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   <TITLE>Nutrastar International Inc - Form S-1 - Filed by newsfilecorp.com</TITLE>

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<P align=center style="margin-top: 0; margin-bottom: 0">As filed with the Securities and Exchange Commission on August
11, 2010</P>
<P align=right style="margin-top: 0; margin-bottom: 0"><B>Registration No. 333 -</B></P>
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<P align=center><B><FONT size=5>UNITED STATES </FONT><BR><FONT size=5>SECURITIES
AND EXCHANGE COMMISSION</FONT><BR></B>Washington, D.C. 20549 </P>
<P align=center><B><FONT size=5>FORM S-1</FONT></B></P>
<P align=center><B>REGISTRATION STATEMENT UNDER THE </B><BR><B>SECURITIES ACT OF
1933 </B></P>
<P align=center><B><FONT size=6>NUTRASTAR INTERNATIONAL
INC.</FONT></B><font size="6"><BR></font><i>(Exact name of registrant as specified in its charter)
</i></P>
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  <TR vAlign=top>
    <TD align=center><B>Nevada </B></TD>
    <TD align=center width="33%"><B>2000 </B></TD>
    <TD align=center width="33%"><B>80-0264950 </B></TD></TR>
  <TR vAlign=top>
    <TD align=center><i>(State or other jurisdiction of </i> </TD>
    <TD align=center width="33%"><i>(Primary Standard Industrial </i> </TD>
    <TD align=center width="33%"><i>(I.R.S. Employer </i> </TD></TR>
  <TR vAlign=top>
    <TD align=center><i>incorporation or organization) </i> </TD>
    <TD align=center width="33%"><i>Classification Code Number) </i> </TD>
    <TD align=center width="33%"><i>Identification No.) </i> </TD></TR></TABLE>
<P align=center><B>7/F Jinhua Mansion</B><BR><B>41 Hanguang
Street</B><BR><B>Nangang District, Harbin, 150080</B><BR><B>People&#146;s Republic of
China</B><BR><B>(86) 451-82287746 </B><BR><i>(Address and telephone number
of principal executive offices)<BR>
  </i>____________________________ </P>
<P align=center><I>Copies to:</I></P>
<P align=center><B>Scott C. Kline, Esq. </B><BR><B>Qixiang Sun,
Esq.</B><BR><B>Pillsbury Winthrop Shaw Pittman LLP </B><BR><B>Suite 4201, Bund
Center222 Yan An Road</B><BR><B>East, Huangpu District</B><BR><B>Shanghai,
200002 China </B><BR><B>+86-21-6137-7999 <BR></B><i>(Names, addresses and
telephone numbers of agents for service) </i> <BR>
  <B>____________________________ </B></P>
<P align=justify style="text-indent: 5%"><B>Approximate date of commencement of proposed sale to
public</B>: From time to time after the effective date of this Registration
Statement, as determined by market conditions and other factors. </P>
<P align=justify style="text-indent: 5%">If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X] </P>
<P align=justify style="text-indent: 5%">If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) 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.&nbsp; [&nbsp; ] </P>
<P align=justify style="text-indent: 5%">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. [&nbsp; ] </P>
<P align=justify style="text-indent: 5%">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 the same offering. [&nbsp; ] </P>
<P align=justify style="text-indent: 5%">If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [&nbsp; ] </P>
<P align=justify style="text-indent: 5%">Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of &#147;large accelerated filer," "accelerated
filer,&#148; and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):</P>
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  <TR vAlign=top>
    <TD align=center>Large accelerated filer [&nbsp;&nbsp; ]</TD>
    <TD align=center width="49%">Accelerated
      filer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [&nbsp;&nbsp; ]</TD></TR>
  <TR vAlign=top>
    <TD align=center>&nbsp;</TD>
    <TD align=center width="49%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=center>Non-accelerated filer&nbsp;&nbsp; [&nbsp;&nbsp; ]</TD>
    <TD align=center width="49%">Smaller reporting company [X]</TD></TR>
  <TR vAlign=top>
    <TD align=center><font size="1">(Do not check if a smaller reporting company)
    </font> </TD>
    <TD align=center width="49%">&nbsp; </TD></TR></TABLE><BR>
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<P align=center><B>CALCULATION OF REGISTRATION FEE </B></P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
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    <TR vAlign=top>
    <TD align=center>Title of securities <BR>to be registered </TD>
    <TD align=center width="20%"><BR>Amount to be registered<SUP>(1) </SUP></TD>
    <TD align=center width="20%">Proposed maximum offering <BR>price per
      share<SUP>(2) </SUP></TD>
    <TD align=center width="20%">Proposed maximum aggregate <BR>offering
      price<SUP>(2) </SUP></TD>
    <TD align=center width="20%">Amount of <BR>registration fee </TD></TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left valign="bottom" bgcolor="#E6EFFF">
      <p style="text-indent: -30; margin-left: 30">Common stock, $0.001 par value per share underlying Series
        A Preferred Stock, $0.001 par value per share </TD>
      <TD vAlign=bottom align=center width="20%" bgcolor="#E6EFFF">&nbsp;1,977,060<SUP>(4) </SUP></TD>
      <TD vAlign=bottom align=center width="20%" bgcolor="#E6EFFF">$2.80 </TD>
      <TD vAlign=bottom align=center width="20%" bgcolor="#E6EFFF">$5,535,768 </TD>
      <TD vAlign=bottom align=center width="20%" bgcolor="#E6EFFF">$395 </TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left valign="bottom" bgcolor="#FFFFFF">
      <p style="text-indent: -30; margin-left: 30">Common stock underlying Series C Warrants exercisable at
        $3.40 per share </TD>
      <TD width="20%" align=center vAlign=bottom bgcolor="#FFFFFF">988,501<SUP>(5) </SUP></TD>
      <TD width="20%" align=center vAlign=bottom bgcolor="#FFFFFF">3.40<SUP>(3) </SUP></TD>
      <TD width="20%" align=center vAlign=bottom bgcolor="#FFFFFF">3,360,904 </TD>
      <TD width="20%" align=center vAlign=bottom bgcolor="#FFFFFF">240 </TD>
    </TR>
    <TR bgcolor="#E6EFFF">
      <TD valign="bottom" bgcolor="#E6EFFF">
      <p style="text-indent: -30; margin-left: 30"><B>Total </B></TD>
      <TD vAlign=bottom align=center width="20%" bgcolor="#E6EFFF">2,965,561 </TD>
      <TD vAlign=bottom align=center width="20%" bgcolor="#E6EFFF"></TD>
      <TD vAlign=bottom align=center width="20%" bgcolor="#E6EFFF">$8,896,672 </TD>
      <TD vAlign=bottom align=center width="20%" bgcolor="#E6EFFF">$635 </TD>
    </TR></TABLE></DIV>
<P align=justify>(1) In accordance with Rule 416(a), the Registrant is also
registering hereunder an indeterminate number of shares that may be issued and
resold resulting from stock splits, stock dividends or similar transactions.
<BR>(2) Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely
for the purpose of computing the amount of the registration fee based on the
average of the bid and asked prices reported on the OTCQB on August 9, 2010.
