SOURCE: Sunwin International Neutraceuticals, Inc.

December 17, 2008 08:54 ET

Sunwin International Reports Profitable 2009 Second Quarter

Q2 2009 Net Income up 135%, Positioning for Increased Global and USA Stevia Demand

QUFU, CHINA--(Marketwire - December 17, 2008) - Sunwin International Neutraceuticals, Inc. (OTCBB: SUWN), a leader in the production and distribution of Chinese herbs, veterinary medicines and one of the world's leading producers of all natural, zero calorie Stevia in China, today announced its second quarter results for fiscal 2009 for the quarter ended October 31, 2008.

The quarter showed continued growth in revenue and a significant rise in net income even as the company increased general and administrative expenses ahead of further global sales growth. Recent developments in the US market where Stevia is pending FDA approval as a sweetener ingredient include an announcement by Coca Cola to launch in the US an all natural low calorie beverage using Stevia and comments by Pepsi Co. of products launched in markets outside the US. Sunwin is positioned to become the largest independent Stevia provider able to supply across the US market for table top, wholesale and bulk sale needs.

Financial Highlights:

Revenues for the second quarter of fiscal 2009 increased 15.4% to $6.56 million as compared to revenues of $5.68 million in the second quarter of fiscal 2008. Net income in the second quarter of fiscal 2009 was approximately $421,000, a 135% increase compared to approximately $179,000 in the second quarter of fiscal 2008.

For the first half of fiscal 2009, revenue increased 29.2% to $12.79 million and net income increased 47.5% to more than $715,000. Gross margins remain steady at approximately 25% reflecting variances and offsets in costs related to the global economic upheavals affecting the cost of raw materials, energy and shipping. The company was able to control costs in order to maintain its current margins.

The significant increase in quarter over quarter net income was primarily attributable to ongoing revenue growth, cost controls and efficiency gains within the business, less increased general and administrative expenses associated with the company's organic and strategic growth. Selling expenses declined year over year. Income from operations net of these changes increased 192% on a quarter to quarter comparison. Sunwin also became a tax payer in China reducing the current year quarterly net income by $92,430 compared to no income taxes paid in the prior year quarter. First half net income was reduced by $166,600 in taxes year to date compared to the prior year period of zero taxes paid.

The fiscal second quarter is the major purchasing period for Stevia raw leaf stock by the Company and as a result, inventories increased through raw materials purchases from $4.7 million at fiscal 2008 year end to $9.2 million at the end of the second quarter ahead of expected demand. While inventories increased substantially, cash and cash equivalents as of October 31, 2008 were $6.78 million, down only slightly from $6.81 million at fiscal 2008 year end. This demonstrates the company's increasing ability to generate internal working capital to fund its growth programs as it addresses the increasing worldwide demand for Stevia products.

President and Chairman Laiwang Zhang, commented, "Sunwin posted yet another strong quarter of growth, profit and conservative fiscal management of the company's assets. The company made significant inventory purchases to increase stevia production to meet expected growth in global demand, eventually to include expected high US market demand as product manufacturers are openly discussing their plans to launch low calorie products using Stevia upon FDA approval. Sunwin is uniquely positioned to address this potential demand as a vertically integrated supplier able to provide both intermediate grades needed by other producers to create high grade Stevia, as well as produce and deliver high grade Stevia customized to a customer's particular needs at competitive costs. In the interim, Sunwin continues to grow its business outside the US in current and recently approved markets to the benefit of the bottom line for our shareholders."


Sunwin expects to continue its growth in international markets where the bulk of Stevia sales are today through increased production at its present facilities and broader distribution of product through wholesale channels, as well as the provision of mid-grade Stevia to other manufacturers who face limited supply scenarios of this product critical for the production of high-grade Stevia.

The company anticipates its acquisition of a 60% interest in Qufu Shengwang Stevia Biology and Science Company will add revenue and profit in the quarters ahead by expanding the business base in agricultural products and profitably monetizing Stevia waste products generated from the production of Stevia.

Sunwin's proprietary OnlySweet™ brand of dietary supplements sold in retail stores across the US continues to grow with increasing interest from major chain retailers and online distributors. OnlySweet unit sales increased 34% during the second quarter of 2009 as compared to the prior year. Expected US approval of Stevia is expected to open further distribution and sales of the tabletop product currently sold, as well as significantly increase wholesale and bulk opportunities for the food and beverage industry in which Sunwin currently participates. Sunwin's customer Zevia was recently featured as one of the fastest growing companies in its category, which we believe is a strong indication of the US market potential for Stevia and Sunwin.

Jeff Reynolds, President of the company's US subsidiary, commented, "The company continues to see needs for increasing production of both mid-grade and high-grade Stevia to meet growing global demand, and anticipates demand increasing upon US FDA approval of Stevia. We believe that US approval will also open significant interest in launching new products, which will increase Stevia demand, as well as create additional demand on currently limited industry production capacity for high-grade Stevia. Sunwin is uniquely positioned as a vertically integrated producer and seller to meet the need for high quality Stevia at competitive prices."

