Amazed at how quikly they diluted this one, no warning. When is the next dilution? Probably wouldn't blink an eye diluting it to a billion. That just how some of these micros use stock. Big flashing warning sign for anyone to look closely before buying into this management team.
Anyone in management care about shareholders? I don't think so. Actions speak volumes.
They have had 200M shares authorized for a long long time. Nobody likes dilution but it is sometimes necessary to grow the business. The question is... will this grow the business enough to justify this level of dilution. Thats the million dollar question that we don't have an answer for yet.
I really don't think they had a choice. Stevia is in the big leagues now and they needed a company with leverage to get their product into play. Now they(we) have one. At least our management won't be calling the shots anymore.
Item 1.01 Entry into a Material Definitive Agreement.
On February 5, 2009, Sunwin International Neutraceuticals, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Wild Flavors, Inc. (“Wild Flavors”) to purchase 20,000,000 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”) at a price of $.15 per share (the “Wild Flavors Stock”) together with five year warrants to purchase 26,666,666 shares of common stock with an exercise price of $0.35 per share (the “Warrants“). Upon completion of the sale of the Shares and other transactions agreed to in connection with the Securities Purchase Agreement, Wild Flavorss will own approximately 15.7% of the issued and outstanding Common Stock of the Company.
Pursuant to the terms of the Securities Purchase Agreement, the Company agreed to convert its wholly owned subsidiary, Sunwin Stevia International Corp., a Florida corporation (“Sunwin USA”), into a Delaware limited liability company. In exchange for its contribution of Sunwin USA’s current capital, the Company will receive 5,500 membership units in Sunwin USA, a 55% interest after giving effect to the issuance of membership units to Wild Flavors. In addition, the Company agreed to issue to Wild Flavors 4,500 membership units (a 45% interest) in Sunwin USA in exchange for Wild Flavors’ agreement to provide sales, marketing, logistics and supply chain management, product development and regulatory services to Sunwin USA over a period of two years beginning on February 5, 2009 (the “Services”). The Company and Wild Flavors agreed that the value of the Services are $1,000,000. In addition, Wild Flavors has agreed to act as the sole manager of Sunwin USA and will be responsible for all of its business and affairs as provided for in the proposed form of the Operating Agreement to be entered into between Wild Flavors and the Company (the "Operating Agreement"). In addition, Wild Flavors has the right of first refusal to purchase additional membership units in Sunwin USA at $222.22 per unit to provide any additional capital required by Sunwin USA as jointly determined by the Company and Wild Flavors.
Under the terms of the Securities Purchase Agreement, Wild Flavors has the option to exchange its 45% interest in Sunwin USA into 6,666,666 shares of the Company’s Common Stock at any time until December 31, 2010 (the “Exchange Option”). Wild Flavors is also entitled to a bonus option which would entitle it to receive the greater of 6% of the issued and outstanding membership units of Sunwin USA or the number of membership units of Sunwin USA necessary to get Wild’s ownership interest to 51% if (i) Sunwin USA achieves cumulative pre-tax profits of $3,000,000 on or before December 31, 2011 computed in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”) exclusive of the cost of product liability insurance and (ii) Wild Flavors has not exercised its Exchange Option (the “Bonus Option”). Upon exercise of the Bonus Option, Wild Flavors is obligated to pay Sunwin USA an aggregate exercise price of $1,000.00. The Bonus Option expires upon the earlier of the date when one of the above conditions can no longer be satisfied and July 1, 2012
Upon completion of the deal if it hasn't already happened, Wild Flavors owns 15.7% of Suwin International and 45% of Sunwin USA. They have warrants to purchase an additional 26,666,666 shares at .35 cents of Sunwin internation. And upon pre tax profits of $3,000,000 before12/31/2011 Wild Flavors can assume 51% of Sunwin USA.