,000 0 0 %
Brio Capital L.P. (3) ..................... 700,000 * 700,000 0 0 %
Capital One Resources Co., Ltd. (4) ....... 500,000 * 500,000 0 0 %
China Direct Investments, Inc. (5) ........ 365,000 * 365,000 0 0 %
China Discovery Investors, Ltd. (6) ....... 553,000 * 500,000 53,000 *
CMS Capital (7) ........................... 700,000 * 700,000 0 0 %
Double U Master Fund, LP (8) .............. 1,175,000 1.38% 1,175,000 0 0 %
Harborview Master Fund L.P. (9) ........... 1,175,000 1.38% 1,175,000 0 0 %
Jeda Services Corp. (10) .................. 100,000 * 100,000 0 0 %
Lake Street Fund, L.P. (11) ............... 950,000 1.12% 950,000 0 0 %
Monarch Capital Fund, Ltd. (12) ........... 2,375,000 2.77% 2,375,000 0 0 %
Nite Capital, L.P. (13) ................... 950,000 1.12% 950,000 0 0 %
Osher Capital Partners, LLC (14) .......... 980,325 1.15% 980,325 0 0 %
Penson Financial Services, Inc. ...........
SEP IRA FBO: David Stein (15) ............ 150,000 * 150,000 0 0 %
Peter Fulton (16) ......................... 14,440 * 14,440 0 0 %
Platinum Long Term Growth VI (17) ......... 2,375,000 2.77% 2,375,000 0 0 %
Alicia B. Church (18) ..................... 47,620 * 47,620 0 0 %
Anna L. LaPerna (19) ...................... 47,620 * 47,620 0 0 %
Dennis Church (20) ........................ 95,240 * 95,240 0 0 %
George R. Church (21) ..................... 23,810 * 23,810 0 0 %
Harry L. Church (22) ...................... 23,810 * 23,810 0 0 %
Michael E. Tanner (23) .................... 47,620 * 47,620 0 0 %
Richard J. Church (24) .................... 1,866,660 2.19% 1,866,660 0 0 %
George L. Church and Dorothy R. Church (25) 47,620 * 47,620 0 0 %
Robert Prager (26) ........................ 44,750 * 44,750 0 0 %
Skyebanc, Inc. (27) ....................... 23,560 * 23,560 0 0 %
Treshnish Investment, Inc. (28) ........... 700,000 * 700,000 0 0 %
Utica Advisors (29) ....................... 336,750 * 336,750 0 0 %
Whalehaven Capital Fund Limited (30) ...... 1,900,000 2.23% 1,900,000 0 0 %
Yewen Xi (31) ............................. 500,000 * 500,000 0 0 %
----------
21,246,250
==========

* represents less than 1%

(1) The number of shares owned and offered includes 1,187,500 shares of our
common stock which are presently outstanding and 1,243,925 shares of our common
stock underlying common stock purchase warrants with at an exercise price of
$0.65 per share. Alpha Capital Anstalt received warrants to purchase 56,425of
these shares as a due diligence fee. The number of shares of our common stock
acquired by the holder upon exercise of the warrants is limited to the extent
necessary to ensure that following the exercise the total number of shares of
our common stock beneficially owned by the holder and its affiliates at any one
time does not exceed 4.99% of our issued and outstanding common stock. Messrs.
Konrad Ackerman and Rainer Posch have voting and dispositive control over
securities owned by Alpha Capital Anstalt.

(2) The number of shares owned and offered includes 50,000 shares of our common
stock which are presently outstanding and 50,000 shares of our common stock
underlying common stock purchase warrants with an exercise price of $0.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and his affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock.

(3) The number of shares owned and offered includes 350,000 shares of our common
stock which are presently outstanding and 350,000 shares of our common stock
underlying common stock purchase warrants with at a price of $.65 per share. The
number of shares of our common stock acquired by the holder upon exercise of the
warrants is limited to the extent necessary to ensure that following the
exercise the total number of shares of our common stock beneficially owned by
the holder or its affiliates at any one time does not exceed 4.99% of our issued
and outstanding common stock. Mr. Shaye Hirsch has voting dispositive control
over securities owned by Brio Capital L.P.

(4) The number of shares owned and offered includes 500,000 shares of our common
stock which are presently outstanding. We issued these shares to Capital One
Resource Co., Ltd. as compensation for consulting services rendered under the
terms of our agreement with China Direct Investments, Inc. See "Management -
U.S. Advisor." Capital One Resource Co., Ltd. is a subsidiary of China Direct,
Inc. (OTCBB: CHND) and an affiliate of China Direct Investments, Inc. Mr. Marc
Siegel, President of China Direct, Inc., has voting and dispositive control over
securities held by Capital One Resource Co., Ltd. The number of shares owned by
Capital One Resource Co., Ltd. excludes our securities owned by China Direct
Investments, Inc. (see footnote 5 below) and China Discovery Investors, Ltd.
(see footnote 6 below).

(5) The number of shares owned and offered includes 140,000 shares of our common
stock which are presently outstanding and 225,000 shares of common stock
underlying common stock purchase warrants with an exercise price of $0.65 per
share. We issued the 140,000 shares of common stock to China Direct Investments
as compensation under the terms of the consulting agreement with that company,
and we issued the warrants as compensation for their services in advising our
company in connection with the 2007 Unit Offering. See "Management - U.S.
Advisor." China Direct Investments, Inc. is a subsidiary of China Direct, Inc.
(OTCBB: CHND) and an affiliate of Capital One Resource Co., Ltd. Mr. Marc
Siegel, President of China Direct, Inc., has voting dispositive control over
securities owned by China Direct Investments, Inc. The number of shares of our
common stock acquired by the holder upon exercise of the warrants is limited to
the extent necessary to ensure that following the exercise the total number of
shares of our common stock beneficially owned by the holder and its affiliates
at any one time does not exceed 4.99% of our issued and outstanding common
stock.

(6) The number of shares owned includes 250,000 shares of common stock which are
presently outstanding and 250,000 shares of our common stock underlying common
stock purchase warrants with an exercise price of $.65 per share held by China
Discovery Investors, Ltd. and 53,000 shares held individually by Mr. Marc
Siegel. The number of shares offered includes 250,000 shares of common stock
presently outstanding and 250,000 shares of our common stock underlying common
stock purchase warrants with an exercise price of $.65 per share. The number of
shares of our common stock acquired by the holder upon exercise of the warrants
is limited to the extent necessary to ensure that following the exercise the
total number of shares of our common stock beneficially owned by the holder and
its affiliates at any one time does not exceed 4.99% of our issued and
outstanding common stock. Mr. Marc Siegel has voting dispositive control over
securities owned by China Discovery Investors, Ltd. The number of shares owned
by China Discovery Investors, Ltd. excludes any securities owned by Capital One
Resource Co., Ltd. (see footnote 3 above) and China Direct Investments, Inc.
(see footnote 4 above), both subsidiaries of China Direct, Inc., a company of
which Mr. Siegel is President and over which he has voting and dispositive
control.

(7) The number of shares owned and offered includes 350,000 shares of our common
stock which are presently outstanding and 350,000 shares of our common stock
underlying common stock purchase warrants with an exercise price of $.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Martin Lipsker has
voting dispositive control over securities owned by CMS Capital.

(8) The number of shares owned and offered includes 587,500 shares of common
stock which are presently outstanding and 587,500 shares of our common stock
underlying common stock purchase warrants with an exercise price of $.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Double U Master Fund
L.P. is a master fund in a master feeder structure whose general partner is B&W
Equities, LLC. Mr. Isaac Winehouse is the manager of B&W Equities, LLC and has
voting dispositive control over securities owned by Double U Master Fund, LP.

(9) The number of shares owned and offered includes 587,500 shares of common
stock which are presently outstanding and 587,500 shares of our common stock
underlying common stock purchase warrants with an exercise price of $.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock

beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Messrs. Richard
Rosenblum and David Stefansky are the managers of Harborview Advisors, LLC and
have voting and dispositive control over securities held by Harborview Master
Fund L.P.

(10) The number of shares owned and offered includes 50,000 shares of common
stock which are presently outstanding and 50,000 shares of our common stock
underlying common stock purchase warrants with an exercise price of $.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. . Mr. David Stein has
voting dispositive control over securities owned by Jeda Services Corp. The
number of shares owned by Jeda Services Corp. excludes securities held by Penson
Financial Services, Inc. SEP IRA FBO: David Stein (see footnote 15 below) over
which Mr. Stein has voting and dispositive control.

(11) The number of shares owned and offered includes 475,000 shares of our
common stock which are presently outstanding and 475,000 shares of our common
stock underlying common stock purchase warrants with an exercise price of $0.65
per share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Scott Hood has
voting and dispositive control over securities owned by Lake Street Fund, L.P.

(12) The number of shares owned and offered includes 1,187,500 shares of our
common stock which are presently outstanding and 1,187,500 shares of our common
stock underlying common stock purchase warrants with an exercise price of $0.65
per share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Joseph Franck has
voting and dispositive control over securities owned by Monarch Capital Fund
Ltd.

(13) The number of shares owned and offered includes 475,000 shares of common
stock which are presently outstanding and 475,000 shares of our common stock
underlying common stock purchase warrants with an exercise price of $.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. John Prinz has
voting dispositive control over securities owned by Nite Capital L.P.

(14) The number of shares owned and offered includes 350,000 shares of our
common stock which are presently outstanding and 630,325 shares of our common
stock underlying common stock purchase warrants with an exercise price of $0.65
per share. Osher Capital Inc. received 280,325 of these warrants as a due
diligence fee. The number of shares of our common stock acquired by the holder
upon exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Yisroel Kluger has
voting and dispositive control over securities owned by Osher Capital, LLC.

(15) The number of shares owned and offered includes 75,000 shares of common
stock which are presently outstanding and 75,000 shares of our common stock
underlying common stock purchase warrants with an exercise price of $.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that

following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. David Stein has
voting and dispositive control over securities held in the SEP IRA for the
benefit of Mr. Stein. The number of securities owned in the SEP IRA for the
benefit of Mr. Stein excludes securities owned by Jeda Services Corp. (see
footnote 10 above) over which Mr. Stein has voting and dispositive control.

(16) The number of shares owned and offered includes 14,440 shares of common
stock underlying common stock purchase warrants with an exercise price of $0.65
per share. The warrants were transferred to Mr. Fulton by his employer,
Skyebanc, Inc. which received the warrants as partial compensation for its
placement agent fees in the 2007 Unit Offering. The number of shares of our
common stock acquired by the holder upon exercise of the warrants is limited to
the extent necessary to ensure that following the exercise the total number of
shares of our common stock beneficially owned by the holder and his affiliates
at any one time does not exceed 4.99% of our issued and outstanding common
stock.

(17) The number of shares owned and offered includes 1,187,500 shares of our
common stock which are presently outstanding and 1,187,500 shares of our common
stock underlying common stock purchase warrants with an exercise price of $0.65
per share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Mark Nordlicht has
voting dispositive control over securities owned by Platinum Long Term Growth
VI.

(18) The number of shares owned and offered includes 23,810 shares of our common
stock presently outstanding and 23,810 shares of our common stock underlying
common stock purchase warrants with an exercise price of $0.65 per share. The
number of shares of our common stock acquired by the holder upon exercise of the
warrants is limited to the extent necessary to ensure that following the
exercise the total number of shares of our common stock beneficially owned by
the holder and her affiliates at any one time does not exceed 4.99% of our
issued and outstanding common stock.

(19) The number of shares owned and offered includes 23,810 shares of our common
stock which are presently outstanding and 23,810 shares of our common stock
underlying common stock purchase warrants with an exercise price of $0.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and her affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock.

(20) The number of shares owned and offered includes 47,620 shares of our common
stock presently outstanding and 47,620 shares of our common stock underlying
common stock purchase warrants with an exercise price of $0.65 per share. The
number of shares of our common stock acquired by the holder upon exercise of the
warrants is limited to the extent necessary to ensure that following the
exercise the total number of shares of our common stock beneficially owned by
the holder and his affiliates at any one time does not exceed 4.99% of our
issued and outstanding common stock.

(21) The number of shares owned and offered includes 11,905 shares of our common
stock which are presently outstanding and 11,905 shares of our common stock
underlying common stock purchase warrants with an exercise price of $0.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and his affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock.

(22) The number of shares owned and offered includes 11,905 shares of our common
stock which are presently outstanding and 11,905 shares of our common stock
underlying common stock purchase warrants with an exercise price of $0.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and his affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock.

(23) The number of shares owned and offered includes 23,810 shares of our common
stock which are presently outstanding and 23,810 shares of our common stock
underlying common stock purchase warrants with an exercise price of $0.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and his affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock.

(24) The number of shares owned and offered includes 933,330 shares of our
common stock which are presently outstanding and 933,330 shares of our common
stock underlying common stock purchase warrants with an exercise price of $0.65
per share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and her affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Church was an
executive officer and member of our Board of Directors from May 2000 until April
2004 and has provided business advisory services to us from time to time. [

(25) The number of shares owned and offered includes 23,810 shares of our common
stock which are presently outstanding and 23,810 shares of our common stock
underlying common stock purchase warrants with an exercise price of $0.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and their affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock.

(26) The number of shares owned and offered includes 23,560 shares of our common
stock which are underlying common stock purchase warrants with an exercise price
of $0.65 per share which Mr. Prager received as a due diligence fee as set forth
above. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and his affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock.

(27) The number of shares owned and offered includes 38,000 shares of our common
stock underlying common stock purchase warrants with an exercise price of $.65
per share. Skyebanc, Inc., a broker/dealer and member of the NASD, received
these warrants as partial compensation for its placement agent fee for the 2007
Unit Offering. The number of shares of our common stock acquired by the holder
upon exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Vincent Labarbara
has voting dispositive control over securities owned by Skyebanc, Inc.

(28) The number of shares owned and offered includes owns 350,000 shares of our
common stock which are presently outstanding and 350,000 shares of our common
stock underlying warrants with an exercise price of $.65 per share. The number
of shares of our common stock acquired by the holder upon exercise of the
warrants is limited to the extent necessary to ensure that following the

exercise the total number of shares of our common stock beneficially owned by
the holder and its affiliates at any one time does not exceed 4.99% of our
issued and outstanding common stock. Mr. Bernard Korolnik has voting dispositive
control over securities owned by Treshnish Investment, Inc.