<BR>(3) Calculated in accordance with Rule 457(g) based upon the exercise price
of the Series C Warrants held by selling stockholders named in this registration
statement. <BR>(4) Represents shares of the Registrant&#146;s common stock underlying
shares of Series A Preferred Stock being registered for resale that have been
issued to the selling stockholders named in this registration statement. <BR>(5)
Represents shares of common stock issuable upon exercise of three-year warrants
to purchase shares of common stock held by selling stockholders named in this
registration statement. </P>
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    <TD style="BORDER-BOTTOM: #000000 3px double" align=left>
      <P align=justify><B>The registrant hereby amends this registration
      statement on such date or dates as may be necessary to delay its effective
      date until the </B><B>registrant shall file a further amendment which
      specifically states that this registration statement shall hereafter
      become effective in </B><B>accordance with Section 8(a) of the Securities
      Act of 1933 or until the registration statement shall become effective on
      such date as the </B><B>Commission, acting pursuant to such Section 8(a),
      may determine. </B></P></TD></TR></TABLE><BR>
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<p><A name=page_3></A><br><b><font color="#FF0000">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. </font></b><BR>
</p>
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    <TD colspan="2" align=left ><B><I>PROSPECTUS</I></B> </TD>
  </TR>
  <TR vAlign=top>
    <TD colspan="2" align=center ><FONT color=#ff0000><B><I>Subject to completion,
      dated August 11, 2010</I></B> </FONT></TD>
  </TR>
  <TR>
    <TD align=center width="5%" >&nbsp;</TD>
    <TD align=center width="85%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD colspan="2" align=center ><B>2,965,561 Shares</B> </TD>
  </TR>
  <TR>
    <TD align=center width="5%" >&nbsp;</TD>
    <TD align=center width="85%">&nbsp;</TD>
  </TR>
  <TR>
    <TD colspan="2" align=center >&nbsp;<IMG src="logo.jpg" width="152" height="145" border=0></TD>
  </TR>
  <TR>
    <TD align=center width="5%" >&nbsp;</TD>
    <TD align=center width="85%">&nbsp;</TD>
  </TR>
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    <TD align=center width="5%" >&nbsp;</TD>
    <TD align=center width="85%"> <P align=center><B>NUTRASTAR INTERNATIONAL INC.</B></P>
      <P align=center><B>Common Stock, par value $0.001 per share </B></P>
      <P align=center>____________________________&nbsp;&nbsp;</P></TD>
  </TR>
  <TR>
    <TD align=center width="5%" >&nbsp;</TD>
    <TD align=center width="85%">&nbsp;</TD>
  </TR>
  <TR>
    <TD colspan="2" align=center > <P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        &nbsp;This prospectus relates to 2,965,561 shares of common stock of Nutrastar
        International Inc. that may be sold from time to time by the selling stockholders
        named in this prospectus, which includes:&nbsp;</P></TD>
  </TR>
  <TR>
    <TD align=center width="5%"  >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" align=center valign="top"  >&#8226;</TD>
    <TD align=left width="85%" >1,977,060 shares of common stock underlying series
      A preferred stock, par value $0.001 per share, or the Series A Preferred
      Stock; and </TD>
  </TR>
  <TR>
    <TD width="5%" align=center valign="top"  >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD width="5%" align=center valign="top"  >&#8226;</TD>
    <TD align=left width="85%" >988,501 shares of common stock issuable to the
      selling stockholders upon the exercise of Series C Warrants. </TD>
  </TR>
  <TR>
    <TD align=center width="5%"  >&nbsp;</TD>
    <TD align=left width="85%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD colspan="2" align=center  > <P
      align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
        will not receive any proceeds from the sales of outstanding shares of
        common stock by the selling stockholders, but we will receive funds from
        the exercise of Series C Warrants held by the selling stockholders, if
        exercised for cash. </P>
      <P
      align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
        common stock is quoted on the OTCQB under the symbol &#147;NUIN.&#148;
        The closing price for our common stock on August 9, 2010 was $2.80 per
        share, as reported on the OTCQB. You are urged to obtain current market
        quotations of our common stock before purchasing any of the shares being
        offered for sale pursuant to this prospectus. </P>
      <P
      align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        shares of our common stock offered under this prospectus are being registered
        to permit the selling stockholders to sell the shares from time to time
        in the public market. The selling stockholders may sell the shares through
        ordinary brokerage transactions or through any other means described in
        the section titled &#147;Plan of Distribution.&#148; We do not know when
        or in what amount the selling stockholders may offer the shares for sale.
        The selling stockholders may sell any, all or none of the shares offered
        by this prospectus.</P>
      <P
      align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investing
        in the shares being offered pursuant to this prospectus involves a high
        degree of risk. You should carefully read and consider the information
        set forth in the section of this prospectus titled &#147;Risk Factors,&#148;
        beginning on page 7, when determining whether to purchase any of these
        shares. </B></P>
      <P
      align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>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. </B></P>
      <P align=center>The date of this prospectus is , 2010. <br>
&nbsp;</P></TD>
  </TR>
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<P align=center><B><U>TABLE OF CONTENTS</U></B></P>
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  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=right width="8%" ><B><U>Page</U></B> </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_5"><B>PROSPECTUS
      SUMMARY</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_5"><B>1</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_11"><B>RISK
      FACTORS</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_11"><B>7</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_22"><B>SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_22"><B>18</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_22"><B>USE
      OF PROCEEDS</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_22"><B>18</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_22"><B>BUSINESS</B>
      </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_22"><B>18</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_29"><B>MANAGEMENT&#146;S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF</B>
      <B>OPERATIONS</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_29"><B>25</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_37"><B>HISTORY
      AND CORPORATE STRUCTURE</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_37"><B>33</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_41"><B>MANAGEMENT</B>
      </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_41"><B>37</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="#page_45"><B>EXECUTIVE
      COMPENSATION</B> </a></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><a href="#page_45"><B>41</B> </a></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_47"><B>TRANSACTIONS
      WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS;</B>
      <B>CORPORATE GOVERNANCE</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_47"><B>43</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR>
    <TD align=left ><b><a href="#CHANGE IN ACCOUNTANTS">CHANGE IN ACCOUNTANTS</a></b></TD>
    <TD align=right width="8%" ><b><a href="#CHANGE IN ACCOUNTANTS">44</a></b></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_48"><B>SELLING
      STOCKHOLDERS</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_48"><B>44</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_52"><B>SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_52"><B>48</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_55"><B>DESCRIPTION
      OF SECURITIES</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_55"><B>51</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_57"><B>MARKET
      FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_57"><B>53</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_59"><B>SHARES
      ELIGIBLE FOR FUTURE SALE</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_59"><B>55</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_60"><B>PLAN
      OF DISTRIBUTION</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_60"><B>56</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_62"><B>LEGAL
      MATTERS</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_62"><B>58</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_62"><B>EXPERTS</B>
      </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_62"><B>58</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_62"><B>WHERE
      YOU CAN FIND MORE INFORMATION</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_62"><B>58</B>
      </A></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=right width="8%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><A
      href="#page_63"><B>INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS</B> </A></TD>
    <TD align=right width="8%" bgColor=#eeeeee ><A
      href="#page_63"><B>F-1</B>
      </A></TD></TR></TABLE>
<P align=justify><B>You should rely only on the information provided in this
prospectus. Neither we nor the selling stockholders have authorized anyone to
provide you with additional or different information. The selling stockholders
are not making an offer of these securities in any jurisdiction where the offer
is not permitted. You should assume that the information in this prospectus is
accurate only as of the date on the front of the document. </B></P>
<P align=center>i </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<div style="border-style: solid; border-width: 1; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
<P align=center style="margin-left: 20; margin-right: 20"><B>PROSPECTUS SUMMARY</B></P>
<P align=justify style="margin-left: 20; margin-right: 20"><I>The items in the following summary are described in more
detail later in this prospectus. You should read the following summary together
with the more detailed information regarding our company and the common stock
being sold in this offering, including &#147;Risk Factors&#148; and our consolidated
financial statements and related notes, included elsewhere in, or incorporated
by reference into, this prospectus. </I></P>
<P align=justify style="margin-left: 20; margin-right: 20">In this prospectus, unless indicated otherwise,</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;we,&#148; &#147;us,&#148; &#147;our company,&#148; &#147;our&#148; and &#147;Nutrastar&#148; refer to the combined
  business of Nutrastar International Inc. and/or its consolidated subsidiaries,
  as the case may be; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;New Resources&#148; refers to New Zealand WAYNE&#146;s New Resources Development
  Co., Ltd., our direct, wholly-owned subsidiary, a BVI company; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;Heilongjiang Shuaiyi&#148; refers to Heilongjiang Shuaiyi New Energy
  Development Co., Ltd. our indirect, wholly-owned subsidiary, a Chinese
  company; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;Daqing Shuaiyi&#148; refers to Daqing Shuaiyi Biotech Co., Ltd., our indirect,
  wholly-owned subsidiary, a Chinese company; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;Harbin Shuaiyi&#148; refers to Harbin Shuaiyi Green &amp; Specialty Food
  Trading LLC, our indirect, wholly-owned subsidiary, a Chinese company;
</P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;BVI&#148; refers to the British Virgin Islands; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;China,&#148; &#147;Chinese&#148; and &#147;PRC,&#148; refer to the People&#146;s Republic of China and
  for the purpose of this prospectus, do not include Taiwan and the special
  administrative regions of Hong Kong and Macau; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;Renminbi&#148; and &#147;RMB&#148; refer to the legal currency of China; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;U.S. dollars,&#148; &#147;dollars&#148; and &#147;$&#148; refer to the legal currency of the United
  States; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;SEC&#148; refers to the United States Securities and Exchange Commission; </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;Securities Act&#148; refers to the Securities Act of 1933, as amended; and </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20">&#147;Exchange Act&#148; refers to the Securities Exchange Act of 1934, as amended.
