Qufu, September 8, 2008 - Sunwin International Neutraceuticals, Inc., 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, announced today that on September 2, 2008 its wholly owned subsidiary, Qufu Natural Green Engineering Co., Ltd. entered into an amendment to its June 30, 2008 agreement to acquire a 60% equity interest of Qufu Shengwang Stevia Biology and Science Co., Ltd. from Shandong Shengwang Group Co., Ltd. and an amendment to the stock purchase agreement entered into between Sunwin International and Shengwang as of June 30, 2008.
Pursuant to the September 2, 2008 amendments, Sunwin International acquired a 60% interest in Qufu Shengwang for a purchase price of $6,200,413 through a stock exchange. The purchase price was based on the net tangible book value of Qufu Shengwang as set forth in its financial statements as of April 30, 2008 which were audited in accordance with Generally Accepted Accounting Principles in the United States and shares of Sunwin issued were based on a twenty day moving average of Sunwin's common stock ending on August 29, 2008. As part of the amended transaction, the parties have entered into a "make good" agreement in which Shengwang agreed to return to Sunwin International a prorata number of the shares it acquired as part of this transaction in the event that Qufu Shengwang does not earn a minimum of $5,000,000 in net income over a period of 36 consecutive months after completion of the acquisition.
Management of Sunwin International estimates that Qufu Shengwang has the current capacity to generate approximately $15 million in sales annually and yield a 20% to 30% net profit margin. Qufu Shengwang was founded with its South Korean partner, Korea Stevia Co., Ltd. and Shengwang Group Corp. in June 2007. Qufu Shengwang manufactures and sells animal feed, agricultural organic fertilizers and bio fertilizers produced from the residue of stevia stock leaves. These Stevia based fertilizers and animal feeds have numerous benefits including low cost production, high nutrient value for soil, higher fructose levels with fewer calories for feeds and a proven ability to breakdown nicotine, dioxin and other harmful chemicals for plants.
Commenting on the Joint Venture, Ms. Dongdong Lin, Sunwin International CEO, stated, "We are very pleased to acquire Qufu Shengwang, as we strive to expand our business through vertical integration. Qufu Shengwang is a natural fit for our company as it uses stevia residue to make organic bio-fertilizer and organic animal feeds. In addition, its products are sold into many of the same end markets as our current line of veterinary feeds and medicines. It broadens our product offerings and enables us to profitably monetize parts of the stevia plant that would presently be waste in our production process. We are confident that this operation coupled with our current growing operations will lead to a strong financial performance in fiscal 2009 and beyond."