(29) The number of shares owned and offered includes 336,750 shares of our
common stock underlying warrants with an exercise price of $.65 per share. Utica
Advisors received these warrants as a due diligence fee as set forth above. The
number of shares of our common stock acquired by the holder upon exercise of the
warrants is limited to the extent necessary to ensure that following the
exercise the total number of shares of our common stock beneficially owned by
the holder and its affiliates at any one time does not exceed 4.99% of our
issued and outstanding common stock. Mr. Solomon Eisenberg has voting
dispositive control over securities owned by Utica Advisors.

(30) The number of shares owned and offered includes 950,000 shares of common
stock which are presently outstanding and 950,000 shares of our common stock
underlying common stock purchase warrants with an exercise price of $.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and its affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Michael Finkelstein
has voting dispositive control over securities owned by Whalehaven Capital Fund
Limited.

(31) The number of shares owned and offered includes 250,000 shares of common
stock which are presently outstanding and 250,000 shares of our common stock
underlying common stock purchase warrants with an exercise price of $.65 per
share. The number of shares of our common stock acquired by the holder upon
exercise of the warrants is limited to the extent necessary to ensure that
following the exercise the total number of shares of our common stock
beneficially owned by the holder and his affiliates at any one time does not
exceed 4.99% of our issued and outstanding common stock. Mr. Xi has also
provided business advisory services to us from time to time.

None of the selling security holders are broker-dealers or affiliates
of broker-dealers, other than Skyebanc, Inc. which received the securities as
compensation for services as placement agent in the 2007 Unit Offering, and Mr.
Peter Fulton, an employee of Skybanc, Inc. as described in footnote 16 above.

None of these firms or individuals have any arrangement with any person
to participate in the distribution of such securities. None of the selling
security holders has, or within the past three years has had, any position,
office or other material relationship with us or any of our predecessors or
affiliates, other than as described previously in this section or as set forth
below

Certain of the selling security holders have participated in a prior
financing concluded by us in July 2004 or April 2005. The following table
describes their participation. The table does not give effect to the exercise of
the warrants which took place subsequent to the date of the financing.

SECURITIES PURCHASED
------------------------------
NUMBER OF SHARES NUMBER OF
NAME OF INVESTOR OFFERING OF COMMON STOCK WARRANTS(1)
- ---------------- -------- --------------- -----------

Yewen Xi ......................... July 2004 300,000 300,000
Alvin Siegel ..................... April 2005 250,000 375,000
Lake Street Fund, L.P. ........... April 2005 1,000,000 1,500,000
Monarch Capital Fund, Ltd. ....... April 2005 1,000,000 1,500,000
Osher Capital, Inc.(2) ........... April 2005 250,000 375,000
Richard J. Church ................ April 2005 750,000 1,125,000
China Discovery Investors, Inc. .. April 2005 375,000 600,000

(1) Each warrant was convertible into one share of common stock at an exercise
price of $0.15 per share. All warrants, including those issued to investors in
the April 2005 offering which did not investment in our 2007 Unit Offering, have
subsequently been exercised.

(2) Osher Capital, Inc. is an affiliate of Osher Capital Partners, LLC, an
investor in the 2007 Unit Offering. In addition to the securities purchased in
the offering, Osher Capital, Inc. received 112,500 shares of our common stock as
partial consideration for a due diligence fee.

PLAN OF DISTRIBUTION

Each selling security holder and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on OTC Bulletin Board or any other stock exchange, market or
trading facility on which the shares are traded or in private transactions.
These sales may be at fixed or negotiated prices. A selling security holder may
use any one or more of the following methods when selling shares:

o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales entered into after the effective date of
the registration statement of which this prospectus is a part;
o broker-dealers may agree with the selling security holders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise; or
o any other method permitted pursuant to applicable law.

The selling security holders may also sell shares under Rule 144 under
the Securities Act of 1933, if available, rather than under this prospectus.

Broker-dealers engaged by the selling security holders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling security holders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated, but, except as set forth in a supplement to this
prospectus, in the case of an agency transaction not in excess of a customary
brokerage commission in compliance with NASDR Rule 2440; and in the case of a
principal transaction a markup or markdown in compliance with NASDR IM-2440.

In connection with the sale of the common stock or interests therein,
the selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in
short sales of the common stock in the course of hedging the positions they
assume. The selling security holders may also sell shares of the common stock
short and deliver these securities to close out their short positions, or loan
or pledge the common stock to broker-dealers that in turn may sell these

securities. The selling security holders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

The selling security holders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933. Each selling security
holder has informed us that he/it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the common
stock.

We are required to pay certain fees and expenses incurred by us
incident to the registration of the shares. We have agreed to indemnify the
selling security holders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act of 1933.

Because selling security holders may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, they will be subject to the
prospectus delivery requirements of the Securities Act of 1933. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 under the Securities Act of 1933 may be sold under Rule 144 rather than
under this prospectus. Each selling security holder has advised us that they
have not entered into any written or oral agreements, understandings or
arrangements with any underwriter or broker-dealer regarding the sale of the
resale shares. There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the selling security
holders.

We agreed to keep this prospectus effective until the earlier of (i)
the date on which the shares may be resold by the selling security holders
without registration and without regard to any volume limitations by reason of
Rule 144(e) under the Securities Act of 1933 or any other rule of similar effect
or (ii) all of the shares have been sold pursuant to the prospectus or Rule 144
under the Securities Act of 1933 or any other rule of similar effect. The resale
shares will be sold only through registered or licensed brokers or dealers if
required under applicable state securities laws. In addition, in certain states,
the resale shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with. Under applicable
rules and regulations under the Securities Exchange Act of 1934, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the selling security holders will be subject to
applicable provisions of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of the common stock by the selling security
holders or any other person. We will make copies of this prospectus available to
the selling security holders and have informed them of the need to deliver a
copy of this prospectus to each purchaser at or prior to the time of the sale.

This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. We will assume no obligation or
responsibility whatsoever to determine a method of disposition for such shares
or to otherwise include such shares within the confines of any registered
offering other than the registration statement of which this prospectus is a
part.

We will use our best efforts to file one or more post-effective
amendments to the registration statement of which this prospectus is a part to
describe any material information with respect to the plan of distribution not
previously disclosed in this prospectus or any material change to such
information in this prospectus. This may include, to the extent required under
the Securities Act of 1933, that a supplemental prospectus be filed, disclosing:

o the name of any broker-dealers;
o the number of common shares involved;
o the price at which the common shares are to be sold;
o the commissions paid or discounts or concessions allowed to
broker-dealers, where applicable;
o that broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus,
as supplemented; and
o any other facts material to the transaction.

SHARES ELIGIBLE FOR FUTURE SALE

As of April 11, 2007, we had 84,404,776 shares of common stock issued
and outstanding. Of the issued and outstanding shares, 34,184,010 shares of our
common stock are "restricted securities" and we have included 10,452,500 of
those shares in the registration statement of which this prospectus is a part.
In general, Rule 144 permits a stockholder who has owned restricted shares for
at least one year, to sell without registration, within a three month period, up
to one percent of our then outstanding common stock. We must be current in our
reporting obligations in order for a stockholder to sell shares under Rule 144.
In addition, stockholders other than our officers, directors or 5% or greater
stockholders who have owned their shares for at least two years may sell them
without volume limitation or the need for our reports to be current.

We cannot predict the effect, if any, that market sales of common stock
or the availability of these shares for sale will have on the market price of
the shares from time to time. Nevertheless, the possibility that substantial
amounts of common stock may be sold in the public market could adversely affect
market prices for the common stock and could damage our ability to raise capital
through the sale of our equity securities.

LEGAL MATTERS

The legality of the securities offered by this prospectus will be
passed upon for us by Schneider Weinberger & Beilly LLP, Boca Raton, Florida.

EXPERTS

Our financial statements as of and for the years ended April 30, 2006
and 2005 included in this prospectus has been audited by Sherb & Co. LLP,
independent registered public accounting firm, as indicated in their report with
respect thereto, and have been so included in reliance upon the report of such
firm given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC the registration statement on Form SB-2
under the Securities Act for the common stock offered by this prospectus. This
prospectus, which is a part of the registration statement, does not contain all
of the information in the registration statement and the exhibits filed with it,
portions of which have been omitted as permitted by SEC rules and regulations.
For further information concerning us and the securities offered by this
prospectus, we refer to the registration statement and to the exhibits filed
with it. Statements contained in this prospectus as to the content of any
contract or other document referred to are not necessarily complete. In each
instance, we refer you to the copy of the contracts and/or other documents filed
as exhibits to the registration statement, and these statements are qualified in
their entirety by reference to the contract or document.

The registration statement, including all exhibits, and other materials
we file with the SEC, may be inspected without charge at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Copies of these
materials may also be obtained from the SEC's Public Reference at 100 F Street,
N.E., Washington D.C. 20549, upon the payment of prescribed fees. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.

We file annual and special reports and other information with the SEC.
Certain of our SEC filings are available over the Internet at the SEC's web site
at http://www.sec.gov. You may also read and copy any document we file with the
SEC at its public reference facilities:

Public Reference Room Office
100 F Street, N.E.
Washington, D.C. 20549

You may also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. Callers in the United States can also call
1-800-732-0330 for further information on the operations of the public reference
facilities.

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2007

INDEX

Page
----

Consolidated Balance Sheet
January 31, 2007 (Unaudited) ............................................ F-2

Consolidated Statements of Operations (Unaudited)
For the Three and Nine months Ended January 31, 2007 and 2006 ........... F-3

Consolidated Statements of Cash Flows (Unaudited)
For the Nine months Ended January 31, 2007 and 2006 ..................... F-4

Notes to Consolidated Financial Statements.................................. F-5

F-1

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
January 31, 2007
(Unaudited)

ASSETS

CURRENT ASSETS:
Cash .......................................................... $ 7,152,142
Accounts receivable (net of allowance for doubtful accounts
of $172,272) ................................................ 2,947,568
Inventories, net .............................................. 4,264,049
Prepaid expenses and other .................................... 955,852
------------

Total Current Assets ...................................... 15,319,611

PROPERTY AND EQUIPMENT (net of accumulated depreciation
of $2,295,383) .............................................. 5,184,666
------------

Total Assets .............................................. $ 20,504,277
============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses ......................... $ 1,684,095
Due to related parties ........................................ 1,297
------------

Total Current Liabilities ................................. 1,685,392

OTHER PAYABLES .................................................. 138,556
------------

Total Liabilities ......................................... 1,823,948
------------

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;
73,942,276 shares issued and outstanding) ................... 73,942
Additional paid-in capital .................................... 12,025,899
Retained earnings ............................................. 7,452,976
Deferred compensation ......................................... (969,212)
Subscription receivable ....................................... (602,900)
Other comprehensive income - foreign currency ................. 699,624
------------

Total Stockholders' Equity ................................ 18,680,329
------------

Total Liabilities and Stockholders' Equity ................ $ 20,504,277
============

See notes to unaudited consolidated financial statements

F-2

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

For the Three Month For the Nine Month
Ended January 31, Ended January 31,
-------------------------- --------------------------
2007 2006 2007 2006
----------- ------------ ----------- ------------

NET SALES ...................................... $ 3,798,352 $ 3,841,882 $11,562,948 $ 11,065,853

COST OF SALES .................................. 2,850,491 2,615,530 8,518,605 7,555,073
----------- ------------ ----------- ------------

GROSS PROFIT ................................... 947,861 1,226,352 3,044,343 3,510,780
----------- ------------ ----------- ------------

OPERATING EXPENSES:
Bad Debt Recovery ............................ - (619,259) - (867,323)
Stock-based consulting expense ............... 128,848 143,143 414,693 278,517
Selling expenses ............................. 409,436 522,237 1,314,792 1,371,548
General and administrative ................... 360,103 40,077 830,020 760,116
----------- ------------ ----------- ------------

Total Operating Expenses ................. 898,387 86,198 2,559,505 1,542,858
----------- ------------ ----------- ------------

INCOME FROM OPERATIONS ......................... 49,474 1,140,154 484,838 1,967,922

OTHER INCOME (EXPENSE):
Other income (expense) ....................... 10,626 891 8,370 152,771
Interest income (expense) .................... 13,826 (15,818) 57,886 (30,321)
----------- ------------ ----------- ------------

Total Other Income (Expense) ............. 24,452 (14,927) 66,256 122,450
----------- ------------ ----------- ------------

INCOME BEFORE PROVISION INCOME TAXES ........... 73,926 1,125,227 551,094 2,090,372

PROVISION FOR INCOME TAXES ..................... - 2,313 - 523,906
----------- ------------ ----------- ------------

INCOME BEFORE MINORITY INTEREST ................ 73,926 1,127,540 551,094 2,614,278

MINORITY INTEREST IN INCOME OF SUBSIDIARY ...... - (256,342) - (589,174)
----------- ------------ ----------- ------------

NET INCOME ..................................... 73,926 871,198 551,094 2,025,104

OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation ...... 418,076 52,004 669,624 183,011
----------- ------------ ----------- ------------

COMPREHENSIVE INCOME ........................... $ 492,002 $ 923,202 $ 1,220,718 $ 2,208,115
=========== ============ =========== ============

NET INCOME PER COMMON SHARE - BASIC AND DILUTED:
Net income per common share - basic .......... $ 0.00 $ 0.02 $ 0.01 $ 0.04
=========== ============ =========== ============
Net income per common share - diluted ........ $ 0.00 $ 0.02 $ 0.01 $ 0.04
=========== ============ =========== ============

Weighted Common Shares Outstanding - basic ... 73,942,276 49,778,814 73,941,003 45,481,225
=========== ============ =========== ============
Weighted Common Shares Outstanding - diluted . 73,942,276 50,970,533 73,941,003 45,854,530
=========== ============ =========== ============

See notes to unaudited consolidated financial statements

F-3

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the Nine Months
Ended January 31,
--------------------------
2007 2006
----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ................................................ $ 551,094 $ 2,025,104
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ........................... 448,064 159,952
Stock-based consulting and fees ......................... 414,694 316,312
Minority interest ....................................... - 589,174
Allowance for doubtful accounts ......................... (100,496) (805,294)
Changes in assets and liabilities:
Accounts receivable ..................................... (150,150) 250,967
Inventories ............................................. (2,430,826) 138,215
Prepaid and other current assets ........................ (13,946) 211,287
Due from/to related parties ............................. (7,459) 67,190
Accounts payable and accrued expenses ................... 70,698 (176,381)
Income taxes payable .................................... - (523,906)
Advances to customers ................................... (38,505) 61,937
----------- -----------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ......... (1,256,832) 2,314,557
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ...................................... (36,181) (2,156,597)
----------- -----------

NET CASH FLOWS USED IN INVESTING ACTIVITIES ................. (36,181) (2,156,597)
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock option and warrants ....... 12,500 2,053,050
Proceeds from subscription receivable ..................... 3,077,100 -
Proceeds from short term loan ............................. 720,000 -
Payment on short term loans .............................. (263,294) -
Payments on loans payable ................................. (720,000) (289,506)
----------- -----------

NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES ............. 2,826,306 1,763,544
----------- -----------

EFFECT OF EXCHANGE RATE ON CASH ............................. 185,158 36,522
----------- -----------

NET INCREASE IN CASH ........................................ 1,718,451 1,958,026

CASH - beginning of year ................................... 5,433,691 1,674,298
----------- -----------

CASH - end of period ........................................ $ 7,152,142 $ 3,632,324
=========== ===========

SUPPLEMENTAL DISCLOSUREOF CASH FLOW INFORMATION:
Cash paid for
Interest .................................................. $ 12,122 $ -
=========== ===========
Taxes ..................................................... $ - $ -
=========== ===========

Common stock issued for deferred compensation ............. $ - $ 532,833
=========== ===========
Stock options granted for deferred compensation ........... $ - $ 106,546
=========== ===========
Due from related party exchanged for property and equipment $ - $ 978,240
=========== ===========

See notes to unaudited consolidated financial statements.