  </P></LI></UL>
<P align=justify style="margin-left: 20; margin-right: 20">Effective May 19, 2009, we implemented a 1-for-114.59 reverse
stock split of issued and outstanding shares of our common stock. Except where
specifically indicated, all common share information (including information
related to warrants to purchase common stock) has been restated to reflect the
1-for-114.59 reverse split.</P>
<P align=center style="margin-left: 20; margin-right: 20"><B>The Company</B></P>
<P align=justify style="margin-left: 20; margin-right: 20"><B><I>Overview of Our Business</I></B></P>
<P align=justify style="margin-left: 20; margin-right: 20">We are a holding company that operates through our indirectly
  owned subsidiary Heilongjiang Shuaiyi, a leading grower and producer of Cordyceps
  Militaris, or &#147;Chinese Golden Grass&#148; in China. We specialize in developing,
  processing, marketing and distributing a variety of agricultural and nutraceutical
  products consisting of Chinese Golden Grass, organic and specialty food products.
  In addition, we plan to produce and market other products developed from Cordyceps
  Militaris within the coming months and years, including specialty beverage products
  as indicated in more detail below. </P>
<P align=justify style="margin-left: 20; margin-right: 20">Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in north-eastern mountainous China. It is a precious
ingredient in traditional Chinese medicine, as Cordyceps Militaris is widely
believed in China to offer high medical and health benefits by nourishing the
<I>yin,</I> boosting the <I>yang,</I> and invigorating the meridians of the
lungs and kidneys. </P>
<P align=center style="margin-left: 20; margin-right: 20">1</P>
</div>
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<div style="border-style: solid; border-width: 1; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
<P align=justify style="margin-left: 20; margin-right: 20">We generated 89.44% and 78.70% of our revenues from Chinese
Golden Grass for the three months ended March 31, 2010 and the fiscal year of
2009, respectively. We believe that we own 19% of the world wide market share in
the cultivated Chinese Golden Grass industry. We plan to continue to focus on
Chinese Golden Grass, which is our fastest growing product line with the
greatest market demand and a significantly high profit margin. We also sell
organic and specialty food products through our subsidiary, Harbin Shuaiyi,
which was formed in 2001. After years of development, we believe that we have
become the largest wholesale distributor of organic and specialty food in
Heilongjiang Province, China.</P>
<P align=justify style="margin-left: 20; margin-right: 20"><B>Our Competitive Strengths</B></P>
<P align=justify style="margin-left: 20; margin-right: 20">We believe that our success to date and potential for future
growth can be attributed to a combination of our strengths, including the
following:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P style="margin-left: 20; margin-right: 20"><B><I>High-end niche products. </I></B>We sell organic and specialty food
  products and Chinese Golden Grass products that the followers of traditional
  Chinese medicine believe have high nutrient concentration, potential health
  benefits and high value. Our products are positioned in the high-end market as
  premium healthy food and are distinguished from the common nutraceutical
  products in the market. </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20"><B><I>Leading market position and significantly high margin. </I></B>We
  believe we have established ourselves as a dominant player in China&#146;s Chinese
  Golden Grass industry. By successfully commercializing our Cordyceps Militaris
  planting technology, we believe that we have achieved economies of scale and
  accordingly significantly high margin that no other major competitor can match
  in the near future. </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20"><B><I>Leading-edge R&amp;D team. </I></B>Our research and development team
  has a strong and extensive technology background and has been an early
  participant in the Chinese Golden Grass market. Currently we have 21
  technicians in our R&amp;D department, led by Mr. Lichen Wang who is a lead
  expert in the field of edible fungus in China. </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20"><B><I>Experienced management team with a strong track record. </I></B>Our
  management team has extensive operating experience and industry knowledge. We
  believe that our management team&#146;s experience and capabilities have
  contributed greatly to our significant growth in the past three years.
  </P></LI></UL>
<P align=justify style="margin-left: 20; margin-right: 20"><B>Our Growth Strategy</B></P>
<P align=justify style="margin-left: 20; margin-right: 20">As a leading nutraceutical producer in China, we believe we are
well positioned to capitalize on future industry growth in China. We are
dedicated to providing healthy and high nutritional products to our consumers.
We will implement the following strategic plans to take advantage of industry
opportunities and our competitive strengths:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P style="margin-left: 20; margin-right: 20"><B><I>Focus on brand development</I>. </B>With intense price
  competition among many similar or identical products in the industry, we
  believe that building brand awareness is the primary means to generate and
  sustain profitable growth in the future. We believe that developing close
  cooperative relationships with research centers of well-known universities in
  China and globally is key to building brand equity. We also market our
  products through an integrated marketing program that includes advertising in
  relevant media outlets, attending trade shows and offering seminars and
  lectures to local communities regarding the products and their heath benefits.
  </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20"><B><I>Introducing new products</I>. </B>We constantly evaluate our
  products and seek to adapt to changing market conditions by updating our
  products to reflect new trends in consumer preferences. We endeavor to expand
  our market presence by introducing additional competitive nutraceutical
  products to our product offerings. Our new products under development include
  specialty beverage products. </P>
  <LI>
  <P style="margin-left: 20; margin-right: 20"><B><I>Increase production capacity. </I></B>Our existing production lines
  of Chinese Golden Grass have been running at close to full capacity while the
  market demand for our existing products continues to increase. In order to
  meet the raw material needs of our products and to expand sales of small
  packages of our Golden Grass products, we plan to add 10 plants to our
  production line, of which three plants are expected to begin
  operating during the second half of 2010. We anticipate that the entire project
  will be completed in 2012. Annual production capacity of Golden Grass is expected
  to increase to 72 tons in 2010, up from 55 tons in 2009. We will convert more
  buildings into biotechnologically controlled cultivation plants to grow and
  process Cordyceps Militaris in the future. <br>
  <br>
  </P></LI></UL>
<P align=center style="margin-left: 20; margin-right: 20">2</P>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-top: 0; margin-bottom: 12; margin-left:20; margin-right:20"><B><I>Further expand our distribution network to increase the prevalence
    of our products nationwide. </I></B>We plan to expand our distribution network
    by selling our small-pack products through drug stores, supermarkets and franchise
    stores. We have one-year contracts with our major distributors which normally
    extend for one more year by the end of the contracts. We maintain constant
    communications with these distributors to keep us informed regarding consumer
    preferences and market trends in order to develop new products. We also organize
    monthly product promotion meetings with the distributors to increase the sales
    of small package products. <br>
  <LI>
  <p style="margin-top: 0; margin-bottom: 12; margin-left:20; margin-right:20"><B><I>Technology innovation. </I></B>We believe that the development of
    new technology is critical to our success. We will continuously improve the
    quality of our existing and future products through new technologies. We intend
    to maintain our long-term partnership with Chinese universities and research
    institutes in order to develop new technologies. </LI>
</UL>
<P align=justify style="margin-left: 20; margin-right: 20"><B><I>Our Background and History</I></B></P>
<P align=justify style="margin-left: 20; margin-right: 20">We were originally incorporated in the State of Nevada on
December 22, 2002. Following incorporation, we engaged in the business of
developing software which allowed us to act as an application service provider
acting as a conduit between retailers and financial institutions. Because this
business was not successful, we were focused on the identification of suitable