Company Background:

Sunwin International Neutraceuticals, Inc. engages in the areas of essential traditional Chinese medicine, zero calorie natural sweeteners (stevia), and veterinary medicines and feeds prepared from 100 percent organic herbal ingredients. As an industry leader in agricultural processing, Sunwin has built an integrated global firm with the sourcing and production capabilities to meet the needs of consumers throughout the world. Sunwin also makes such value-added products as specialty veterinary food ingredients and specialty feed ingredients. For more info about Sunwin, please visit

Safe Harbor Statement

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Sunwin International Neutraceuticals, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our guidance and expectations regarding revenues, net income and earnings. In addition, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations: our expectations regarding FDA approval of stevia in the US and the acceptance of stevia in the American consumer market. In addition, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations: the business operating risks and new and competing sugar substitutes.

We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2008 and our reports on Form 10-Q.

                        CONSOLIDATED BALANCE SHEETS

                                                October 31,     April 30,
                                                    2008          2008
                                                ------------- ------------
                       ASSETS                    (Unaudited)    (Restated)
 Cash                                           $   6,782,197 $  6,811,136
 Accounts receivable, net                           3,741,691    4,163,839
 Inventories, net                                   9,226,294    4,707,044
 Taxes receivable                                     180,441            -
 Prepaid expenses and other assets                    173,546      264,576
 Due from related party                             2,173,562            -
  Total Current Assets                             22,277,731   15,946,594

PROPERTY AND EQUIPMENT                             17,234,044   14,151,293
LAND USE RIGHT                                      2,335,165            -
                                                ------------- ------------

  Total Assets                                  $  41,846,940 $ 30,097,887
                                                ============= ============


 Accounts payable and accrued expenses          $   4,234,322 $  2,649,817
 Notes payable                                        100,000            -
 Advances from customers                                    -       12,726
 Taxes payable                                          3,610      401,808
 Due to related party                                  65,859      431,443
                                                ------------- ------------
  Total Current Liabilities                         4,403,791    3,495,794

OTHER PAYABLES                                        157,218      154,207
                                                ------------- ------------
  Total Liabilities                                 4,561,009    3,650,001
                                                ------------- ------------

MINORITY INTEREST                                   2,735,369            -
                                                ------------- ------------

 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; 116,532,712 and 87,006,936
  shares issued and outstanding at October 31,
  2008 and April 30, 2008, respectively)              116,533       87,007
 Additional paid-in capital                        23,707,554   17,218,066
 Retained earnings                                  7,041,384    6,325,919
 Subscription receivable                                    -     (372,900)
 Other comprehensive income - foreign currency      3,685,091    3,189,794
                                                ------------- ------------
  Total Stockholders' Equity                       34,550,562   26,447,886
                                                ------------- ------------

  Total Liabilities and Stockholders' Equity    $  41,846,940 $ 30,097,887
                                                ============= ============


                       For the Three Months         For the Six Months
                        Ended October 31,           Ended October 31,
                    --------------------------  --------------------------
                        2008          2007          2008          2007
                    ------------  ------------- ------------  -------------

NET REVENUES        $  6,559,912  $   5,684,189 $ 12,787,784  $   9,901,426
COST OF REVENUES       4,912,344      4,220,549    9,630,011      7,094,671

                    ------------  ------------- ------------  -------------
GROSS PROFIT           1,647,568      1,463,640    3,157,773      2,806,755
                    ------------  ------------- ------------  -------------

   expense               123,748        123,748      247,496        247,496
  Selling expenses       463,019        821,843      922,355      1,398,803
  General and
   administrative        558,802        346,554    1,126,970        705,786
                    ------------  ------------- ------------  -------------
    Total Operating
     Expenses          1,145,569      1,292,145    2,296,821      2,352,085
                    ------------  ------------- ------------  -------------

 OPERATIONS              501,999        171,495      860,952        454,670

  Other income               542          1,269          782          1,066
  Interest income         11,108          6,109       23,719         31,775
                    ------------  ------------- ------------  -------------
   Total Other
    Income                11,650          7,378       24,501         32,841
                    ------------  ------------- ------------  -------------

 MINORITY INTEREST       513,649        178,873      885,453        487,511

INCOME TAXES             (92,430)             -     (166,600)             -
                    ------------  ------------- ------------  -------------

 MINORITY INTEREST       421,219        178,873      718,853        487,511

 SUBSIDIARIES             (3,388)             -       (3,388)             -
                    ------------  ------------- ------------  -------------

NET INCOME               417,831        178,873      715,465        487,511

  Unrealized foreign
   (loss) gain          (119,815)       308,464      495,297        719,320
                    ------------  ------------- ------------  -------------

 INCOME             $    298,016  $     487,337 $  1,210,762  $   1,206,831
                    ============  ============= ============  =============

  Net income per
   common share -
   basic            $       0.00  $        0.00 $       0.01  $        0.01
                    ============  ============= ============  =============
  Net income per
   common share -
   diluted          $       0.00  $        0.00 $       0.01  $        0.01
                    ============  ============= ============  =============

  Weighted Common
   Outstanding -
   basic              88,304,772     87,006,936   87,652,308     86,779,093
                    ============  ============= ============  =============
  Weighted Common
   Outstanding -
   diluted            88,304,772     87,006,936   87,652,308     86,779,093
                    ============  ============= ============  =============

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