F-4

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

Sunwin International Neutraceuticals, Inc. was incorporated on August 27, 1987
in the State of Nevada as Network USA, Inc. The Company does not have any
substantive operations of its own and substantially all of its primary business
operations are conducted through its 100% owned subsidiary, Qufu Natural Green
Engineering Co. Ltd. and its subsidiaries ("Qufu"). Qufu is a Chinese limited
liability company, organized under the laws of the Peoples Republic of China,
with principal offices in Qufu, China. Qufu was founded in July 1999 and was
re-registered in January 2004 to amend its capital structure. Qufu has three
wholly owned Chinese subsidiaries, Shengya Veterinary Medicine Co., Ltd
(formerly known as Shangong Qufu Veterinary Medicine Plant), Shengyuan Herb
Extraction Co., Ltd., and Qufu Chinese Medicine Factory. Qufu is engaged in the
areas of essential traditional Chinese medicine, organic herbal medicine,
neutraceutical products, natural sweetener called Stevioside, and animal
medicine prepared from organic herbal ingredients.

On January 26, 2004, effective February 1, 2004, Sunwin Tech Group, Inc.,
("Sunwin Tech") a Florida corporation that became a wholly-owned subsidiary of
the Company (on April 30, 2004; see the following paragraph), entered into a
Stock Purchase Agreement with Shandong Shengwang Pharmaceutical Group
Corporation, Ltd. ("Group Corporation") a major shareholder of Qufu. Under this
agreement, Group Corporation exchanged 80% of the issued and outstanding capital
stock of Qufu in exchange for 100% of the issued and outstanding capital stock
of Sunwin Tech with a fair market value of $95,000. The Stock Purchase Agreement
has been accounted for as a reverse acquisition under the purchase method for
business combinations. Accordingly, the combination of the two companies is
recorded as a recapitalization of Qufu, pursuant to which Sunwin Tech is treated
as the continuing entity.

On April 30, 2004, under a Share Exchange Agreement, the Company issued
17,000,004 shares of its common stock for the acquisition of all of the
outstanding capital stock of Sunwin Tech from its four shareholders, Messrs.
Baozhong Yuan, Laiwang Zhang, Xianfeng Kong and Lei Zhang. For financial
accounting purposes, the exchange of stock was treated as a recapitalization of
Sunwin Tech with the former shareholders of the Company retaining 11,492,268 or
approximately 36.3% of the outstanding stock. The consolidated financials
statements reflect the change in the capital structure of the Company due to the
recapitalization and the consolidated financial statements reflect the
operations of the Company and its subsidiaries for the periods presented.

In connection with the Share Exchange Agreement, Sunwin Tech purchased 4,500,000
shares of the common stock of the Company owned by the former principal
shareholders of the Company, for $175,000, and, at the closing Sunwin Tech
distributed the 4,500,000 shares to Baozhong Yuan, Laiwang Zhang, Xianfeng Kong
and Lei Zhang, pro-rata according to their ownership of Sunwin Tech immediately
prior to the closing. This transaction did not affect the issuance of common
shares by the Company.

F-5

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

THE COMPANY (CONTINUED)

Effective July 27, 2004 the Company changed its name to Sunwin International
Neutraceuticals, Inc. The Company filed an amendment to its Articles of
Incorporation on July 12, 2004 to change its name, and to increase the number of
shares of common stock it is authorized to issue to 200,000,000 with a par value
of $.001 per share.

Also, effective July 27, 2004, the Company effected a six for one (6:1) forward
stock split of its issued and outstanding common stock. Each stockholder of
record at the close of business on July 27, 2004 received five additional shares
of common stock for each share of common stock held. All share and per-share
information has been restated to reflect this forward stock split.

As noted previously, prior to our acquisition of Sunwin Tech, effective February
1, 2004, Sunwin Tech acquired 80% of Qufu ("the Qufu Merger") from Group
Corporation, an entity controlled by Mr. Laiwang Zhang, our President and
Chairman, in exchange for all shares of Sunwin Tech's common stock. At the time
of this merger the minority shareholders of Qufu included Shandong Shengwang
Pharmaceutical Corporation Ltd. ("Corporation Ltd.") (17%) and Shandong
Shengwang Group Corporation (2.5%) ("Shengwang Group"), both of which are
controlled by our President and Chairman. The remaining minority shareholder,
Qufu Veterinary Medicine Company, Ltd. ("Qufu Vet Ltd.") (0.5%) was controlled
by a Chinese state owned agency.

Subsequent to the Qufu Merger, the Shengwang Group acquired the 17% interest of
Qufu owned by Corporation Ltd., and ultimately the Shengwang Group acquired the
0.5% Qufu interest owned by Qufu Vet Ltd., after Qufu Vet Ltd. was dissolved.
These events subsequent to the Qufu Merger resulted in the Shengwang Group
owning 20% of Qufu.

In February 2006, the Company acquired the remaining 20% minority interest of
Qufu from Shandong Shengwang Group Corporation. As a result, Qufu is a
wholly-owned subsidiary of the Company, effective on February 1, 2006. The
Company acquired the remaining 20% interest of Qufu Natural Green Engineering
Company, Ltd. by issuing 5,000,000 shares of common stock in February 2006
valued at $2,775,000. The transaction was treated as a business combination
pursuant to FAS 141. The Company accounted for the acquisition of the remaining
20% of Qufu as if it was a business combination. The fair value of the 5,000,000
shares was based on the price per share as of the close of the market on
February 7, 2006 of $0.555 per share, for a total fair value of $2,775,000. The
acquired minority interest had a value of approximately $2,595,000. The excess
of approximately $180,000 was determined to be an indirect and general expense
related to the business acquisition and was expensed.

On February 7, 2006, the Company formed a wholly owned subsidiary in Florida,
Sunwin Stevia International Corp. The purpose of this subsidiary is to establish
a North American distribution network for Stevioside manufactured by our
Company.

F-6

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

THE COMPANY (CONTINUED)

On April 11, 2006, the Company formed a wholly owned subsidiary in California,
Sunwin California, Inc. The purpose of this subsidiary is to distribute Chinese
herbs produced by our Company to Asian communities within California.

On April 20, 2006, the Company formed a wholly owned subsidiary in Canada,
Sunwin (Canada) Pharmaceutical Ltd., in order to market its traditional Chinese
medicines throughout Canada. The newly formed subsidiary will endeavor to market
some of its products in Canada. The Company desires to develop a partnership
with Canadian business representatives with knowledge of the consumer product
market within Canada. As of the date of this report the Company has not
identified a resource for this effort.

On May 31, 2006, the Company has entered into an oral agreement with Shandong
Yulong Group Company, Limited ("Yulong") to acquire 100% ownership of Qufu
Pharmaceuticals Factory ("Qufu Pharmaceuticals"). Qufu Pharmaceuticals Factory,
founded in 1994, a wholly owned subsidiary of Yulong, manufactures and
distributes Class I medicines in China. The medicines are derived from chemical
compounds. Yulong is in the process of receiving a GMP (good manufacturing
practices) certification for its facility which is a condition precedent to the
Company finalizing any terms of the proposed acquisition. While the Company has
been informed the certification should be issued during the first quarter of
fiscal 2008, after which time the Company would then proceed with finalizing the
terms under which it would proceed with the transaction, there is no assurance
that the Company will ever consummate this acquisition.

BASIS OF PRESENTATION

Certain reclassifications have been made to the prior year to conform to current
year presentation.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). The accompanying consolidated
financial statements for the interim periods are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the periods presented. The consolidated
financial statements include the accounts of the Company and its wholly and
partially owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated. These consolidated financial statements
should be read in conjunction with the financial statements for the year ended
April 30, 2006 and notes thereto contained on Form 10-KSB of the Company as
filed with the Securities and Exchange Commission. The results of operations for
the nine months ended January 31, 2007 are not necessarily indicative of the
results for the full fiscal year ending April 30, 2007.

The consolidated statements include the accounts of the Company and its wholly
and partially-owned subsidiaries. All significant inter-company balances and
transactions have been eliminated.

F-7

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles 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 period. Actual
results could differ from those estimates.

NET INCOME PER SHARE

Net income per common share for the nine months ended January 31, 2007 and 2006
is based upon the weighted average common shares and dilutive common stock
equivalents outstanding during the period as defined by Statement of Financial
Accounting Standards, Number 128 "Earnings Per Share."

INVENTORIES

Inventories, consisting of raw materials and finished goods related to the
Company's products are stated at the lower of cost or market utilizing the
weighted average method.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

INCOME TAXES

The Company files federal and state income tax returns in the United States for
its domestic operations, and files separate foreign tax returns for the
Company's Chinese subsidiaries. Income taxes are accounted for under Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which
is an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. The
Company has no U.S. tax liability based on the fact that the Company derived all
of its revenues outside of the United States.

F-8

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

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 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. In accordance with Statement of Financial Accounting Standards (SFAS)
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the
Company examines 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.

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 Statement of Financial Accounting
Standards (SFAS) No. 52, "Foreign Currency Translation," 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 exchange rate prevailing at the balance sheet date. Revenues and
expenses are translated at weighted average exchange rates for the period to
approximate translation at the exchange rates prevailing at the dates those
elements are recognized in the financial statements. Translation adjustments
resulting from the process of translating the local currency financial
statements into U.S. dollars are included in determining comprehensive loss.

The functional and reporting currency is the U.S. dollar. The functional
currency of the Company's Chinese subsidiary, Qufu, 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
and were not material during the periods presented due to fluctuations between
the RMB and the United States dollar. The cumulative translation adjustment and
effect of exchange rate changes on cash for the nine months ended January 31,
2007 was $185,158.

On July 21, 2005, the central government of China allowed the RMB to fluctuate,
ending its decade-old valuation peg to the U.S. dollar. The new RMB rate
reflects an approximately 2% increase in value against the U.S. dollar.
Historically, the Chinese government has benchmarked the RMB exchange ratio
against the U.S. dollar, thereby mitigating the associated foreign currency
exchange rate fluctuation risk. The Company does not believe that its foreign
currency exchange rate fluctuation risk is significant, especially if the
Chinese government continues to benchmark the RMB against the U.S. dollar.

F-9

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

STOCK-BASED COMPENSATION

The Company accounts for stock options issued to employees in accordance with
FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement
No. 123" ("FAS No. 123R"). FAS No. 123R requires companies to recognize in the
statement of operations the grant- date fair value of stock options and other
equity-based compensation issued to employees. The Company has adopted FAS
No.123R in the second quarter of fiscal year 2006.

REVENUE RECOGNITION

The Company does not record an allowance for product returns. The Company does
not allow product returns except for previous isolated cases of product
exchanges in the case of expired products.

The following policies reflect specific criteria for the various revenue streams
of the Company: The Company's revenues from the sale of products are recorded
when the goods are shipped, title passes, and collectibility is reasonably
assured.

NOTE 2 - INVENTORIES

At January 31, 2007, inventories consisted of the following:

Raw materials ............................... $ 2,253,623
Finished goods .............................. 2,075,685
-----------
4,329,308
Less: reserve for obsolete inventory ........ (65,259)
-----------
$ 4,264,049
===========

F-10

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 3 - RELATED PARTY TRANSACTIONS

DUE TO RELATED PARTIES

The Company pays management fees to Group Corporation, an entity controlled by
Mr. Zhang, our President and Chairman. Group Corporation provides management
services to us, 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. The management fees, which are
included in general and administrative expenses for the nine months ended
January 31, 2007 and January 31, 2006, were $144,337 and $ 55,200 respectively.
At January 31, 2007, the Company owed Group Corporation $1,297 for management
fees.

NOTE 4 - PREPAID EXPENSES AND OTHERS ASSETS

Prepaid expenses and other assets at January 31, 2007 of $955,852 consisted of a
prepayment to suppliers for merchandise that had not yet been shipped as well as
services that had not yet been provided by the contractors/consultants. The
Company will recognize the prepayment as inventory or expense as suppliers make
delivery of goods or provide services, in compliance with its accounting policy.
As of January 31, 2007, prepaid expenses to suppliers for merchandise which had
not yet been shipped amounted to $612,344 and the prepaid expenses for
consulting services amounted to $343,508.

NOTE 5 - STOCKHOLDERS EQUITY

Common Stock

For the nine months ended January 31, 2007 and 2006, amortization of stock based
compensation amounted to $414,693 and $278,517, respectively.

On March 23, 2005, the Company's Board of Directors authorized and adopted the
2005 Equity Compensation Plan (the "2005 Plan"). The Company has currently
reserved 5,000,000 of its authorized but unissued shares of common stock for
issuance under the 2005 Plan. As of January 31, 2007, there are no available
shares to be issued, or options granted, under the 2005 Plan. On February 7,
2006, the Company's Board of Directors authorized and adopted the 2006 Equity
Compensation Plan (the "2006 Plan"). The Company has currently reserved
6,200,000 of its authorized but unissued shares of common stock for issuance
under the 2006 Plan. As of January 31, 2007, there are 1,265,000 shares
available to be issued or options granted under the 2006 Plan. The number of
shares authorized under the 2006 Plan, may be amended (subject to adjustment in
the event of certain changes in our capitalization) without further action by
the Board of Directors and stockholders, as required.