businesses with which to enter into a business opportunity or business
combination until December 23, 2008, when we completed our reverse acquisition
of New Resources. As a result of our reverse acquisition of New Resources, we
are no longer a shell company and active business operations were revived. </P>
<P align=justify style="margin-left: 20; margin-right: 20">On May 19, 2009, we filed amended and restated articles of
incorporation with the Nevada Secretary of State to amend our articles of
incorporation to, among other things, (1) change our name from &#147;YzApp
International Inc.&#148; to &#147;Shuaiyi International New Resources Development Inc.,&#148;
(2) increase the total number of shares of common stock that we have the
authority to issue from 50,000,000 to 190,000,000 shares and (3) effect a
1-for-114.59 reverse split of our outstanding common stock.</P>
<P align=justify style="margin-left: 20; margin-right: 20">On January 11, 2010, we changed our name to Nutrastar
International Inc. to more accurately reflect our marketing and branding
strategy and products. </P>
<P align=justify style="margin-left: 20; margin-right: 20">On May 27, 2010, we entered into a securities purchase
agreement, or the 2010 Securities Purchase Agreement with certain investors,
pursuant to which, we agreed to issue and sell up to an aggregate of 250,000
Units at a purchase price of $28.56 per Unit, for an aggregate purchase price of
up to $7,140,000, or the Aggregate Purchase Price. Each Unit consists of (i) one
share of a newly designated series A preferred stock, par value $0.001 per
share, or the Series A Preferred Stock, with an initial one-to-ten conversion
ratio into shares of the Company&#146;s common stock, par value $0.001 per share, and
(ii) warrants to purchase five shares of common stock at an exercise price of
$3.40 per share, or the Series C Warrants. In addition, Gilford Securities
Incorporated, as the placement agent of this transaction, received from the
investors a fee equal to 2% of the Aggregate Purchase Price and Series C
Warrants to purchase 2% of the aggregate number of shares of common stock that
shares of Series A Preferred Stock to be issued under the 2010 Securities
Purchase Agreement are convertible into. </P>
<P align=justify style="margin-left: 20; margin-right: 20">In connection with the 2010 Securities Purchase Agreement, we
filed a Certificate of Designation of Series A Preferred Stock with the
Secretary of State of the State of Nevada, or the 2010 Certificate, on May 27,
2010, which became effective upon filing. Pursuant to the 2010 Certificate,
there are 300,000 shares of Series A Preferred Stock authorized. </P>
<P align=justify style="margin-left: 20; margin-right: 20">On June 7, 2010 and June 28, 2010, we consummated the first and
the second closing of the private placement transaction contemplated by the 2010
Securities Purchase Agreement, respectively, in which we issued in aggregate
approximately 197,700 Units to certain investors at a purchase price of $28.56
per unit for gross proceeds of approximately $5.65 million. </P>
<P align=center>3</P>
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<P align=justify style="margin-left: 20; margin-right: 20"><B><I>Corporate Information</I></B></P>
<P align=justify style="margin-left: 20; margin-right: 20">The following chart reflects our organizational structure as of
the date of this prospectus. </P>
<P align=center style="margin-left: 20; margin-right: 20"><IMG
src="orgchart.jpg" width="578" height="314"
border=0></P>
<P align=justify style="margin-left: 20; margin-right: 20">Our corporate headquarters are located at 7/F Jinhua Mansion,
41 Hanguang Street, Nangang District, Harbin 150080, China. Our telephone number
is (86) 451-82287746. We maintain a website at <U><FONT
color=#0000ff>http://www.nutrastarintl.com</FONT></U> that contains information
about us, but that information is not a part of this prospectus. </P>
<P align=center>4 </P>
</div>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=center><B>The Offering </B></P>
  <center>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="90%" border=0>
  <TR vAlign=top bgcolor="#E6EFFF">
    <TD align=left>
      <P align=justify>Common stock offered by selling stockholders </P></TD>
    <TD align=left width="10%" ></TD>
    <TD align=left width="45%">
      <P align=justify>2,965,561 shares, consisting of 1,977,060 shares of
      common stock underlying Series A Preferred Stock owned by selling
      stockholders and 988,501 shares of common stock issuable upon the exercise
      of Series C Warrants held by the selling stockholders. This number
      represents 17.1% of our current outstanding common stock, on a fully
      diluted basis<SUP>(1)</SUP>. </P></TD></TR>
  <TR vAlign=top>
    <TD align=left>
      <P align=justify>Common stock outstanding before the offering </P></TD>
    <TD align=left width="10%"  ></TD>
    <TD align=left width="45%">
      <P align=justify>14,332,731 shares </P></TD></TR>
  <TR vAlign=top bgcolor="#E6EFFF">
    <TD align=left>
      <P align=justify>Common stock outstanding after the offering, assuming all
      the shares of Series A Preferred Stock are converted into common stock and
      the Series C Warrants are exercised for cash. </P></TD>
    <TD align=left width="10%" ></TD>
    <TD align=left width="45%" style="border-bottom-style: none; border-bottom-width: medium">
      <P align=justify>17,298,292 shares </P></TD></TR>
  <TR vAlign=top>
    <TD align=left>
      <P align=justify>Proceeds to us </P></TD>
    <TD align=left width="10%" style="border-right-style: none; border-right-width: medium"  ></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="45%">
      <P align=justify>We will not receive any proceeds from the sale of common
      stock covered by this prospectus. We will, however, receive approximately
      $3.36 million from the exercise of the warrant held by the selling
      stockholder, if exercised for cash. </P></TD></TR>
  <TR vAlign=top bgcolor="#E6EFFF">
    <TD align=left>
      <P align=justify>Trading Symbol </P></TD>
    <TD align=left width="10%" style="border-right-style: none; border-right-width: medium" >
      <P align=justify>&nbsp;</P></TD>
    <TD align=left width="45%" style="border-style: none; border-width: medium">
      <P align=justify>NUIN </P></TD></TR></TABLE>
  </center>
<P align=justify>(1) Based on 14,332,731 shares of our common stock issued and
outstanding as of August 9, 2010.</P>
<P align=justify><B>Risk Factors</B></P>
<P align=justify>In operating our business, we have faced and will continue to
face significant challenges. Our ability to successfully operate our business is
subject to numerous risks as discussed more fully in the section titled &#147;Risk
Factors.&#148; For example: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>Our current business is significantly based on a single product, Chinese
  Golden Grass;
  <LI>Our inability to grow and harvest sufficient Cordyceps Militaris to
  satisfy our production requirements could reduce our sales and negatively
  affect our results of operations;
  <LI>Evaluating our business and prospects based only on our past results may
  be difficult; and
  <LI>We are subject to risks of conducting business in China. </LI></UL>
<P align=justify>Any of the above risks could materially and adversely affect
our business, financial position and results of operations. An investment in our
common stock involves risks. You should carefully read and consider the
information set forth in &#147;Risk Factors&#148; and all other information set forth in
this prospectus before investing in our common stock. </P>
<P align=center>5</P>
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<div style="border-style: solid; border-width: 1; padding-left: 4; padding-right: 4; padding-top: 1; padding-bottom: 1">
<P align=center><B>Summary Consolidated Financial Information </B></P>
<P align=justify>The following summary consolidated statement of income data for
the years ended December 31, 2009 and 2008 and the consolidated balance sheet
data as of December 31, 2009 and 2008 are derived from our audited consolidated
financial statements included in this prospectus. The summary consolidated
statement of income data for the periods ended March 31, 2010 and 2009 and the
consolidated balance sheet data as of March 31, 2010 are derived from our
unaudited consolidated financial statements included in this prospectus. Such
unaudited financial information includes all adjustments, consisting of only
normal recurring accruals, which our management considers necessary for the fair
presentation of our financial position and results of operations for such
interim periods. The data set forth below should be read in conjunction with
&#147;Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations&#148; and our consolidated financial statements and related notes
appearing elsewhere in this prospectus. Our historical results are not
necessarily indicative of our results for any future periods.</P>
<DIV>
  <center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="98%" border=1>
    <TR vAlign=top>
