SCHNEIDER WEINBERGER & BEILLY LLP
2200 Corporate Boulevard, N.W.
Suite 210
Boca Raton, Florida 33431
telephone 561-362-9595
telecopier 561-362-9612
September 2, 2005
'CORRESP'
United States Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
Attention: Jeffrey Riedler
Dana Hartz
Joel Parker
Zafar Hasan
Re: Sunwin International Neutraceuticals, Inc. (the "Company")
Registration Statement on Form SB-2
File Number 333-125300
Ladies and Gentlemen:
The Company is in receipt of the Staff's letter of comment dated June
23, 2005. The Company has filed amendment number 1 to the above-captioned
registration statement on this date. Following are the Company's responses to
the Staff's comments. In addition, under separate cover the Company is
delivering three courtesy copies of amendment number 1 to Dana Hartz, marked to
show the changes from the original registration statement as filed on May 27,
2005 and keyed to the Staff's comments in its June 23, 2005 letter.
General
1. The Company acknowledges the Staff's comment and has filed Exhibit 5.1 and
23.2, opinion and consent of counsel, and Exhibit 21, subsidiaries (along with
the consent of the auditors).
2. The Company acknowledges the Staff's comment and has made such changes as it
deemed appropriate in amendment number 1 in response to the Staff's comment
letter of June 23, 2005.
3. This response letter has been prepared in accordance with the directions
contained in this comment.
Form SB-2
Risk Factors
General
<page>
4, 5, and 6. The Company acknowledges the Staff's comments 4, 5 and 6 and has
revised most of the risk factors and added a substantial number of additional
risk factors. Since a substantial amount of disclosure has been revised and
added to this section, it is difficult to identify in this letter all changes.
Generally, we have removed our 3rd, 4th, 5th and 6th risk factors, and added 9
new risk factors under "Risks Related to our Business." We have added a
subsection, "Risks Related to Doing Business in China" and added 9 new risk
factors. Under the subsection "Risks Related to this Offering" we added
additional disclosure to the 2nd risk factor.
We are materially reliant...
We cannot assure you that the current Chinese policies...
Even if the Chinese government continues it policies...
We are subject to risks associated with the conversion....
7. The Company acknowledges the Staff's comment and has revised most of the risk
factors and added a substantial number of additional risk factors. Since a
substantial amount of disclosure has been revised and added to this section, it
is difficult to identify in this letter all changes. Generally, we have removed
our 3rd, 4th, 5th and 6th risk factors, and added 9 new risk factors under
"Risks Related to our Business." We have added a subsection, "Risks Related to
Doing Business in China" and added 9 new risk factors. Under the subsection
"Risks Related to this Offering" we added additional disclosure to the 2nd risk
factor.
We cannot assure you that the current Chinese policies...
8. The Company has removed this risk factor and replaced it in its entirety with
a number of risk factors under the subsection "Risks Related to Doing Business
in China."
Management's Discussion and Analysis or Plan of Operation
Critical Accounting Policies
9. The Company has informed us that there are no significant items which will
reduce the Company's gross revenues. During the regular course of the Company's
business, product returns and chargebacks rarely occur. In fiscal year of 2005,
the Company experienced product returns in the amount of $1,200. The Company
offers some of its long-term customers, in connection with its Stevioside
product and veterinary medicine products, a discount if they prepay their
purchase. This kind of transaction accounts for a small portion of the Company's
revenue, approximately 1% - 2%. The Company does not provide any rebates or
other allowances for sales. In the footnotes to the Company's consolidated
financials statements for the year ended April 30, 2005, the Company added the
following accounting policy Customer Deposits Customer deposits at April 30,
2005 of $11,514 consist of a prepayment to the Company for merchandise that had
not yet shipped. The Company will recognize the deposits as revenue as customers
take delivery of the goods, in compliance with its revenue recognition policy.
Liquidity and Capital Resources
<page>
10. The Company has revised its analysis of the cash flow activities to provide
more of an explanation as to the variations in the line items between the
periods presented.
11. The Company has provided a discussion as to the impact of the Company's
current notes payable.
Business - Our Company
12. The first time we use the term PRC is in the first sentence under
"Prospectus Summary-The Company," and PRC if defined.
13. The Company has revised this section throughout and cited the sources of
statistics and figures use in support of the disclosure.
14. Please be advised that, notwithstanding a few customers account for 10% or
more of the net (gross) revenues of the Company FROM A PARTICULAR PRODUCT GROUP
(as disclosed in the description of the Business), the Company has informed us
that no customer, wholesaler or supplier represents a material portion of the
Company's ENTIRE business, nor do any represent 10% or more of the Company's
entire net (gross) revenues. Furthermore, the Company does not have any
agreements with its customers or wholesalers.
Certain Relationships and Related Transactions
15. and 16. The Company has revised this section by adding 4 new paragraphs of
disclosure relating to the transactions between the Company and Shandong
Shengwang Pharmaceutical Corporation, Limited and Shangong Shengwang Group
Corporation.
17. Please be advised that there are no agreement with the related parties
described under this section except for the two agreements with CDI which have
both been filed.
Exhibits
18. The Company has filed with this amendment as Exhibit 21 the list of
subsidiaries.
Financial Statements
Consolidated Balance Sheet
19. It is customary in the Company's business to receive advances from customers
in connection with the Stevioside product and veterinary medicine product.
Customers will advance funds to receive a price discount and to secure their
order of product. If a customer pays 3 months prior to actual shipment, the
Company will give them certain discounts in price. In the fiscal year of 2005,
the Company had approximately $11,514 in customer advances. In the footnotes to
the consolidated financials statements for the year ended April 30, 2005, the
Company added a footnote regarding the accounting policy. Please also see the
response herein to comment 9.
Consolidated Statements of Operations
20. You have asked the Company to retroactively restate the weighted shares
outstanding giving effect to the recapitalization. The Company has informed us
that in the calculation of weighted shares, they treated the 17,000,004 shares
of the Company's common stock issued for the acquisition of all of the
outstanding capital stock of Sunwin Tech Group, Inc. as if they were outstanding
<page>
since the beginning of their fiscal year. The shares retained by the former
shareholders of the Company were treated as if they were outstanding from the
date of the Share Exchange Agreement (April 30, 2004) or for one day. The shares
issued for debt were treated as if they were outstanding since April 30, 2004
(one day), the date issued for debt and services. Accordingly, the Company
believes that their calculation of weighted shares is correct and does not need
to be restated.
Consolidated Statements of Stockholders' Equity
21. We have been informed by the Company that on the consolidated statement of
stockholders' equity, the Company debited retained earnings for $95,000 on the
share exchange agreement in order to eliminate the Company's investment made of
$95,000 for the acquisition. At the time of preparing the financial statements,
the Company believed it was proper to eliminate the investment against retained
earnings. However, after further consideration, the Company believes it should
eliminate the investment of $95,000 against paid-in capital. Since there in no
effect on the statement of operatons, cash flow statements, or earnings per
shares, the Company will reflect this change on future filings.
Note 4 - Related Party Transactions
22. The Company has included a description of the related party transactions.
We trust the foregoing sufficiently responds to the Staff's comments.
If you have any further questions or comments, please contact the undersigned.
Sincerely,
/s/ Roxanne K. Beilly
Roxanne K. Beilly
cc: Ms. Dongdong Lin