F-11

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 5 - STOCKHOLDERS EQUITY (CONTINUED)

Stock Options

The purpose of the Plan is to encourage stock ownership by the Company's
officers, directors, key employees and consultants, and to give these persons a
greater personal interest in the success of the business and an added incentive
to continue to advance and contribute to the Company. Subject to the limitation
on the aggregate number of shares issuable under the 2005 and 2006 Plan, there
is no limit as to the amount of shares that may be granted to any person. Shares
used for stock grants and plan options may be authorized and unissued shares, or
shares reacquired by the Company, 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 the
Company for other purposes.

The 2005 and 2006 Plan is administered by the Company's Board of Directors or an
underlying committee. The Board of Directors or the committee determines from
time to time those of our officers, directors, key employees and consultants to
whom stock grants or plan options are to be granted, the terms and provisions of
the respective option agreements, the time or times at which such options shall
be granted, the type of options to be granted, the dates such plan options
become exercisable, the number of shares subject to each option, the purchase
price of such shares and the form of payment of such purchase price. All other
questions relating to the administration of the plans, and the interpretation of
the provisions thereof and of the related option agreement, are resolved by the
Board or committee.

Plan options may either be options qualifying as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended or non-qualified
options. The Company's officers, directors, key employees and consultants are
eligible to receive stock grants and non-qualified options under the plan; only
its employees are eligible to receive incentive options. In addition, the 2005
and 2006 Plans allow for the inclusion of a reload option provision which
permits an eligible person to pay the exercise price of the option with shares
of common stock owned by the eligible person and receive a new option to
purchase shares of common stock equal in number to the tendered shares.
Furthermore, compensatory stock grants may also be issued.

Any incentive option granted under the plans must provide for an exercise price
of not less than 100% of the fair market value of the underlying shares on the
date of grant, but the exercise price of any incentive option granted to an
eligible employee owning more than 10% of our outstanding common stock must not
be less than 110% of fair market value on the date of the grant. The term of
each Plan's option and the manner in which it may be exercised is determined by
the Board of Directors or the committee, provided that no option may be
exercisable more than ten years after the date of its grant and, in the case of
an incentive option granted to an eligible employee owning more than 10% of the
common stock, no more than five years after the date of the grant. The exercise
price of non-qualified options shall be determined by the Board of Directors or
the Committee, but shall not be less than the par value of our common stock on
the date the option is granted. The per share purchase price of shares issuable
upon exercise of either the 2005 or 2006 Plan option may be adjusted in the
event of certain changes in our capitalization, but no such adjustment shall
change the total purchase price payable upon the exercise in full of options
granted under the Plan.

F-12

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 5 - STOCKHOLDERS EQUITY (CONTINUED)

Stock Options (Continued)

All incentive stock options expire on or before the 10th anniversary of the date
the option is granted; however, in the case of incentive stock options granted
to an eligible employee owning more than 10% of the common stock, these options
will expire no later than five years after the date of the grant. Non-qualified
options expire 10 years and one day from the date of grant unless otherwise
provided under the terms of the option grant.

As of January 31, 2007, there are no shares available to be issued, or options
granted, under the 2005 Plan. As of January 31, 2007, there are 1,265,000 shares
available to be issued or options granted under the 2006 Plan. Under the 2006
Plan a total of 860,000 common shares were issued to satisfy the requirements
under a service consulting agreement from January 2006, in February 2006 the
Company granted options to purchase 4,000,000 shares to employees, and the
Company granted options to purchase 75,000 shares under a consulting agreement
entered into in February 2006. All options granted for the purchase by employees
of 4,000,000 shares of common stock were exercised in the year ended April 30,
2006. Of the options granted to the consultant for the purchase of 75,000 shares
of common stock a total of 50,000 were exercised for the year ended April 30,
2006 and a total of 25,000 options were exercised for the nine months ended
January 31, 2007. There were no outstanding stock options as of January 31,
2007.

F-13

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 6 - SEGMENT INFORMATION

The following information is presented in accordance with SFAS No. 131,
Disclosure about Segments of an Enterprise and Related Information. In the
periods ended January 31, 2007 and January 31, 2006, the Company operated in two
reportable business segments - (1) the sale of essential traditional Chinese
medicine, 100 percent organic herbal medicine, neutraceutical products, and
animal medicines prepared from 100% organic herbal ingredients and (2) sale of
natural sweetener called Stevioside. The Company's 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 the nine
months ended January 31, 2007 and 2006 are as follows:

Nine months Ended January 31, 2007 (Unaudited):

Chinese and Natural
Animal Sweetener Corporate
Medicines (Stevioside) and Other Consolidated
------------ ------------ ----------- ------------

Net Revenues ................ $ 5,307,396 $6,243,196 $ 12,356 $ 11,562,948
Interest income ............. 3,388 52,644 1,854 57,886
Depreciation and amortization 219,541 228,523 - 448,064
Net income (loss) ........... 688,428 649,773 (787,107) 551,094
Long-lived asset expenditures 36,181 - - 36,181
Segment Assets .............. $ 10,226,575 $9,427,275 $ 850,427 $ 20,504,277

Nine months Ended January 31, 2006(Unaudited):

Chinese and Natural
Animal Sweetener Corporate
Medicines (Stevioside) and Other Consolidated
------------ ------------ ----------- ------------

Net Revenues ................ $ 6,622,791 $4,443,062 $ - $ 11,065,853
Interest (expense) .......... (32,704) 2,383 - (30,321)
Depreciation and amortization 47,986 111,966 - 159,952
Net income (loss) ........... 1,434,990 921,704 (331,589) 2,025,104
Long-lived asset expenditures 1,546,346 610,251 - 2,156,597
Segment Assets .............. $ 6,560,683 $7,509,526 $ 1,123,969 $ 15,194,178

F-14

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 7 - OPERATING RISK

(a) Country risk

Currently, the Company's revenues are mainly derived from sale of herbs, beet
sugar and veterinary products in the Peoples Republic of China ("PRC"). The
Company hopes to expand its operations to countries outside the PRC, however,
such expansion has not been commenced and there are no assurances that the
Company will be able to achieve such an expansion successfully. Therefore, a
downturn or stagnation in the economic environment of the PRC could have a
material adverse effect on the Company's financial condition.

(b) Products risk

In addition to competing with other companies, the Company could have to compete
with larger U.S. companies who have greater funds available for expansion,
marketing, research and development and the ability to attract more qualified
personnel if access is allowed into the PRC market. If U.S. companies do gain
access to the PRC markets, they may be able to offer products at a lower price.
There can be no assurance that the Company will remain competitive should this
occur.

The Company can not guarantee that the current exchange rate will remain steady,
therefore there is a possibility that the Company could post the same amount of
profit for two comparable periods and because of a fluctuating exchange rate
actually post higher or lower profit depending on exchange rate of RMB converted
to U.S. dollars on that date. The exchange rate could fluctuate depending on
changes in the political and economic environments without notice.

(d) Political risk

Currently, the PRC is in a period of growth and is openly promoting business
development in order to bring more business into the PRC. Additionally, the PRC
allows a Chinese corporation to be owned by a United States corporation. If the
laws or regulations are changed by the PRC government, the Company's ability to
operate the PRC subsidiaries could be affected.

(e) Key personnel risk

The Company's future success depends on the continued services of executive
management in China. The loss of any of their services could be detrimental to
the Company and could have an adverse effect on business development. The
Company does not currently maintain key-man insurance on their lives. Future
success is also dependent on the ability to identify, hire, train and retain
other qualified managerial and other employees. Competition for these
individuals is intense and increasing.

F-15

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2007
(UNAUDITED)

NOTE 7 - OPERATING RISK (CONTINUED)

(f) Performance of subsidiaries risk

Currently all of the Company's revenues are derived via the operations of Qufu
and its subsidiaries. Economic, governmental, political, industry and internal
company factors outside of the Company's control affect each of the
subsidiaries. If the subsidiaries do not succeed, the value of the assets and
the price of our common stock could decline. Some of the material risks relating
to the subsidiary companies include the fact that Qufu and all of their
subsidiaries are located in China and have specific risks associated with that
and the intensifying competition for the Company's products and services.

F-16

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED APRIL 30, 2006

INDEX

Page
----

Report of Independent Registered Public Accounting Firm ....................F-18

Consolidated Financial Statements:

Consolidated Balance Sheet .................................................F-19

Consolidated Statements of Operations ......................................F-20

Consolidated Statements of Stockholders' Equity ............................F-21

Consolidated Statements of Cash Flows ......................................F-22

Notes to Consolidated Financial Statements .................................F-23

F-17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Sunwin International Neutraceuticals, Inc.
Shandong, China

We have audited the accompanying consolidated balance sheet of Sunwin
International Neutraceuticals, Inc. and its Subsidiaries as of April 30, 2006,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the years ended April 30, 2006 and 2005. 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. The Company is 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
control 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 amount and disclosures in the
consolidated 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 Subsidiaries as of April 30, 2006, and
the results of their operations and their cash flows for the years ended April
30, 2006 and 2005, in conformity with accounting principles generally accepted
in the United States of America.

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

Boca Raton, Florida
June 23, 2006

F-18

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
April 30, 2006

ASSETS

CURRENT ASSETS:
Cash ........................................................ $ 5,433,691
Accounts receivable (net of allowance for doubtful accounts
of $272,768) ............................................... 2,608,873
Inventories, net ............................................ 1,778,870
Prepaid expenses and other .................................. 967,892
------------

Total Current Assets .................................... 10,789,326

PROPERTY AND EQUIPMENT (net of accumulated depreciation
of $1,847,319) ................................................. 5,375,849
------------

Total Assets ............................................ $ 16,165,175
============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Loans payable ............................................... $ 255,487
Accounts payable and accrued expenses ....................... 1,579,402
Due to related parties ...................................... 8,497
Advances from customers ..................................... 37,363
------------

Total Current Liabilities ............................... 1,880,749

OTHER PAYABLES .................................................. 134,448
------------

Total Liabilities ....................................... 2,015,197
------------

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; 73,917,276 shares issued and outstanding) ... 73,917
Additional paid-in capital .................................. 12,013,424
Retained earnings ........................................... 6,901,883
Deferred compensation ....................................... (1,383,906)
Subscription reveivable ..................................... (3,680,000)
Other comprehensive gain - foreign currency ................. 224,660
------------

Total Stockholders' Equity .............................. 14,149,978
------------

Total Liabilities and Stockholders' Equity .............. $ 16,165,175
============

See notes to consolidated financial statements.

F-19

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years
Ended April 30,
---------------------------
2006 2005
------------ ------------

NET REVENUES ..................................... $ 15,490,013 $ 12,114,006

COST OF SALES .................................... 10,865,917 8,378,838
------------ ------------

GROSS PROFIT ..................................... 4,624,096 3,735,168
------------ ------------

OPERATING EXPENSES:
Stock-based consulting expense .............. 569,581 220,000
Selling expenses ............................ 615,348 923,114
General and administrative .................. 1,011,026 967,226
------------ ------------
Total Operating Expenses ................. 2,195,955 2,110,340
------------ ------------

INCOME FROM OPERATIONS ........................... 2,428,141 1,624,828

OTHER INCOME (EXPENSE):
Other income ................................ 103,675 59,094
Interest expense, net ....................... (35,338) (62,054)
------------ ------------

Total Other Income (Expense) ............. 68,337 (2,960)
------------ ------------

INCOME BEFORE INCOME TAXES ....................... 2,496,478 1,621,868

(BENEFIT) PROVISION FOR INCOME TAXES ............. (524,481) 513,373
------------ ------------

INCOME BEFORE MINORITY INTEREST .................. 3,020,959 1,108,495

MINORITY INTEREST IN INCOME OF SUBSIDIARY ........ (591,145) (279,381)
------------ ------------

NET INCOME ....................................... $ 2,429,814 $ 829,114
============ ============

NET INCOME PER COMMON SHARE - BASIC AND DILUTED:
Net income per common share - basic ........ $ 0.05 $ 0.02
============ ============
Net income per common share - diluted ...... $ 0.05 $ 0.02
============ ============

Weighted Common Shares Outstanding - basic .. 50,614,262 34,987,824
============ ============

Weighted Common Shares Outstanding - diluted 50,639,262 36,224,370
============ ============

See notes to consolidated financial statements.

F-20

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended April 30, 2006 and 2005

Common Stock, $.001 Par Value
----------------------------- Additional
Number of Paid-in Retained Deferred
Shares Amount Capital Earnings Compensation
----------- ----------- ----------- ----------- ------------

Balance, April 30, 2004 ...................... 31,617,276 $ 31,617 $ 218,383 $ 3,642,955 $ (100,000)

Common stock issued for services ............. 1,500,000 1,500 148,500 - (150,000)

Contributed capital .......................... - - 6,489 - -

Common stock in private placement ............ 10,250,000 10,250 892,315 - -

Amortization of deferred compensation ........ - - - - 250,000

Comprehensive income:
Net income for the year .................. - - - 829,114 -

Foreign currency translation adjustment .. - - - - -
----------- ----------- ----------- ----------- -----------

Balance, April 30, 2005 ...................... 43,367,276 43,367 1,265,687 4,472,069 -

Common stock issued for services ............. 5,090,000 5,090 992,801 - (762,833)

Common stock issued for acqusition of minority
interest in subsidiary ....................... 5,000,000 5,000 2,770,000 - -

Grants of stock warrants ..................... - - 14,563 - -

Grants of stock options ...................... - - 798,833 - (798,833)

Exercise of stock warrants ................... 15,500,000 15,500 2,335,000 - -

Exercise of stock options .................... 4,960,000 4,960 3,836,540 - -

Amortization of deferred compensation ........ - - - - 177,760

Subscription receivable ...................... - - - - -

Comprehensive income:
Net income for the year .................. - - - 2,429,814 -

Foreign currency translation adjustment .. - - - - -
----------- ----------- ----------- ----------- -----------

Balance, April 30, 2006 ...................... 73,917,276 $ 73,917 $12,013,424 $ 6,901,883 $(1,383,906)
=========== =========== =========== =========== ===========
(continued)
See notes to consolidated financial statements.