      <TD align=center><B>STATEMENT OF </B><BR> <B>INCOME </B></TD>
      <TD colspan="2" align=center><B>Three Months Ended </B><BR> <B>March 31,
        </B><BR></TD>
      <TD colspan="2" align=center><B>Years Ended </B><BR> <B>December 31, </B><BR></TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=center><BR></TD>
      <TD align=center width="20%"><B>2010 </B><BR> <B>(Unaudited)
        </B></TD>
      <TD align=center width="20%"><B>2009 </B><BR> <B>(Unaudited)
        </B></TD>
      <TD align=center width="20%"><B>2009 </B><BR></TD>
      <TD align=center width="20%"><B>2008 </B><BR></TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>Revenues </TD>
      <TD align=center width="20%">$4,768,395 </TD>
      <TD align=center width="20%">$4,642,724 </TD>
      <TD align=center width="20%">$15,332,445 </TD>
      <TD align=center width="20%">$12,989,760 </TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=center>Operating expenses </TD>
      <TD align=center width="20%">601,504 </TD>
      <TD align=center width="20%">415,057 </TD>
      <TD align=center width="20%">1,864,086 </TD>
      <TD align=center width="20%">1,643,671 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>Operating income </TD>
      <TD align=center width="20%">3,110,376 </TD>
      <TD align=center width="20%">2,471,963 </TD>
      <TD align=center width="20%">8,904,394 </TD>
      <TD align=center width="20%">6,741,141 </TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=center>Income taxes </TD>
      <TD align=center width="20%">422,820 </TD>
      <TD align=center width="20%">316,192 </TD>
      <TD align=center width="20%">1,235,210 </TD>
      <TD align=center width="20%">974,653 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>Net income </TD>
      <TD align=center width="20%">$2,721,062 </TD>
      <TD align=center width="20%">$2,170,269 </TD>
      <TD align=center width="20%">$7,741,716 </TD>
      <TD align=center width="20%">$3,719,049 </TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=center>Earnings Per Share </TD>
      <TD align=left width="20%">&nbsp; </TD>
      <TD align=left width="20%">&nbsp; </TD>
      <TD align=left width="20%">&nbsp; </TD>
      <TD align=left width="20%">&nbsp; </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center>Basic </TD>
      <TD align=center width="20%">$0.19 </TD>
      <TD align=center width="20%">$0.17 </TD>
      <TD align=center width="20%">$0.59 </TD>
      <TD align=center width="20%">$0.305 </TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=center>Diluted </TD>
      <TD align=center width="20%">$0.19 </TD>
      <TD align=center width="20%">$0.17 </TD>
      <TD align=center width="20%">$0.58 </TD>
      <TD align=center width="20%">$0.305 </TD>
    </TR>
  </TABLE>
  </center>
</DIV><BR>
<DIV>
  <center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="98%" border=1>
    <TR vAlign=top>
      <TD align=center ><B>BALANCE SHEET DATA </B></TD>
      <TD align=center width="22%"><B>As of March 31, </B></TD>
      <TD colspan="2" align=center><B>As of December 31, </B></TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left ><BR></TD>
      <TD align=center width="22%"><B><U>2010 </U></B><BR> <B>(Unaudited)
        </B></TD>
      <TD align=center width="22%"><BR> <U><B>2009 </B></U></TD>
      <TD align=center width="22%"><BR> <U><B>2008 </B></U></TD>
    </TR>
    <TR vAlign=top>
      <TD align=center >Working capital </TD>
      <TD align=center width="22%">$13,778,631 </TD>
      <TD align=center width="22%">$10,758,895 </TD>
      <TD align=center width="22%">$402,853 </TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=center >Current assets </TD>
      <TD align=center width="22%">24,207,062 </TD>
      <TD align=center width="22%">21,198,471 </TD>
      <TD align=center width="22%">10,664,249 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center >Total assets </TD>
      <TD align=center width="22%">37,106,530 </TD>
      <TD align=center width="22%">34,342,380 </TD>
      <TD align=center width="22%">24,751,220 </TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=center >Current liabilities </TD>
      <TD align=center width="22%">10,428,431 </TD>
      <TD align=center width="22%">10,439,576 </TD>
      <TD align=center width="22%">10,261,396 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=center >Total liabilities </TD>
      <TD align=center width="22%">10,428,431 </TD>
      <TD align=center width="22%">10,439,576 </TD>
      <TD align=center width="22%">11,139,282 </TD>
    </TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=center >Stockholders&#146; equity </TD>
      <TD align=center width="22%">$26,678,099 </TD>
      <TD align=center width="22%">$23,902,804 </TD>
      <TD align=center width="22%">$13,611,938 </TD>
    </TR>
  </TABLE>
  </center>
</DIV>
<P align=center>6 </P>
</div>
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<P align=center><B>RISK FACTORS</B></P>
<P align=justify><I>The shares of our common stock being offered for resale by
the selling stockholders are highly speculative in nature, involve a high degree
of risk and should be purchased only by persons who can afford to lose the
entire amount invested in the common stock. Before purchasing any of the shares
of common stock, you should carefully consider the following factors relating to
our business and prospects. You should pay particular attention to the fact that
we conduct all of our operations in China and are governed by a legal and
regulatory environment that in some respects differs significantly from the
environment that may prevail in the U.S. and other countries. If any of the
following risks actually occurs, our business, financial condition or operating
results will suffer, the trading price of our common stock could decline, and
you may lose all or part of your investment. </I></P>
<P align=justify><B>RISKS RELATED TO OUR BUSINESS</B></P>
<P align=justify><B><I>The global economic crisis could further impair our
business, limit demand for our products and affect the overall availability and
cost of external financing for our operations. </I></B></P>
<P align=justify>The continuation or intensification of the global economic
crisis and turmoil in the global financial markets may adversely impact our
business and our potential sources of capital financing. Our ability to access
the capital markets may be restricted at a time when we would like, or need, to
raise capital, which could have an impact on our flexibility to react to
changing economic and business conditions. In addition, these economic
conditions also impact levels of consumer spending, which have recently
deteriorated significantly and may remain depressed for the foreseeable future.
Consumer purchases of discretionary items, including our Chinese Golden Grass,
generally decline during recessionary periods and other periods where disposable
income is adversely affected. If demand for our products fluctuates as a result
of economic conditions or otherwise, our revenue and gross margin could be
harmed. Presently, it is unclear whether and to what extent the economic
stimulus measures and other actions taken or contemplated by the Chinese
government and other governments throughout the world will mitigate the effects
of the crisis on the agricultural and nutraceutical industries and other
industries that affect our business. Although these conditions have not
presently impaired our ability to access credit markets and finance our
operations, the impact of the current crisis on our ability to obtain capital
financing in the future, and the cost and terms of same, is unclear. </P>
<P align=justify><B><I>Our current business is significantly based on a single
product, Chinese Golden Grass, which currently accounts for approximately 90
percent of our revenues, and we may not be able to general significant revenue
if this product fails.</I></B> </P>
<P align=justify>Approximately 89.44% of our sales for the three months ended
March 31, 2010 comes from a single product, Chinese Golden Grass, and our
business may suffer a material adverse impact if this product fails. If we
experience difficulties or obstacles in the manufacture and sale of Chinese
Golden Grass, we may not be able to generate significant revenues, our business
may fail and you would lose all or part of your investment in our company.</P>
<P align=justify><B><I>We may not be able to grow and harvest sufficient
Cordyceps Militaris to satisfy our production requirements and any decline in
the amount or quality of Cordyceps Militaris could reduce our sales and
negatively affect our results of operations, financial condition and business
prospects. </I></B></P>
<P align=justify>Our Chinese Golden Grass business and financial results
significantly depend on maintaining a consistent and cost-effective supply of
Cordyceps Militaris. The availability, size and quality of Cordyceps Militaris
for the production of our products are subject to risks inherent to growing,
such as size, quality, and yield fluctuation caused by technical problems of
growing, pest and disease problems, and other factors beyond our control.