F-21A

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended April 30, 2006 and 2005
(continued)

Other Total
Subscription Comprehensive Stockholders'
Receivable Gain (Loss) Equity
------------ ------------- ------------

Balance, April 30, 2004 ...................... $ - $ - $ 3,792,955

Common stock issued for services ............. - - -

Contributed capital .......................... - - 6,489

Common stock in private placement ............ - - 902,565

Amortization of deferred compensation ........ - - 250,000

Comprehensive income:
Net income for the year .................. - - 829,114

Foreign currency translation adjustment .. - (2,971) (2,971)
------------ ------------ ------------

Balance, April 30, 2005 ...................... - (2,971) 5,778,152

Common stock issued for services ............. - - 235,058

Common stock issued for acqusition of minority
interest in subsidiary ....................... - - 2,775,000

Grants of stock warrants ..................... - - 14,563

Grants of stock options ...................... - - -

Exercise of stock warrants ................... - - 2,350,500

Exercise of stock options .................... - - 3,841,500

Amortization of deferred compensation ........ - - 177,760

Subscription receivable ...................... (3,680,000) - (3,680,000)

Comprehensive income:
Net income for the year .................. - - 2,429,814

Foreign currency translation adjustment .. - 227,631 227,631
------------ ------------ ------------

Balance, April 30, 2006 ...................... $ (3,680,000) $ 224,660 $ 14,149,978
============ ============ ============

See notes to consolidated financial statements.

F-21B

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years
Ended April 30,
--------------------------
2006 2005
----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ............................................. $ 2,429,814 $ 829,114
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ....................... 304,814 291,415
Stock-based consulting .............................. 427,381 250,000
Minority interest ................................... 841,851 278,083
Allowance for doubtful accounts ..................... (765,083) (539,048)
Changes in assets and liabilities:
Accounts receivable ................................. (28,970) 1,347,264
Inventories ......................................... 1,065,019 1,033,328
Prepaid and other current assets .................... (270,234) (117,128)
Due from related parties ............................ 74,944 (66,447)
Other assets ........................................ - 12,077
Accounts payable and accrued expenses ............... (297,127) (376,697)
Income taxes payable ................................ (515,412) 515,412
Advances to customers ............................... 25,849 (1,018,862)
Accounts payable - long-term ........................ 4,260 (102)
----------- -----------

NET CASH PROVIDED BY OPERATING ACTIVITIES .................. 3,297,106 2,438,409
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase (decrease) in due from related parties ........ 978,240 (464,455)
Capital expenditures ................................... (3,952,212) (981,634)
Disposal of fixed assets ............................... 1,033,682 -
----------- -----------

NET CASH FLOWS (USED IN) INVESTING ACTIVITIES .............. (1,940,290) (1,446,089)
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock ..................... - 902,565
Proceeds from exercise of stock options and warrants ... 2,512,000 -
Payments on loans payable .............................. (337,054) (760,694)
----------- -----------

NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES ............ 2,174,946 141,871
----------- -----------

EFFECT OF EXCHANGE RATE ON CASH ............................ 227,631 (2,971)
----------- -----------

NET INCREASE IN CASH ....................................... 3,759,393 1,131,220

CASH - beginning of year .................................. 1,674,298 543,078
----------- -----------

CASH - end of year ......................................... $ 5,433,691 $ 1,674,298
=========== ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATON:
Cash paid for:
Interest ............................................ $ 35,338 $ 62,054
=========== ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATON:
Common stock issued for acquisition of minority interest $ 2,775,000 $ -
=========== ===========
Contributed capital paid for services .................. $ - $ 6,489
=========== ===========
Stock Options granted for deferred compensation ........ $ 798,833 $ -
=========== ===========
Common stock issued for subscription receivable ........ $ 3,680,000 $ -
=========== ===========

See notes to consolidated financial statements.

F-22

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Sunwin International Neutraceuticals, Inc. was incorporated on August 27, 1987
in the State of Nevada as Network USA, Inc. ("Network"). The Company does not
have any substantive operations of its own and substantially all of its primary
business operations are conducted through its 100% owned subsidiary, Qufu
Natural Green Engineering Company Limited and its subsidiaries ("Qufu"). Qufu is
a Chinese limited liability company, organized under the laws of the Peoples
Republic of China, with principal offices in Qufu, China. Qufu was founded in
July 1999 and was re-registered in January 2004 to change its capital structure.
Qufu has three wholly owned Chinese subsidiaries, Shengya Veterinary Medicine
Co., Ltd (formerly known as Shangong Qufu Veterinary Medicine Plant), Shengyuan
Herb Extraction Co., Ltd., and Qufu Chinese Medicine Factory. Qufu is engaged in
the areas of essential traditional Chinese medicine, 100 percent organic herbal
medicine, nutraceutical products, natural sweetener (beet sugar), and animal
medicine prepared from 100% organic herbal ingredients.

On January 26, 2004, effective February 1, 2004, Sunwin Tech Group, Inc.,
("Sunwin Tech") a Florida corporation that became a wholly-owned subsidiary of
the Company (on April 30, 2004; see the following paragraph) entered into a
Stock Purchase Agreement with Shandong Shengwang Pharmaceutical Group
Corporation ("Group Corporation") a major shareholder of Qufu, Under this
agreement, Shandong exchanged 80% of the issued and outstanding capital stock of
Qufu in exchange for 100% of the issued and outstanding capital stock of Sunwin
Tech Group, Inc. ("Sunwin") with a fair market value of $95,000. The Stock
Purchase Agreement has been accounted for as a reverse acquisition under the
purchase method for business combinations. Accordingly, the combination of the
two companies is recorded as a recapitalization of Qufu, pursuant to which
Sunwin Tech is treated as the continuing entity.

On April 30, 2004, under a Share Exchange Agreement, Network issued 17,000,004
shares of the Company's common stock for the acquisition of all of the
outstanding capital stock of Sunwin Tech Group, Inc., a Florida corporation,
from its four shareholders: Baozhong Yuan, Laiwang Zhang, Xianfeng Kong and Lei
Zhang. For financial accounting purposes, the exchange of stock was treated as a
recapitalization of Sunwin Tech with the former shareholders of the Network
retaining 11,492,268 or approximately 36.3% of the outstanding stock. The
consolidated financials statements reflect the change in the capital structure
of the Network due to the recapitalization and the consolidated financial
statements reflect the operations of Network and its subsidiaries for the
periods presented.

In connection with the Share Exchange Agreement, Sunwin Tech purchased 4,500,000
shares of the common stock of Network owned by the former principal shareholders
of Network, for $175,000, and, at the closing Sunwin Tech distributed the
4,500,000 shares to Baozhong Yuan, Laiwang Zhang, Xianfeng Kong and Lei Zhang,
pro-rata according to their ownership of Sunwin Tech immediately prior to the
closing. This transaction did not affect the issuance of common shares by
Network.

F-23

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company (Continued)

Effective July 27, 2004 Network changed its name to Sunwin International
Neutraceuticals, Inc. ("Sunwin"). Henceforth Network or Sunwin are to be
referred to as the "Company", unless reference is made to the respective company
for reference to events surrounding that company. The Company filed an amendment
to its Articles of Incorporation on July 12, 2004 to change its name, and to
increase the number of shares of common stock it is authorized to issue to
200,000,000 shares, $.001 par value per share.

As noted previously, prior to our acquisition of Sunwin Tech, effective February
1, 2004, Sunwin Tech acquired 80% of Qufu ("the Qufu Merger") from Shandong
Shengwang Pharmaceutical Group Corporation ("Group Corporation"), a company
controlled by Mr. Laiwang Zhang, our President and Chairman, in exchange for all
shares of Sunwin Tech's common stock. At the time of this merger the minority
shareholders of Qufu included Shandong Shengwang Pharmaceutical Corporation Ltd.
("Corporation Ltd.") (17%) and Shandong Shengwang Group Corporation (2.5%)
("Shengwang Group"), both of which are controlled by our President and Chairman.
The remaining minority shareholder, Qufu Veterinary Medicine Company, Ltd.
("Qufu Vet Ltd.") (0.5%), was controlled by a Chinese state owned agency.

Subsequent to the Qufu Merger, the Shengwang Group acquired the 17% interest of
Qufu owned by Corporation Ltd., and ultimately the Shengwang Group acquired the
0.5% Qufu interest owned by Qufu Vet Ltd., after Qufu Vet Ltd. was dissolved.
These events subsequent to the Qufu Merger, resulted in the Shengwang Group
owning 20% of Qufu.

In February 2006, the Company acquired the remaining 20% minority interest of
Qufu from Shandong Group in exchange for 5,000,000 shares of our common stock
valued at $2,775,000. Our President and Chairman, is a control person of
Shandong Group. Of the total purchase price, approximately $180,000 was
allocated to consulting expenses paid to the President and Chairman as it
represented the difference between the purchase price and the valuation of the
minority interest purchased. The minority interest income for the year end April
30, 2006 represents the minority interest's proportional share of Qufu's net
income up until the date we acquired the minority interest ownership in Qufu.

F-24

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of presentation

On April 11, 2006, the Company formed a wholly owned subsidiary in California,
Sunwin California, Inc. The purpose of this subsidiary is to exploit the
distribution of Chinese herbs in Chinese communities within California.

On April 20, 2006, the Company formed a wholly owned subsidiary in Canada,
Sunwin (Canada) Pharmaceutical Limited, in order to market its Chinese
herb-based medicines throughout Canada. The newly formed subsidiary will submit
applications to health Canada for products licenses in order to distribute their
products in Canada.

The consolidated statements include the accounts of Sunwin International
Neutraceuticals, Inc. and its wholly and partially-owned subsidiaries. All
significant inter-company balances and transactions have been eliminated.

Estimates

Cash and cash equivalents

For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid instruments purchased with a maturity of three months or less
and money market accounts to be cash equivalents.

Accounts receivable

Accounts receivable are reported at net realizable value. The Company has
established an allowance for doubtful accounts based upon factors pertaining to
the credit risk of specific customers, historical trends, and other information.
Delinquent accounts are written off when it is determined that the amounts are
uncollectible. At April 30, 2006, the allowance for doubtful accounts was
$272,768.

Inventories

Inventories, consisting of raw materials and finished goods related to the
Company's products are stated at the lower of cost or market utilizing the
weighted average method.

F-25

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Advances from customers

Advances from customers at April 30, 2006 of $37,363 consist of a prepayment to
the Company for merchandise that had not yet shipped to the customer. The
Company will recognize the deposits as revenue as customers take delivery of the
goods, in compliance with its revenue recognition policy.

Fair value of financial instruments

Income taxes

Income per Share

Net income per common share for the years ended April 30, 2006 and 2005 is based
upon the weighted average common shares and dilutive common stock equivalents
outstanding during the year as defined by Statement of Financial Accounting
Standards, Number 128 "Earnings Per Share". As of April 30, 2006, there were
options to purchase 25,000 shares of common stock, which dilute future earnings
per share.

F-26

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment

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 Statement of Financial Accounting
Standards (SFAS) No. 52,"Foreign Currency Translation," and are included in
determining net income or loss.

The functional and reporting currency is the U.S. dollar. The functional
currency of the Company's Chinese subsidiary, Qufu, 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
and were not material during the periods presented due to fluctuations between
the Chinese dollar ("RMB") and the United States dollar. The cumulative
translation adjustment and effect of exchange rate changes on cash at April 30,
2006 was $224,660.

On July 21, 2005, the central government of China allowed the Chinese dollar or
RMB to fluctuate, ending its decade-old valuation peg to the U.S. dollar. The
new RMB rate reflects an approximately 2% increase in value against the U.S.
dollar. Historically, the Chinese government has benchmarked the RMB exchange
ratio against the U.S. dollar, thereby mitigating the associated foreign
currency exchange rate fluctuation risk. The Company does not believe that its
foreign currency exchange rate fluctuation risk is significant, especially if
the Chinese government continues to benchmark the RMB against the U.S. dollar.

F-27

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive income

The Company uses Statement of Financial Accounting Standards No. 130 (SFAS 130)
"Reporting Comprehensive Income". Comprehensive income is comprised of net
income and all changes to the statements of stockholders' equity, except those
due to investments by stockholders', changes in paid-in capital and
distributions to stockholders. For the Company, comprehensive income for the
year ended April 30, 2006 included net income and foreign currency translation
adjustments.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash and trade accounts receivable. The
Company places its cash with high credit quality financial institutions in the
United States and China. As of April 30, 2006, bank deposits in the United
States exceeded federally insured limit by $424,757. At April 30, 2006, the
Company had approximately $4,908,934 in China bank deposits, which may not be
insured. The Company has not experienced any losses in such accounts through
April 30, 2006. Almost all of the Company's sales are credit sales which are
primarily to customers whose ability to pay is dependent upon the industry
economics prevailing in these areas; however, concentrations of credit risk with
respect to trade accounts receivables is limited due to generally short payment
terms. The Company also performs ongoing credit evaluations of its customers to
help further reduce potential credit risk.

Stock based compensation

The Company accounts for stock options issued to employees in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise price. Such
compensation amounts, if any, are amortized over the respective vesting periods
of the option grant. The Company adopted the disclosure provisions of SFAS No.
123, "Accounting for Stock-Based Compensation" and SFAS 148, "Accounting for
Stock-Based Compensation -Transition and Disclosure", which permits entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 had been applied. The Company accounts for stock options
and stock issued to non-employees for goods or services in accordance with the
fair value method of SFAS 123.

Research and development

Research and development costs are expensed as incurred and amounted to $115,137
and $171,335 for the years ended April 30, 2006 and 2005, 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.

F-28

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue recognition

The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records 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 collectibility is reasonably assured. The
following policies reflect specific criteria for the various revenues streams of
the Company: The Company's revenues from the sale of products are recorded when
the goods are shipped, title passes, and collectibility is reasonably assured.

Advertising

Advertising is expensed as incurred. Advertising expenses for the years ended
April 30, 2006 and 2005 totaled approximately $171,896 and $212,865,
respectively. Sunwin incurred a decrease in advertising costs related to its
veterinary medicine division. Industry regulations adopted by the central
government regarding good manufacturing process ("GMP") have limited competition
in the industry. As such the Company has reduced their advertising expenditures
in the veterinary medicine department.

Minority Interest

Under generally accepted accounting principles when losses applicable to the
minority interest in a subsidiary exceed the minority interest in the equity
capital of the subsidiary, the excess is not charged to the majority interest
since there is no obligation of the minority interest to make good on such
losses. The Company, therefore, has included losses applicable to the minority
interest against its interest since the minority owners have no obligation to
make good on the losses. If future earnings do materialize, the Company shall be
credited to the extent of such losses previously absorbed. On February 7, 2006,
the Board of Directors approved the acquisition of the remaining 20% of Qufu
from Shandong Shengwang Group Corporation. As a result, Qufu is a wholly-owned
subsidiary of the Company, effective on February 1, 2006. There is no minority
interest as of April 30, 2006. The acquisition of the remaining 20% of Qufu was
a non cash transaction, whereby we issued 5,000,000 shares of our common stock
to acquire the remaining 20% of Qufu. The minority interest income for the year
end April 30, 2006 represents the minority interest's proportional share of
Qufu's net income up until the date we acquired the minority interest ownership
in Qufu.

Shipping and costs

Shipping costs are included in selling expenses and totaled $357,941 and
$273,992 for the years ended April 30, 2006 and 2005, respectively.

F-29

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent accounting pronouncements

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of
ARB No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No.43, Chapter 4,
Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handing costs, and spoilage. This statement requires
that those items be recognized as current period charges regardless of whether
they meet the criterion of "so abnormal" which was the criterion specified in
ARB No. 43. In addition, this Statement requires that allocation of fixed
production overheads to the cost of production be based on normal capacity of
the production facilities. This pronouncement is effective for the Company
beginning October 1, 2005. Adopting the new standard does not significantly
impact the Company's consolidated financial statements as of April 30, 2006.

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. The
Company has adopted FAS No.123R in the second quarter of fiscal year 2006.

In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of
Non-monetary Assets." The Statement is an amendment of APB Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of nonmonetary assets
that do not have commercial substance. SFAS 153 is effective for fiscal periods
beginning after December 15, 2005. The adoption of this pronouncement is not
expected to have any significant effect on the Company's financial position or
results of operations.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154
("SFAS No. 154"), Accounting Changes and Error Corrections. SFAS No. 154 applies
to all voluntary changes in accounting principle, and changes the requirements
for accounting for and reporting of a change in accounting principle. SFAS No.
154 also requires retrospective application to prior periods' financial
statements of a voluntary change in accounting principle unless it is
impracticable. SFAS No. 154 is effective for accounting changes and corrections
of errors made in fiscal years beginning after December 15, 2005. We adopted
SFAS No. 154 on April 1, 2006, which we do not expect SFAS No. 154 to have a
significant impact on our consolidated financial condition and results of
operations.

F-30

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 2 - INVENTORIES

At April 30, 2006, inventories consisted of the following:

Raw materials ............................... $ 873,376
Finished goods .............................. 968,819
-----------
1,842,195

Less: reserve for obsolete inventory ........ (63,325)
-----------
$ 1,778,870
===========

NOTE 3 - PROPERTY AND EQUIPMENT

At April 30, 2006, property and equipment consisted of the following:

Estimated Life

Office Furniture 7 Years $ 2,054
Auto and Truck 10 Years $ 3,927
Manufacturing Equipment 20 Years $ 4,831,178
Building 20 Years $ 1,719,740
Office Equipment 5 Years $ 71,302
Construction in Process - $ 594,967
-----------
$ 7,223,168
Less: Accumulated Depreciation $(1,847,319)
-----------
$5,375, 849

For the years ended April 30, 2006 and 2005, depreciation expense amounted to
$304,814 and $291,415, respectively.

NOTE 4 - RELATED PARTY TRANSACTIONS

Due from related parties

Before February 7, 2006, the minority shareholder of Qufu, which owned 20% of
that company, was Shandong Shengwang Group Corporation ("Shengwang Group"). On
February 7, 2006, the Company acquired 20% of Qufu from Group Corporation. As a
result, Qufu is a wholly-owned subsidiary of the Company, effective on February
1, 2006. Prior to the acquisition of the minority interest of Qufu, the minority
interest was owned by Shandong Shengwang Pharmaceutical Corporation Ltd.
("Corporation Ltd.") (17%) and Shandong Shengwang Group Corporation (2.5%)
("Shengwang Group"), both of which are controlled by our President and Chairman.
The remaining minority shareholder, Qufu Veterinary Medicine Company, Ltd.
("Qufu Vet Ltd.") (0.5%) was controlled by a Chinese state owned agency.

F-31

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 4 - RELATED PARTY TRANSACTIONS (continued)

Due from related parties (Continued)

Prior to acquisition of the minority interest, the Shengwang Group acquired the
17% interest of Qufu owned by Corporation Ltd., and ultimately the Shengwang
Group acquired the 0.5% Qufu interest owned by Qufu Vet Ltd,, after which Qufu
Vet Ltd. was dissolved. These events, resulted in the Shengwang Group owning 20%
of Qufu.

Many of the members of the Company's management have been employed by Shandong
Shengwang Pharmaceutical Group Corporation (the original 80% owner of Qufu)
("Group Corporation"), Corporation Ltd, and Shengwang Group prior to the 80% and
20% acquisition of Qufu, and performed services in conjunction with their duties
at, and for, Qufu and the Company.

From time to time the Company advance funds to Corporation, Ltd. and certain of
its affiliated entities to effectuate the purchase of equipment and hiring of
construction services for the Company at advantageous prices through the buying
power provided by Corporation, Ltd. in connection with the Company building an
additional manufacturing line. At April 30, 2006, all funds advanced to
Corporation, Ltd. for the purchase of equipment and hiring of construction
services on the Company's behalf were utilized and the Company took possession
of the equipment and manufacturing facilities.

The Company pays management fees to Corporation, Ltd. The management fees which
are included in general and administrative expenses for the years ended April
30, 2006 and April 30, 2005 were $123,078 and $ 43,806 respectively. At April
30, 2006, the Company owed Corporation, Ltd. $8,497 for management fees.

Consulting agreement

On June 11, 2005, the Company entered into a one-year agreement with China
Direct Investments, Inc. for business development and management services,
effective May 1, 2005. In connection with this agreement, the Company was
required to issue 665,000 shares of the Company's common stock payable on a
quarterly basis on August 31, 2005, November 30, 2005, February 28, 2006 and May
1, 2006 for a total of 2,660,000 shares. In November 2005, the Company issued
1,330,000 shares of common stock due under this consulting agreement. A total of
1,330,000 shares were issued under this June 2005 agreement. The remaining
1,330,000 to be issued under this agreement were issued under a January 2006
service agreement.

In January 2006, the Company issued the remaining 1,330,000 shares due under
this contract and entered into a new consulting agreement with China Direct
Investments, Inc. In connection with the issuance of 2,660,000 common shares
under the original consulting agreement, the Company recorded stock-based
consulting expense of $235,058 and deferred consulting expense of $203,933 to be
amortized over the new contract term of 36-months based on the fair value of
common shares issuable at the end of each month of the service period at shares
prices ranging from $.11 to $.20 per share. Effective January 1, 2006, the
Company entered into a three-year agreement with China Direct Investments, Inc.
to provide business development and management services. In connection with the
new agreement, the Company issued 2,430,000 shares of common stock, plus the
remaining 1,330,000 remaining to be issued under the June 2005 service
agreement.

F-32

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 4 - RELATED PARTY TRANSACTIONS (continued)

Consulting agreement (Continued)

The Company valued these shares using the fair value of common shares on grant
date at approximately $.23 per share and recorded deferred consulting expense of
$558,900 to be amortized over the service period. For the year ended April 30,
2006, amortization of deferred consulting expense amounted to $84,760.

NOTE 5 - ACQUISITIONS

On January 26, 2004, the Company entered into a Stock Purchase Agreement,
effective February 1, 2004 with Shandong Shengwang Pharmaceutical Group
Corporation ("Shandong"), a 90% shareholder of Qufu Natural Green Engineering
Company Limited and its subsidiaries ("Qufu"). Qufu is a Chinese limited
liability company with principal offices in Qufu City, Shandong, China. Under
this agreement, Shandong exchanged 80% of the issued and outstanding capital
stock of Qufu in exchange for 100% of the issued and outstanding capital stock
of Sunwin Tech Group, Inc. with a fair market value of $95,000. The Company
accounted for this acquisition using the purchase method of accounting. The
Stock Purchase Agreement has been accounted for as a reverse acquisition under
the purchase method for business combinations. Accordingly, the combination of
the two companies is recorded as a recapitalization of Qufu, pursuant to which
Sunwin is treated as the continuing entity.

On February 7, 2006, the Company acquired 20% of Qufu Natural Green Engineering
Company, Limited from Shandong Shengwang Group Corporation. As a result, Qufu
Natural Green Engineering Company, Limited is a wholly-owned subsidiary of the
Company, effective on February 1, 2006. There is no minority interest for the
year ended April 30, 2006.

NOTE 6 - LOANS PAYABLE

Loans payable consisted of the following at April 30, 2006:

Note to Bank of China dated February 28, 2006, due in
quarterly installments through February 28, 2007.
Interest rate at 6.9030%. Secured by equipment $ 255,487
------------
Total $ 255,487
============

F-33

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 7 - INCOME TAXES

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

The Company's subsidiaries in China are governed by the Income Tax Law of the
Peoples 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). During
the year ended April 30, 2006 the Company obtained approval from the Peoples
Republic of China to have its income taxes abated. Such approval is in effect
for the year end April 30, 2006, and was also granted for the prior fiscal year
ended April 30, 2005. The Income tax benefit reflected in year end April 30,
2006 is for the reduction of income taxes payable owing from the year ended
April 30, 2005.

The components of income before income tax consist of the following:

Year Ended April 30,
----------------------------
2006 2005
----------- -----------
US Operations .............. $ (682,742) $ (288,410)
Chinese Operations ......... 3,179,220 1,910,278
----------- -----------
$ 2,496,478 $ 1,621,868
=========== ===========

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

Year Ended April 30,
------------------------
2006 2005
--------- ---------

Federal, State and Local ........ $ - $ -
Peoples Republic of China
- Federal and Local ..... (524,481) 513,373
--------- ---------
$(524,481) $ 513,373
========= =========

F-34

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 7 - INCOME TAXES (Continued)

The table below summarizes the differences between the Company's effective tax
rate and the statutory US Federal rate as follows for years ended April 30, 2006
and 2005:

Year Ended April 30,
--------------------------
2006 2005
----------- -----------

Income tax at Federal statutory rate ..................... $ 874,000 $ 568,000
Permanent differences - stock based compensation ......... 136,000 87,000
US tax rate in excess of foreign tax rate ................ (50,000) (32,000)
US net operating loss not available against foreign income 89,000 13,000
Other reconciling items for foreign income taxes ......... - (123,000)
Abatement of foreign income taxes year end April 30, 2006 (1,049,000) -
----------- -----------
- 513,000
Year end April 30, 2005 foreign income
taxes abated in year end April April 30, 2006 .......... (525,000) -
----------- -----------
Tax (benefit) provision .................................. $ (525,000) $ 513,000
=========== ===========

The Company has a net operating loss ("NOL") carryforward for United States
income tax purposes at April 30, 2006 expiring through the year 2026. Management
estimates the NOL as of April 30, 2006 to be approximately $620,000. The
utilization of the Company's NOL's maybe limited because of a possible change in
ownership as defined under Section 382 of Internal Revenue Code.

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. The Company has
recognized, a valuation allowance for those deferred tax assets for which it is
more likely than not that realization will not occur. The Company's deferred tax
asset as of April 30, 2006 is as follows:

NOL carryforwards ............................ $ 135,000
Valuation allowance .......................... (135,000)
---------
Deferred tax asset, net of allowance ......... $ -
=========

NOTE 8 - STOCKHOLDERS' EQUITY

Preferred stock

The Company is authorized to issue 1,000,000 shares of Preferred Stock, par
value $.001, with such designations, rights and preferences as may be determined
from time to time by the Board of Directors.

F-35

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 8 - STOCKHOLDERS' EQUITY (Continued)

Common Stock

On July 27, 2004, the Company's board of directors approved a 6 for 1 forward
stock split. All per share data included in the accompanying consolidated
financial statement have been adjusted retroactively to reflect the forward
split.

On April 30, 2004, the Company issued 1,000,002 shares of common stock for debt.
The Company valued these shares at the quoted trading price on the date of grant
of $0.10 per common share. In connection with these shares, the Company reduced
a loan payable by $100,000.

On April 30, 2004, the Company granted 2,125,002 shares of common stock to
consultants for business development and marketing services. The Company valued
these shares at the quoted trading price on the date of grant of $0.10 per
common share.

In connection with these shares issued on April 30, 2004, for the years ended
April 30, 2005 and 2004, the Company recorded stock-based consulting expense of
$100,000 and $112,500, respectively.

On May 1, 2004, the Company entered into three one-year consulting agreements
with third party consultants for business development services and for
management services relating to the payment of professionals for legal and
accounting services. In connection with these consulting agreements, the Company
issued an aggregate of 1,500,000 shares of common stock. The Company valued
these shares at the quoted trading price on the date of grant of $0.10 per
common share. For the year ended April 30, 2005, in connection with these
shares, the Company recorded stock-based consulting expense of $120,000 and
professional fees of $30,000 (included in general and administrative expense).

In July 2004, the Company sold 2.5 units to three accredited investors in a
private transaction exempt from registration under the Securities Act of 1933 in
reliance on an exemption available under Regulation D. Each unit consists of
600,000 shares of our common stock and two-year common stock warrants to
purchase 600,000 shares of our common stock at an exercise price of $0.167 per
share. As of July 15, 2004, the Company issued 1,500,000 shares of common stock
and granted 1,500,000 warrants for net proceeds of $120,000.

On April 12, 2005, the Company completed an $875,000 financing consisting of
8,750,000 shares of our common stock at $.10 per share, and Class A Common Stock
Purchase Warrants to purchase an additional 13,125,000 shares. Each warrant
entitles the holder to purchase one share of common stock for a period of five
years, at an exercise price of $.15 per share, subject to adjustment. In
connection with this financing, the Company received net proceeds of $782,565.

If the Company fails to maintain an effective registration statement for the
time periods required by the subscription agreement, or if the holder is unable
to exercise the warrant as a result of the Company's failure to maintain an
effective registration statement, upon written demand by the holder, the Company
is obligated to pay the holder a sum equal to the closing price of the Company's
common stock on the trading day immediately preceding the notice, less the
original purchase price of $0.10 per share.