Because all Cordyceps Militaris used to produce our Chinese Golden Grass
products are grown by us, we may not be able to locate in a timely manner any
third party suppliers who could provide us with sufficient materials to meet our
production needs when our self-supply faces significant fluctuations in the
availability of Cordyceps Militaris. Therefore, any interruptions to or decline
in the amount or quality of our Cordyceps Militaris supply could materially
disrupt our production and adversely affect our business and financial condition
and financial prospects. </P>
<P align=justify><B><I>Our sales and reputation may be affected by product
liability claims, litigation, product recalls, or adverse publicity in relation
to our products. </I></B></P>
<P align=justify>The sale of products for human consumption involves an inherent
risk of injury to consumers. We face risks associated with product liability
claims, litigation, or product recalls, if our products cause injury, or
become adulterated or misbranded. Our products are subject to product
tampering, and to contamination risks, such as mold, bacteria, insects, and
other pests, and off-flavor contamination during the various stages of the
procurement, production, transportation and storage processes. If any of our
products were to be tampered with, or become tainted in any of these respects
and we were unable to detect this, our products could be subject to product
liability claims or product recalls. We cannot predict what impact such product
liability claims or resulting negative publicity would have on our business or
on our brand image. The successful assertion of product liability claims against
us could result in potentially significant monetary damages, diversion of
management resources and require us to make significant payments and incur
substantial legal expenses. We do not have product liability insurance and have
not made provisions for potential product liability claims. Therefore, we may
not have adequate resources to satisfy a judgment if a successful claim is
brought against us. Even if a product liability claim is not successfully
pursued to judgment by a claimant, we may still incur substantial legal expenses
defending against such a claim. Finally, serious product quality concerns could
result in governmental action against us, which, among other things, could
result in the suspension of production or distribution of our products, loss of
certain licenses, or other governmental penalties. A widespread product recall
could result in significant loss due to the cost of conducting a product recall
including destruction of inventory and the loss of sales resulting from the
unavailability of the product for a period of time. In addition. product
liability claims and product recalls could have a material adverse effect on the
demand for our products and on our business goodwill and reputation. Adverse
publicity could result in a loss of consumer confidence in our products.</P>
<P align=center>7</P>
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<P align=justify><B><I>We compete in an industry that is brand-conscious, and
unless we are able to establish and maintain brand name recognition our sales
may be negatively impacted.</I></B> </P>
<P align=justify>Our business is substantially dependent upon awareness and
market acceptance of our products and brand by our targeted consumers. In
addition, our business depends on acceptance by our suppliers and consumers of
our brand. Although we believe that we have made progress towards establishing
market recognition for our brand &#147;<b><font lang="ZH-CN" style="font-size: 10.0pt; font-family: SimSun; color: black">&#24069;&#20159;&#19996;&#26041;&#31070;</font></b>&#148; in the Chinese Golden Grass
products industry, it is too early in the product life cycle of the brand to
determine whether our products and brand will achieve and maintain satisfactory
levels of acceptance by our customers. </P>
<P align=justify><B><I>We compete in an industry characterized by rapid changes
in consumer preferences, so our inability to continue developing new products to
satisfy our consumers' changing preferences would have a material adverse effect
on our sales volumes. </I></B></P>
<P align=justify>Our success depends on our ability to anticipate, gauge and
react in a timely and effective manner to changes in consumer spending patterns
and product preferences. We must continually work to develop, produce and market
new products, maintain and enhance the recognition of our brands, achieve a
favorable mix of products, and refine our approach as to how and where we market
and sell our products. While we plan to devote considerable effort and resources
to shape, analyze and respond to consumer preferences, consumer spending
patterns and preferences cannot be predicted with certainty and can change
rapidly. Our failure to adapt our product offering to respond to such changes
may result in reduced demand and lower prices for our products, resulting in a
material adverse effect on our sales volumes, sales and profits.</P>
<P align=justify>Our current market distribution and penetration is limited as
compared with the potential market and so our initial views as to customer
acceptance of a particular product can be erroneous, and there can be no
assurance that true market acceptance will ultimately be achieved. In addition,
customer preferences are also affected by factors other than taste. If we do not
adjust to respond to these and other changes in customer preferences, our sales
may be adversely affected. </P>
<P align=justify><B><I>Expansion of our business may put added pressure on our
management and operational infrastructure impeding our ability to meet any
potential increased demand for the products that we sell and possibly hurting
our future operating results. </I></B></P>
<P align=justify>Our business plan is to significantly grow our operations to
meet anticipated growth in demand for the products that we sell, and by the
introduction of new product offerings. Growth in our business may place a
significant strain on our personnel, management, financial systems and other
resources. The evolution of our business also presents numerous risks and
challenges, including: </P>
<P align=center>8</P>
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<A name=page_13></A>
<UL style="TEXT-ALIGN: justify">
  <LI>our ability to successfully and rapidly expand sales to potential new
  distributors in response to potentially increasing demand; </LI>
  <LI>
  <P>the costs associated with such growth, which are difficult to quantify, but
  could be significant; and </P>
  <LI>
  <P>rapid technological change. </P>
  </UL>
<P align=justify>To accommodate any such growth and compete effectively, we may
need to obtain additional funding to improve information systems, procedures and
controls and expand, train, motivate and manage our employees, and such funding
may not be available in sufficient quantities, if at all. If we are not able to
manage these activities and implement these strategies successfully to expand to
meet any increased demand, our operating results could suffer. </P>
<P align=justify><B><I>Due to our rapid growth in recent years, our past results
may not be indicative of our future performance and evaluating our business and
prospects may be difficult. </I></B></P>
<P align=justify>Our business has grown and evolved rapidly in recent years as
demonstrated by our growth in net income for the fiscal year ended December 31,
2009 to $7.7 million, from $3.7 million for the fiscal year ended December 31,
2008. We may not be able to achieve similar growth in future periods, and our
historical operating results may not provide a meaningful basis for evaluating
our business, financial performance and prospects. Moreover, our ability to
achieve satisfactory production results at higher volumes is unproven.
Therefore, you should not rely on our past results or our historical rate of
growth as an indication of our future performance. </P>
<P align=justify><B><I>We depend heavily on key personnel, and turnover of key
employees and senior management could harm our business.</I></B> </P>
<P align=justify>Our future business and results of operations depend in
significant part upon the continued contributions of our key technical and
senior management personnel, including Lianyun Han, our chief executive officer
and chairperson, and Robert Tick, our chief financial officer. The expertise of
management and technical innovation of the company give it a strong competitive
advantage. We do not maintain key person insurance on these individuals. The
loss of any of these key employees&#146; services or any of our other management
poses a risk to our business. We may not be able to attract or retain qualified
management on acceptable terms in the future due to the intense competition for
qualified personnel in our industry and as a result, our business could be
adversely affected.</P>
<P align=justify><B><I>We may have to pay liquidated damages to our investors in
the recent private placement if the registration statement of which this
prospectus is a part is not effective within the time periods specified.
</I></B></P>
<P align=justify>In connection with the recent private placement described
above, on May 27, 2010, we entered into the 2010 Securities Purchase Agreement
with certain investors, pursuant to which, we granted registration rights to
holders of registrable securities, which include shares of common stock issuable
upon conversion of shares of the Series A Preferred Stock and shares of common
stock issuable upon exercise of the Series C Warrants. Under the terms of the
2010 Securities Purchase Agreement, if this registration statement is not
declared effective by the SEC within the time period specified in the 2010
Securities Purchase Agreement, then we are required to pay the investors, as
liquidated damages, 1.0% of the amount invested for each 30-day period during
which such failure continues, for up to a maximum of 8% of each investor&#146;s
investment pursuant to the 2010 Securities Purchase Agreement, except that we
will not be obligated to pay any such fee if we are unable to fulfill our
registration obligations as a result of rules, regulations, positions or
releases issued or actions taken by the SEC with respect to Rule 415 of the
Securities Act, so long as we register at such time the maximum number of
securities permissible by the SEC. There can be no assurance that the
registration statement of which this prospectus is a part will be declared
effective by the SEC for the time period necessary to avoid payment of
liquidated damages. </P>
<P align=justify><B><I>Our inability to protect our trademarks, patent and trade
secrets may prevent us from successfully marketing our products and competing
effectively. </I></B></P>
<P align=justify>Failure to protect our intellectual property could harm our
brands and our reputation, and adversely affect our ability to compete
effectively. Further, enforcing or defending our intellectual property rights,
including our trademarks, patents, copyrights, know how and trade secrets, could
result in the expenditure of significant financial and managerial resources. We
produce, market and sell our products using the brand &#147;<b><font lang="ZH-CN" style="font-size: 10.0pt; font-family: SimSun; color: black">&#24069;&#20159;&#19996;&#26041;&#31070;</font></b>&#148; We regard
our intellectual property, particularly our trademark, know how and trade
secrets to be of considerable value and importance to our business and our
success. We rely on a combination of patent, trademark, trade secrecy laws, and
contractual provisions to protect our intellectual property rights. There can be
no assurance that the steps taken by us to protect these proprietary rights will be adequate or that third parties will not infringe or
misappropriate our patent, trademark, trade secrets or similar proprietary
rights. In addition, there can be no assurance that other parties will not
assert infringement claims against us, and we may have to pursue litigation
against other parties to assert our rights. Any such claim or litigation could
be costly and we may lack the resources required to defend against such claims.