F-36

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 8 - STOCKHOLDERS' EQUITY (Continued)

Common Stock (Continued)

During the year ended April 30, 2006, the Company issued 15,500,000 shares of
common stock in connection with the exercise of common stock warrants for
proceeds of $2,350,500.

During the year ended April 30, 2006, the Company issued 4,960,000 shares of
common stock in connection with the exercise of common stock options for net
proceeds of $161,500 and share subscription receivable of $3,680,000.

During the year ended April 30, 2006, the Company issued 2,660,000 shares of
common stock for services rendered (See Note 4). In connection with the issuance
of these common shares, the Company recorded stock-based consulting expense of
$235,058 and deferred consulting expense of $203,933 based on the fair value of
common shares issued at the end of each month of the service period.
Additionally, effective January 1, 2006, the Company entered into a new
three-year agreement with China Direct Investments, Inc. to provide business
development and management services. In connection with this new agreement, the
Company issued 2,430,000 shares of common stock. The Company valued these
services using the fair value of common shares on grant date at approximately
$.23 per share and recorded deferred consulting expense of $558,900 to be
amortized over the service period. For the year ended April 30, 2006,
amortization of deferred consulting expense amounted to $84,760.

On February 7, 2006, the Company issued 5,000,000 shares of common stock to
acquire the 20% minority interest of Qufu based on 20% of the shareholder equity
of Qufu. In connection with the issuance of these common shares, the Company
holds a 100% ownership interest in Qufu Natural Green Engineering Company,
Limited. The acquisition of the remaining 20% of Qufu was a non cash
transaction, whereby we issued 5,000,000 shares of our common stock to acquire
the remaining 20% of Qufu. The minority interest income for the year end April
30, 2006 represents the minority interest's proportional share of Qufu's net
income up until the date we acquired the minority interest ownership in Qufu.
The Company recognized stock based consulting expense of $179,994. This amount
of $179,994 represents the difference between the purchase price of $2,775,000
(5,000,000 common shares at $.555 per share) and the valuation of the minority
interest of $2,595,006 that was purchased.

Stock Options

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

F-37

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 8 - STOCKHOLDERS' EQUITY (Continued)

Stock options (Continued)

The purpose of these Plans is to encourage stock ownership by the Company's
officers, directors, key employees and consultants, and to give these persons a
greater personal interest in the success of its business and an added incentive
to continue to advance and contribute to the Company. Subject to the limitation
on the aggregate number of shares issuable under the 2005 and 2006 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 the
Company, 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 the Company for other
purposes.

Plan options may either be options qualifying as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended or non-qualified
options. The Company's officers, directors, key employees and consultants are
eligible to receive stock grants and non-qualified options under the plan; only
its employees are eligible to receive incentive options. In addition, the 2005
and 2006 Plans allows for the inclusion of a reload option provision which
permits an eligible person to pay the exercise price of the option with shares
of common stock owned by the eligible person and receive a new option to
purchase shares of common stock equal in number to the tendered shares.
Furthermore, compensatory stock grants may also be issued.

F-38

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 8 - STOCKHOLDERS' EQUITY (Continued)

Stock options (Continued)

All incentive stock options expire on or before the 10th anniversary of the date
the option is granted; however, in the case of incentive stock options granted
to an eligible employee owning more than 10% of the common stock, these options
will expire no later than five years after the date of the grant. Non-qualified
options expire 10 years and one day from the date of grant unless otherwise
provided under the terms of the option grant.

As of April 30, 2006, there are no available shares to be issued, or granted
with options, under the 2005 Plan. Under the 2005 Plan a total of 2,660,000
common shares were issued to satisfy the requirements under the service
consulting agreement from June 2005, a total of 1,430,000 common shares were
issued to satisfy the requirements under the service consulting agreement from
January 2006, and the Company granted options to purchase 910,000 shares for a
consulting agreement entered into in November 2005. These options granted for
the purchase of 910,000 shares of common stock were exercised in the year ended
April 30, 2006.

As of April 30, 2006, there are 1,265,000 shares available to be issued, or
granted with options, under the 2006 Plan. Under the 2006 Plan a total of
860,000 common shares were issued to satisfy the requirements under a service
consulting agreement from January 2006, in February 2006 the Company granted
options to purchase 4,000,000 shares to employees, and the Company granted
option to purchase 75,000 shares under a consulting agreement entered into in
February 2006. All options granted for the purchase by employees of 4,000,000
shares of common stock were exercised in the year ended April 30, 2006. Of the
options granted to the consultant for the purchase of 75,000 shares of common
stock a total of 50,000 were exercised in the year ended April 30, 2006.

The following options were granted during the year ended April 30, 2006:

- - On November 4, 2005, the Company entered into the consulting agreements
with three consultants for general business development. These
agreements have a term of one year. In addition the consultants will
assist the Company in the marketing and selling of its Stevia and
Chinese herb products in North America. The Company granted the three
consultants an aggregate of 910,000 options to purchase 910,000 shares
of the Company's common stock at $0.15 per share. These options were
granted under the Company's 2005 equity compensation plan. The fair
value of these option grants were estimated at $0.062 per option on the
date of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions dividend yield of -0- %;
expected volatility of 92 %; risk-free interest rate of 3.75 % and an
expected holding period of one year. In connection with these options,
the Company recorded deferred compensation of $56,292 to be amortized
over the service period of one year. For the year ended April 30, 2006,
amortization of deferred consulting expense amounted to $28,146. These
options have a one year life. All options were exercisable on the date
of grant. All 910,000 options have been exercised during the year ended
April 30, 2006.

F-39

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 8 - STOCKHOLDERS' EQUITY (Continued)

Stock options (Continued)

- - On February 7, 2006, the Company issued 4,000,000 options to purchase
shares of the Company's common stock to five employees. These options
are for services to be rendered over three years. Of these 4,000,000
options issued to the employees, options to purchase 3,200,000 shares
of the Company's common stock at $0.90 per share were granted to four
employees and options to purchase 800,000 shares of the Company's
common stock at $1.00 per share were granted to one employee. These
options have a life of one year. These options were granted under the
Company's 2006 equity compensation plan. The fair value of these option
grants were estimated at $0.184 and $ 0.169 per option respectively on
the date of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions dividend yield of -0- %;
expected volatility of 119 %; risk-free interest rate of 4.65 % and an
expected holding period of one year. In connection with these options,
the Company recorded deferred compensation of $722,137 to be amortized
over the service period of three years. For the year ended April 30,
2006, amortization of deferred consulting expense amounted to $60,178.
All options were exercisable on the date of grant. All 4,000,000
options have been exercised during the year ended April 30, 2006.

- - On February 7, 2006, the Company entered into a three-month consulting
agreement with a consultant to formulate a comprehensive marketing plan
to distribute Stevioside manufactured by the Company, in North America.
Under the agreement, the Company will pay the consultant $50,000 and
grant the consultant 25,000 options per month for a period of three
months. These options were granted under the Company's 2006 equity
compensation plan. The options are to purchase common stock at $0.50
per share for a period of one year. The fair value of these option
grants were estimated at $0.272 per option on the date of grant using
the Black-Scholes option-pricing model with the following
weighted-average assumptions dividend yield of -0- percent; expected
volatility of 119 percent; risk-free interest rate of 4.65 percent and
an expected holding period of one year. In connection with these
options, the Company recorded deferred compensation of $20,404 to be
amortized over the service period of one year. For the year ended April
30, 2006, amortization of deferred consulting expense amounted to
$4,676. These options have a life of five years. All options were
exercisable on the date of grant. A total of 75,000 options have been
granted under this consulting agreement. Of these granted options
50,000 have been exercised during the year ended April 30, 2006.

F-40

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 8 - STOCKHOLDERS' EQUITY (Continued)

Common stock options (Continued)

A summary of the status of the Company's outstanding stock options granted as of
April 30,2006 and changes during the period are as follows:

Weighted
Average
Exercise
Shares Price
--------- --------
Outstanding at April 30, 2004 - $ -
Granted - -
Exercised - -
Forfeited - -
--------- --------
Outstanding at April 30, 2005 - $ -
Granted 4,985,000 0.773
Exercised 4,960,000 0.774
Forfeited - -
--------- --------
Outstanding at April 30, 2006 25,000 $ 0.50
========= ========

Options exercisable at end of period 25,000 $ 0.50
========= ========

Weighted-average fair value of options
granted during the period $ 0.773

The following information applies to all options outstanding at April 30, 2006:

Options Outstanding Options Exercisable
------------------------- -------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Contractual Exercise Exercise
Prices Shares Life (Years) Price Shares Price
- -------- ------ ------------ -------- ------ --------
$0.50 25,000 0.78 $ 0.50 25,000 0.50

Common stock warrants

In July 2004, in connection with a private placement, the Company granted
two-year common stock purchase warrants to purchase an aggregate of 1,500,000
shares of the Company's common stock with an exercise price of $0.167 per share.
These warrants contain standard anti-dilution protection for the warrant holder
in the event of stock splits, recapitalization or reorganization by the Company.
All 1,500,000 warrants have been exercised during the year ended April 30, 2006.

F-41

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 8 - STOCKHOLDERS' EQUITY (Continued)

Common stock warrants (Continued)

On April 12, 2005, in connection with a private placement, the Company granted
Class A Common Stock Purchase Warrants to purchase an aggregate of 13,125,000
shares of the Company's common stock. Each warrant entitles the holder to
purchase one share of common stock for a period of five years, at an exercise
price of $0.15 per share, subject to adjustment. Additionally, in connection
with this private placement, the Company granted Class A Common Stock Purchase
Warrants to purchase an aggregate of 375,000 shares of the Company's common
stock for a period of five years, at an exercise price of $0.15 per share as a
placement fee. The number of shares issuable upon the exercise, and the exercise
price per share, are subject to adjustment in the event the Company issues
additional shares of common stock as a dividend or other distribution or for
stock splits or combinations. The number of shares of the Company's common stock
and the exercise price of the warrant are also subject to adjustment in the
event the Company issues additional shares of its common stock or any other
securities which are convertible or exercisable into shares of its common stock
at a per share price less than the exercise price of the warrant, other than in
certain specific instances, in which event the exercise price of the warrant
would be reset to the lower price. All 13,625,000 warrants granted in connection
with this private placement have been exercised during the year ended April 30,
2006.

On May 1, 2005, the Company entered into a two-month agreement with China Direct
Investments, Inc., a related party, to provide consulting and advisory services
to assist the Company. The consultant received an aggregate of 500,000 Class A
Common Stock Purchase Warrants to purchase shares of the Company's common stock
at an exercise price of $0.15 per share for one year. The fair value of this
warrant grant was estimated at $0.029 per warrant on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions dividend yield of -0- %; expected volatility of 45 %; risk-free
interest rate of 4.00 % and an expected holding period of 5 years. In connection
with these warrants, the Company recorded stock-based consulting expense of
$14,564. All 500,000 warrants granted in connection with this agreement have
been exercised during the year ended April 30, 2006.

F-42

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 8 - STOCKHOLDERS' EQUITY (Continued)

Common stock warrants (Continued)

A summary of the status of the Company's outstanding stock warrants granted as
of April 30, 2006 and changes during the period is as follows:

Weighted
Average
Exercise
Shares Price
---------- --------
Outstanding at April 30, 2004 - $ -
Granted 15,000,000 0.151
Exercised - -
Forfeited - -
---------- --------
Outstanding at April 30, 2005 15,000,000 $ 0.151
Granted 500,000 0.150
Exercised 15,500,000 0.151
Forfeited - -
---------- --------
Outstanding at April 30, 2006 - $ -
========== ========

Warrants exercisable at end of period - $ -
========== ========
Weighted-average fair value of warrants
granted during the period $ 0.150
========

NOTE 9 - COMMITMENTS

Operating Leases

The Company leases office and manufacturing space under leases in Shandong,
China that expire through 2013. All facilities related to traditional Chinese
medicine are leased from Shandong Shengwang Pharmaceutical Group Corporation.
This lease term will be expired on Oct0ber 1, 2012 with annual lease payment of
$19,940. Future minimum rental payments required under these operating leases
are as follows:

Period: Total: Shandong

Period Ended April 30, 2007 $ 46,320 $ 19,940
Period Ended April 30, 2008 $ 48,605 $ 19,940
Period Ended April 30, 2009 $ 48,605 $ 19,940
Period Ended April 30, 2010 $ 48,605 $ 19,940
Period Ended April 30, 2011 $ 48,605 $ 19,940
Thereafter $ 76,334 $ 28,249

Rent expense included in general and administrative expenses for the years ended
April 30, 2006 and 2005 amounted to $46,990 and $42,479, respectively.

F-43

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 10 - LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceeding. No federal, state or
local governmental agency is presently contemplating any proceeding against the
Company.

NOTE 11 - OPERATING RISK

(a) Country risk

(b) Products risk

The Company can not guarantee that the current exchange rate will remain steady,
therefore there is a possibility that the Company could post the same amount of
profit for two comparable periods and because of a fluctuating exchange rate
actually post higher or lower profit depending on exchange rate of Chinese
Renminbi (RMB) converted to U.S. dollars on that date. The exchange rate could
fluctuate depending on changes in the political and economic environments
without notice.

(d) Political risk

(e) Key personnel risk

The Company's future success depends on the continued services of executive
management in China. The loss of any of their services would be detrimental to
the Company and could have an adverse effect on business development. The
Company does not currently maintain key-man insurance on their lives. Future
success is also dependent on the ability to identify, hire, train and retain
other qualified managerial and other employees. Competition for these
individuals is intense and increasing.