In addition, any event that would jeopardize our proprietary rights or any
claims of infringement by third parties could have a material adverse affect on
our ability to market or sell our brands, and profitably exploit our products. </P>
<P align=center>9</P>
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<P align=justify><B><I>We may be exposed to potential risks relating to our
internal controls over financial reporting.</I></B> </P>
<P align=justify>As directed by Section 404 of the Sarbanes-Oxley Act of 2002,
the SEC adopted rules requiring public companies to include a report of
management on the company&#146;s internal controls over financial reporting in their
annual reports, including Form 10-K. Under current law, we are subject to this
requirement beginning with our annual report for the fiscal year ended December
31, 2007. A report of our management is included under Item 9A(T) of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2009, or the Annual
Report, in which our management concluded that our internal controls over our
financial reporting were effective for the period covered by the Annual Report.
However, in the future, our management may conclude that our internal controls
over our financial reporting are not effective due to the identification of one
or more material weaknesses. In the event we identify significant deficiencies
or material weaknesses in our internal controls that we cannot remediate in a
timely manner, investors and others may lose confidence in the reliability of
our financial statements. </P>
<P align=justify><B><I>We do not carry any business interruption insurance,
third-party liability insurance for our production facilities or insurance that
covers the risk of loss of our products in shipment. </I></B></P>
<P align=justify>Operation of our facilities involves many risks, including
equipment failures, natural disasters, industrial accidents, power outages,
labor disturbances and other business interruptions. Furthermore, if any of our
products are faulty, then we may become subject to product liability claims or
we may have to engage in a product recall. We do not carry any business
interruption insurance, product recall or third-party liability insurance for
our production facilities or with respect to our products to cover claims
pertaining to personal injury or property or environmental damage arising from
defects in our products, product recalls, accidents on our property or damage
relating to our operations. As a result, we may be required to pay for financial
and other losses, damages and liabilities, including those caused by natural
disasters and other events beyond our control, out of our own funds, which could
have a material adverse effect on our business, financial condition and results
of operations.</P>
<P align=justify><B><I>We may be exposed to liabilities under the Foreign
Corrupt Practices Act, and any determination that we violated the Foreign
Corrupt Practices Act could have a material adverse effect on our
business.</I></B> </P>
<P align=justify>We are subject to the Foreign Corrupt Practice Act, or the
FCPA, and other laws that prohibit improper payments or offers of payments to
foreign governments and their officials and political parties by U.S. persons
and issuers as defined by the statute for the purpose of obtaining or retaining
business. We have operations, agreements with third parties and make sales in
China, which may experience corruption. Our activities in China create the risk
of unauthorized payments or offers of payments by one of the employees,
consultants, sales agents or distributors of our company, because these parties
are not always subject to our control. It is our policy to implement safeguards
to discourage these practices by our employees. Also, our existing safeguards
and any future improvements may prove to be less than effective, and the
employees, consultants, sales agents or distributors of our Company may engage
in conduct for which we might be held responsible. Violations of the FCPA may
result in severe criminal or civil sanctions, and we may be subject to other
liabilities, which could negatively affect our business, operating results and
financial condition. In addition, the government may seek to hold our Company
liable for successor liability FCPA violations committed by companies in which
we invest or that we acquire. </P>
<P align=justify><B><I>We have not voluntarily implemented various corporate
governance measures, in the absence of which, shareholders may have limited
protections against related party transactions, conflicts of interest and
similar matters. </I></B></P>
<P align=justify>Since our common stock is not listed for trading on a national
securities exchange, we are not subject to certain of the corporate governance
requirements established by the national securities exchanges pursuant to the
Sarbanes-Oxley Act of 2002. These include rules relating to independent
directors, and independent director nominating, audit and compensation
committees. While we are currently seeking independent directors for our board
of directors, we do not presently have such directors. As a result, we have not
established independent audit, compensation, or nominating committees of our board of directors. In the absence of a
majority of independent directors, our officers and directors could establish
policies and enter into transactions without independent review and approval. In
certain circumstances, management may not have the same interests as the
shareholders and conflicts of interest may arise. Notwithstanding the exercise
of their fiduciary duties as directors and executive officers and any other
duties that they may have to us or our shareholders in general, these persons
may have interests different than yours which could adversely affect your
investment.</P>
<P align=center>10</P>
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<P align=justify><B><I>There are limitations on the liability of our directors,
and we may have to indemnify our officers and directors in certain instances.
</I></B></P>
<P align=justify>Our bylaws provide that we will indemnify our officers and
directors and may indemnify our employees and other agents. The Company may also
have contractual indemnification obligations under its agreements with its
executive officers and directors. The foregoing indemnification obligations
could result in the Company incurring substantial expenditures to cover the cost
of settlement or damage awards against directors and officers, which the Company
may be unable to recoup. These provisions and resultant costs may also
discourage the Company from bringing a lawsuit against directors and officers
for breaches of their fiduciary duties and may similarly discourage the filing
of derivative litigation by the Company&#146;s stockholders against the Company&#146;s
directors and officers even though such actions, if successful, might otherwise
benefit the Company and its stockholders. </P>
<P align=justify><B>RISKS RELATED TO DOING BUSINESS IN CHINA</B></P>
<P align=justify><B><I>Adverse changes in political and economic policies of the
PRC government could impede the overall economic growth of China, which could
reduce the demand for our products and damage our business.</I></B> </P>
<P align=justify>We conduct substantially all of our operations and generate all
of our revenue in China. Accordingly, our business, financial condition, results
of operations and prospects are affected significantly by economic, political
and legal developments in China. The PRC economy differs from the economies of
most developed countries in many respects, including: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>a higher level of government involvement; </P>
  <LI>
  <P>a early stage of development of the market-oriented sector of the economy;
  </P>
  <LI>
  <P>a rapid growth rate; </P>
  <LI>
  <P>a higher level of control over foreign exchange; and </P>
  <LI>
  <P>the allocation of resources. </P></LI></UL>
<P align=justify>As the PRC economy has been transitioning from a planned
economy to a more market-oriented economy, the PRC government has implemented
various measures to encourage economic growth and guide the allocation of
resources. While these measures may benefit the overall PRC economy, they may
also have a negative effect on us.</P>
<P align=justify>Although the PRC government has in recent years implemented
measures emphasizing the utilization of market forces for economic reform, the
PRC government continues to exercise significant control over economic growth in
China through the allocation of resources, controlling the payment of foreign
currency-denominated obligations, setting monetary policy and imposing policies
that impact particular industries or companies in different ways.</P>
<P align=justify>Any adverse change in economic conditions or government
policies in China could have a material adverse effect on the overall economic
growth in China, which in turn could lead to a reduction in demand for our
services and consequently have a material adverse effect on our business and
prospects.</P>
<P align=justify><B><I>Uncertainties with respect to the PRC legal system could
limit the legal protections available to you and us.</I></B> </P>
<P align=justify>We conduct substantially all of our business through our
operating subsidiaries in the PRC. Our operating subsidiaries are generally
subject to laws and regulations applicable to foreign investments in China and,
in particular, laws applicable to foreign-invested enterprises. The PRC legal
system is based on written statutes, and prior court decisions may be cited for
reference but have limited precedential value. Since 1979, a series of new PRC
laws and regulations have significantly enhanced the protections
afforded to various forms of foreign investments in China. However, since the
PRC legal system continues to rapidly evolve, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws,
regulations and rules involve uncertainties, which may limit legal protections
available to you and us. In addition, any litigation in China may be protracted
and result in substantial costs and diversion of resources and management
attention. In addition, all of our executive officers and all of our directors
are residents of China and not of the United States, and substantially all the
assets of these persons are located outside the United States. As a result, it
could be difficult for investors to affect service of process in the United
States or to enforce a judgment obtained in the United States against our
Chinese operations and subsidiaries. </P>
<P align=center>11</P>
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<P align=justify><B><I>If we are found to have failed to comply with applicable
laws, we may incur additional expenditures or be subject to significant fines
and penalties. </I></B></P>
<P align=justify>Our operations are subject to PRC laws and regulations
applicable to us. However, many PRC laws and regulations are uncertain in their
scope, and the implementation of such laws and regulations in different
localities could have significant differences. In certain instances, local
implementation rules and/or the actual implementation are not necessarily
consistent with the regulations at the national level. Although we strive to
comply with all the applicable PRC laws and regulations, we cannot assure you
that the relevant PRC government authorities will not later determine that we
have not been in compliance with certain laws or regulations. Our failure to
comply with applicable PRC laws and regulations could subject us to
administrative penalties and injunctive relief, as well as civil remedies,
including fines, injunctions and recalls of our products. It is possible that
changes to such laws or more rigorous enforcement of such laws or with respect
to our current or past practices could have a material adverse effect on our
business, operating results and financial condition.</P>
<P align=justify><B><I>The PRC government exerts substantial influence over the
manner in which we must conduct our business activities.</I></B> </P>
<P align=justify>The PRC government has exercised and continues to exercise
substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by
changes in its laws and regulations, including those relating to taxation,
import and export tariffs, environmental regulations, land use rights, property
and other matters. We believe that our operations in China are in material
compliance with all applicable legal and regulatory requirements. However, the
central or local governments of the jurisdictions in which we operate may impose
new, stricter regulations or interpretations of existing regulations that would
require additional expenditures and efforts on our part to ensure our compliance
with such regulations or interpretations. </P>
<P align=justify>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 China or particular regions thereof and could require us to divest
ourselves of any interest we then hold in Chinese properties or joint ventures.