F-44

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 11 - OPERATING RISK (Continued)

(f) Performance of subsidiaries risk

NOTE 12 - SEGMENT INFORMATION

The following information is presented in accordance with SFAS No. 131,
Disclosure about Segments of an Enterprise and Related Information. In the
periods ended April 30, 2006 and 2005, the Company operated in two reportable
business segments - (1) the sale of essential traditional Chinese medicine, 100
percent organic herbal medicine, neutraceutical products, and animal medicines
prepared from 100% organic herbal ingredients and (2) sale of natural sweetener
(stevioside). The Company's 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 the year ended April 30, 2006 and 2005
is as follows:

Year Ended April 30, 2006 (Unaudited):

Chinese and Natural Corporate
Animal Sweetener and
Medicines (Stevioside) Other Consolidated
----------- ------------ ----------- ------------

Net Revenues ................ $ 8,288,493 $ 7,201,520 $ - $15,490,013
Interest expense (income) ... 37,729 (2,391) - 35,338
Depreciation and amortization 149,608 155,206 - 304,814
Net income (loss) ........... 1,927,890 1,184,666 (682,742) 2,429,814
Long-lived asset expenditures 2,599,074 1,353,138 - 3,952,212
Segment Assets .............. $ 7,664,588 $ 7,858,330 $ 642,257 $16,165,175

Year Ended April 30, 2005(Unaudited):

Chinese and Natural Corporate
Animal Sweetener and
Medicines (Stevioside) Other Consolidated
----------- ------------ ----------- ------------

Net Revenues ................ $ 6,573,440 $ 5,540,566 $ - $12,114,006
Interest expense (income) ... 46,914 11,240 3,900 62,054
Depreciation and amortization 96,092 195,323 - 291,415
Net income (loss) ........... 614,703 502,821 (288,410) 829,114
Long-lived asset expenditures 770,198 211,436 - 981,634
Segment Assets .............. $ 4,249,534 $ 5,687,174 $ 900,777 $10,837,485

F-45

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006 and 2005

NOTE 13 - SUBSEQUENT EVENTS (unaudited)

F-46

No dealer, sales representative or any other person has been authorized to give
any information or to make any representations other than those contained in
this prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by the company or any of the
underwriters. This prospectus does not constitute an offer of any securities
other than those to which it relates or an offer to sell, or a solicitation of
any offer to buy, to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this prospectus nor any
sale made hereunder shall, under any circumstances, create an implication that
the information set forth herein is correct as of any time subsequent to the
date hereof.

TABLE OF CONTENTS

Page

PROSPECTUS SUMMARY.............................................................3
ABOUT THE OFFERING.............................................................3
SELECTED FINANCIAL DATA........................................................4
RISK FACTORS...................................................................4
CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING INFORMATION...................14
MARKET FOR COMMON STOCK AND DIVIDEND POLICY...................................14
CAPITALIZATION................................................................15
USE OF PROCEEDS...............................................................16
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.....................16
BUSINESS......................................................................32
MANAGEMENT....................................................................49
EXECUTIVE COMPENSATION........................................................53
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS..........................60
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................60
DESCRIPTION OF SECURITIES.....................................................61
SELLING SECURITY HOLDERS......................................................63
PLAN OF DISTRIBUTION..........................................................72
LEGAL MATTERS.................................................................74
EXPERTS.......................................................................74
WHERE YOU CAN FIND ADDITIONAL INFORMATION.....................................74

SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.

PROSPECTUS
----------

_______, 2007

21,246,250 Shares of Common Stock

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Nevada Revised Statutes allows us to indemnify each of our officers
and directors who are made a party to a proceeding if:

(a) the officer or director conducted himself or herself in good faith;

(b) his or her conduct was in our best interests, or if the conduct was not
in an official capacity, that the conduct was not opposed to our best interests;
and

(c) in the case of a criminal proceeding, he or she had no reasonable cause
to believe that his or her conduct was unlawful. We may not indemnify our
officers or directors in connection with a proceeding by or in our right, where
the officer or director was adjudged liable to us, or in any other proceeding,
where our officer or director are found to have derived an improper personal
benefit.

Our by-laws require us to indemnify directors and officers against, to
the fullest extent permitted by law, liabilities which they may incur under the
circumstances described above.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling our
company pursuant to the foregoing provisions, we have been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as express in the act and is therefore unenforceable.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses payable by us in connection with the
distribution of the securities being registered are as follows:

SEC Registration and Filing Fee .................. $ 375
Legal Fees and Expenses* ......................... 35,000
Accounting Fees and Expenses* ................... 30,000
Financial Printing* .............................. 5,000
Transfer Agent Fees* ............................ 1,500
Blue Sky Fees and Expenses* ..................... 2,500
Miscellaneous* ................................... 1,000
-------
TOTAL .................... $75,375
=======
* Estimated

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

Following are all issuances of securities by the small business issuer
during the past three years which were not registered under the Securities Act
of 1933, as amended (the "Securities Act"). In each of these issuances the
recipient represented that he was acquiring the shares for investment purposes
only, and not with a view towards distribution or resale except in compliance
with applicable securities laws. No general solicitation or advertising was used
in connection with any transaction, and the certificate evidencing the
securities that were issued contained a legend restricting their transferability

II-1

absent registration under the Securities Act or the availability of an
applicable exemption therefrom. Unless specifically set forth below, no
underwriter participated in the transaction and no commissions were paid in
connection with the transactions.

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. In connection with the transaction, Sunwin Tech
purchased 4,500,000 shares of our common stock owned by our former principal
stockholders, and, at the closing, Sunwin Tech distributed the 4,500,000 shares
to Messrs. Baozhong Yuan, Xianfeng Kong and Lei Zhang (former officers and
directors) and Laiwang Zhang, pro-rata to their ownership of Sunwin Tech
immediately prior to the closing. The securities were issued in reliance on an
exemption from registration provided by Section 4(2) of the Securities Act.

On April 30, 2004, we issued 1,000,002 shares of our common stock to an
unaffiliated third party in satisfaction of $100,000 due that party by our
company. We valued these shares at $0.10 per share. The securities were issued
in reliance on an exemption from registration provided by Section 4(2) of the
Securities Act.

On April 30, 2004, we also issued an aggregate of 2,125,002 shares of
our common stock to eight individuals and entities as compensation for business
development and advisory services under agreements for services rendered or to
be rendered for a six-month period. We valued these shares at $0.10 per share,
resulting in consulting expense of $112,500 for fiscal 2004 and deferred
consulting expense of $100,000. These issuances included 709,680 shares issued
to Mr. Richard J. Church and 290,322 shares issued to Mr. Michael L. Mead,
former officers and directors of our company. The securities were issued in
reliance on an exemption from registration provided by Section 4(2) and
Regulation D of the Securities Act.

On May 1, 2004, we issued an aggregate of 1,500,000 shares of our
common stock to two companies and one individual as compensation valued at
$150,000 under one year consulting agreements. The securities were issued in
reliance on an exemption from registration provided by Section 4(2) of the
Securities Act. We valued these shares at $150,000.

In July 2004, we sold 2.5 units of our securities to three accredited
investors in a private transaction exempt from registration under the Securities
Act in reliance on an exemption available under Section 4(2) and Regulation D of
the Securities Act. Each unit consisted of 600,000 shares of our common stock
and two-year common stock purchase warrants to purchase 600,000 shares of our
common stock at an exercise price of $0.167 per share. This transaction resulted
in the issuance of an aggregate of 1,500,000 shares of our common stock and
warrants to purchase an additional 1,500,000 shares. We received gross proceeds
of $120,000. We did not use a placement agent and paid no commission.

In April 2005, we sold 8,750,000 shares of our common stock at $.10 per
share, and issued five year common stock purchase warrants to purchase an
additional 13,125,000 shares at an exercise price of $0.15 per share, to 12
accredited investors in a private transaction exempt from registration under the
Securities Act in reliance on an exemption provided by Section 4(2) of the
Securities Act and the rules and regulations, including Regulation D. We paid a
finder's fee of $87,500 and issued five-year warrants to purchase a total of
375,000 shares of common stock with an exercise price of $0.15 per share.

In May 2005, we issued five-year warrants to purchase 500,000 shares of
our common stock, at an exercise price of $.15 per share, to China Direct
Investments, Inc., an accredited investor, as compensation under a consulting
agreement for advisory services rendered or to be rendered for a two month
period. We valued these shares at $39,221. The securities were issued in
reliance on an exemption from registration provided by Section 4(2) of the
Securities Act.

II-2

In August 2005, we issued 665,000 shares of our common stock to China
Direct Investments, Inc., an accredited investor, as compensation under a
consulting agreement for advisory services rendered. We valued these shares at
$73,150. The securities were issued in reliance on an exemption from
registration provided by Section 4(2) of the Securities Act.

In February 2006, we acquired the remaining 20% of Qufu from Shandong
Shengwang Pharmaceutical Group Corporation, an accredited investor, in exchange
for 5,000,000 shares of our common stock valued at $2,775,000. The securities
were issued in reliance on an exemption from registration provided by Section
4(2) of the Securities Act.

In March 2006 we issued 140,000 shares of our common stock to China
Direct Investments, Inc., an accredited investor, as compensation under a
consulting agreement for advisory services rendered. We valued the shares at
$32,200. The securities were issued in reliance on an exemption from
registration provided by Section 4(2) of the Securities Act.

In March 2007, we sold 9,812,500 shares of our common stock and issued
common stock purchase warrants to purchase an additional 9,812,500 shares of
common stock to 25 accredited investors in a private placement exempt from
registration under the Securities Act in reliance on exemptions provided by
Section 4(2) and Rule 506 of Regulation D of that act resulting in gross
proceeds to us of $4,121,250. We paid Skyebanc, Inc., an NASD member firm that
acted as placement agent in the transaction, a cash fee of $15,960 and issued it
warrants to purchase 38,000 shares of common stock as compensation for its
services. We paid $25,000 to counsel for the investors as reimbursement for
legal services rendered in connection with the offering. We also paid due
diligence fees to certain investors or their advisors, as well as a fee to China
Direct Investments, Inc. who advised us in the offering, which consisted of an
aggregate of $151,305 in cash and common stock warrants to purchase a total of
943,250 shares of common stock.

In March 2007 we issued Capital One Resource Co., Ltd., an accredited
investor and affiliate of China Direct Investments, Inc., 500,000 shares of our
common stock as compensation under a consulting agreement for advisory services
rendered under the terms of the agreement with China Direct Investments, Inc. We
valued the shares at $220,000. The securities were issued in reliance on an
exemption from registration provided by Section 4(2) of the Securities Act.

ITEM 27. EXHIBITS.

3.1 Articles of Incorporation (1)
3.2 Certificate of Amendment to Articles of Incorporation (2)
3.3 By-Laws (1)
4.1 Form of $0.65 common stock purchase warrant (8)
5.1 Opinion of Schneider Weinberger & Beilly LLP *
10.1 Share Exchange Agreement dated April 30, 2004 between Network USA, Inc.
and the stockholders of Sunwin Tech Group, Inc. (3)
10.2 Form of Stevia rebaudiana Planting Agreement (4)
10.3 Stock Purchase Agreement between Sunwin Tech Group, Inc., Qufu Natural
Green Engineering Company, Limited and Shandong Shengwang
Pharmaceutical Group Corporation (4)
10.4 2005 Equity Compensation Plan (5)
10.5 Consulting and Management Agreement with China Direct Investments, Inc.
*
10.6 Lease agreement dated October 1, 2002 between Shandong Shengwang
Pharmaceutical Corporation and Qufu Natural Green Engineering Co., Ltd.
(7)
10.7 Lease agreement dated October 6, 2002 between Qufu LuCheng Chiya
Resident Commitment and Qufu Natural Green Engineering Co., Ltd. (7)

II-3

10.8 Lease agreement dated April 1, 2004 between Qufu ShengDa Industry Co.,
Ltd. and Qufu Natural Green Engineering Co., Ltd.(7)
10.9 Stock Purchase Agreement dated February 7, 2006 between Sunwin
International Neutraceuticals, Inc., Qufu Natural Green Engineering
Company and Shandong Shengwang Pharmaceutical Group Corporation (6)
10.10 2006 Equity Compensation Plan (6)
10.11 Subscription Agreement (8)
23.1 Consent of Sherb & Co., LLP*
23.2 Consent of Schneider Weinberger & Beilly LLP (included in Exhibit 5.1)*

* filed herewith

(1) Incorporated by reference to the Annual Report on Form 10-KSB for the fiscal
year ended April 30, 2000
(2) Incorporated by reference to the Form 8-K/A as filed on July 30, 2004.
(3) Incorporated by reference to the Report on Form 8-K as filed with on May 12,
2004.
(4) Incorporated by reference to the Annual Report on Form 10-K for the fiscal
year ended April 30, 2004.
(5) Incorporated by reference to the Report on Form 8-K as filed on April 28,
2005.
(6) Incorporated by reference to the Quarterly Report on Form 10-QSB for the
period ended January 31, 2006.
(7) Incorporated by reference to the Annual Report on Form 10-KSB/A for the
fiscal year ended April 30, 2005.
(8) Incorporated by reference to the Report on Form 8-K as filed on March 23,
2007.

ITEM 28. UNDERTAKINGS.

The small business issuer will:

(1) File, during any period in which it offers or sales securities, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and

(iii) Include any additional or changed material information
to the plan of distribution.

(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.

II-4

(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at then end of the offering.

(4) For determining liability of the undersigned small business issuer
under the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned small business issuer undertakes that in a primary
offering of securities of the undersigned small business issuer pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned small
business issuer will be a seller to the purchaser and will be considered to
offer or sell such securities to such purchaser:

i. Any preliminary prospectus or prospectus of the undersigned small
business issuer relating to the offering required to be filed pursuant to Rule
424;

ii. Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned small business issuer or used or referred to by the
undersigned small business issuer; The portion of any other free writing
prospectus relating to the offering containing material information about the
undersigned small business issuer or its securities provided by or on behalf of
the undersigned small business issuer;

iii. Any other communication that is an offer in the offering made by
the undersigned small business issuer to the purchaser;

iv. Any other communication that is an offer in the offering made by
the undersigned small business issuer to the purchaser.

(5) For determining liability under the Securities Act to any
purchaser, each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
small business issuer will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

II-5

SIGNATURES

In accordance with the Securities Act of 1933, the registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
of filing on Form SB-2 and authorized this registration statement to be signed
on its behalf by the undersigned on April 25, 2007.

Sunwin International Neutraceuticals, Inc.

By: /s/ Dongdong Lin
----------------
Dongdong Lin, Chief Executive Officer,
director, principal executive officer

By: /s/ Fanjun Wu
-------------
Fanjun Wu, Chief Financial Officer, and
principal accounting and financial officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE

/s/ Laiwang Zhang President and Chairman April 25, 2007
- ------------------
Laiwang Zhang

/s/ Dongdong Lin Chief Executive Officer, director, April 25, 2007
- ---------------- principal executive officer
Dongdong Lin

/s/ Fanjun Wu Chief Financial Officer and April 25, 2007
- ------------- Principal accounting officer
Fanjun Wu

/s/ Chengxiang Yan Director April 25, 2007
- ------------------
Chengxiang Yan