</P>
<P align=justify><B><I>Restrictions on currency exchange may limit our ability
to receive and use our sales revenue effectively.</I></B> </P>
<P align=justify>All our sales revenue and expenses are denominated in RMB.
Under PRC law, the RMB is currently convertible under the &#147;current account,&#148;
which includes dividends and trade and service-related foreign exchange
transactions, but not under the &#147;capital account,&#148; which includes foreign direct
investment and loans. Currently, our PRC operating subsidiaries may purchase
foreign currencies for settlement of current account transactions, including
payments of dividends to us, without the approval of the State Administration of
Foreign Exchange, or SAFE, by complying with certain procedural requirements.
However, the relevant PRC government authorities may limit or eliminate our
ability to purchase foreign currencies in the future. Since a significant amount
of our future revenue will be denominated in RMB, any existing and future
restrictions on currency exchange may limit our ability to utilize revenue
generated in RMB to fund our business activities outside China that are
denominated in foreign currencies. </P>
<P align=justify>Foreign exchange transactions by our PRC operating subsidiaries
under the capital account continue to be subject to significant foreign exchange
controls and require the approval of or need to register with PRC government
authorities, including SAFE. In particular, if our PRC operating subsidiaries
borrow foreign currency through loans from us or other foreign lenders, these
loans must be registered with SAFE, and if we finance the subsidiaries by means
of additional capital contributions, these capital contributions must be
approved by certain government authorities, including the Ministry of Commerce, or MOFCOM, or their
respective local counterparts. These limitations could affect their ability to
obtain foreign exchange through debt or equity financing. </P>
<P align=center>12</P>
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<P align=justify><B><I>Fluctuations in exchange rates could adversely affect our
business and the value of our securities.</I></B> </P>
<P align=justify>The value of our common stock will be indirectly affected by
the foreign exchange rate between U.S. dollars and RMB and between those
currencies and other currencies in which our sales may be denominated.
Appreciation or depreciation in the value of the RMB relative to the U.S. dollar
would affect our financial results reported in U.S. dollar terms without giving
effect to any underlying change in our business or results of operations.
Fluctuations in the exchange rate will also affect the relative value of any
dividend we issue in the future as well as earnings from, and the value of, any
U.S. dollar-denominated investments we make in the future.</P>
<P align=justify>Since July 2005, the RMB has no longer been pegged to the U.S.
dollar. Although the People's Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange
rate, the RMB may appreciate or depreciate significantly in value against the
U.S. dollar in the medium to long term. Moreover, it is possible that in the
future PRC authorities may lift restrictions on fluctuations in the RMB exchange
rate and lessen intervention in the foreign exchange market. </P>
<P align=justify>Very limited hedging transactions are available in China to
reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. While we may enter into hedging transactions in
the future, the availability and effectiveness of these transactions may be
limited, and we may not be able to successfully hedge our exposure at all. In
addition, our foreign currency exchange losses may be magnified by PRC exchange
control regulations that restrict our ability to convert RMB into foreign
currencies. </P>
<P align=justify><B><I>Restrictions under PRC law on our PRC subsidiaries'
ability to make dividends and other distributions could materially and adversely
affect our ability to grow, make investments or acquisitions that could benefit
our business, pay dividends to you, and otherwise fund and conduct our
businesses. </I></B></P>
<P align=justify>Substantially all of our revenues are earned by our PRC
subsidiaries. However, PRC regulations restrict the ability of our PRC
subsidiaries to make dividends and other payments to its offshore parent
company. PRC legal restrictions permit payments of dividend by our PRC
subsidiaries only out of their accumulated after-tax profits, if any, determined
in accordance with PRC accounting standards and regulations. Our PRC
subsidiaries are also required under PRC laws and regulations to allocate at
least 10% of our annual after-tax profits determined in accordance with PRC GAAP
to a statutory general reserve fund until the amounts in said fund reaches 50%
of our registered capital. Allocations to these statutory reserve funds can only
be used for specific purposes and are not transferable to us in the form of
loans, advances or cash dividends. Any limitations on the ability of our PRC
subsidiaries to transfer funds to us could materially and adversely limit our
ability to grow, make investments or acquisitions that could be beneficial to
our business, pay dividends and otherwise fund and conduct our business.</P>
<P align=justify><B><I>Under the New EIT Law, we may be classified as a
&#147;resident enterprise&#148; of China. Such classification will likely result in
unfavorable tax consequences to us and our non-PRC stockholders. </I></B></P>
<P align=justify>China passed a new Enterprise Income Tax Law, or the New EIT
Law, and its implementation regulations, both of which became effective on
January 1, 2008. Under the New EIT Law, an enterprise established outside of
China with &#147;de facto management bodies&#148; within China is considered a &#147;resident
enterprise,&#148; meaning that it can be treated in a manner similar to a Chinese
domestic enterprise for enterprise income tax purposes. The implementing rules
of the New EIT Law define de facto management as &#147;substantial and overall
management and control over the production and operations, personnel,
accounting, and properties&#148; of the enterprise. On April 22, 2009, the State
Administration of Taxation issued the Notice Concerning Relevant Issues
Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated
Offshore as Resident Enterprises pursuant to Criteria of de facto Management
Bodies, or the Notice, further interpreting the application of the New EIT Law
and its implementation with respect to non-Chinese enterprises or group
controlled offshore entities. Pursuant to the Notice, an enterprise incorporated
in an offshore jurisdiction and controlled by a Chinese enterprise or group will
be classified as a &#147;non-domestically incorporated resident enterprise&#148; if (i)
its senior management in charge of daily operations reside or perform their
duties mainly in China; (ii) its financial or personnel decisions are made or
approved by bodies or persons in China; (iii) substantial assets and properties,
accounting books, corporate chops, board and shareholder minutes are kept in
China; and (iv) at least half of its directors with voting rights or senior
management often resident in China. A resident enterprise would be generally
subject to the uniform 25% enterprise income tax rate as to its worldwide
income. Substantially all of our management is currently based in China. Therefore, we may be
treated as a Chinese resident enterprise for enterprise income tax purposes. The
tax consequences of such treatment are currently unclear, as they will depend on
how local tax authorities apply or enforce the New EIT Law or the implementation
regulations. </P>
<P align=center>13</P>
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<P align=justify>In addition, under the New EIT Law and implementation
regulations, PRC income tax at the rate of 10% is applicable to dividends
payable to investors that are &#147;non-resident enterprises&#148; (and that do not have
an establishment or place of business in the PRC, or that have such
establishment or place of business but the relevant income is not effectively
connected with the establishment or place of business) to the extent that such
dividends have their source within the PRC unless there is an applicable tax
treaty between the PRC and the jurisdiction in which an overseas holder resides
which reduces or exempts the relevant tax. Similarly, any gain realized on the
transfer of shares by such investors is also subject to the 10% PRC income tax
if such gain is regarded as income derived from sources within the PRC. If we
are considered a PRC &#147;resident enterprise&#148;, it is unclear whether the dividends
we pay with respect to our shares, or the gain you may realize from the transfer
of our shares, would be treated as income derived from sources within the PRC
and be subject to PRC tax. If we are required under the New EIT Law to withhold
PRC income tax on our dividends payable to our foreign shareholders, or if you
are required to pay PRC income tax on the transfer of your shares, the value of
your investment in our shares may be materially and adversely affected. </P>
<P align=justify><B><I>If the China Securities Regulatory Commission, or CSRC,
or another PRC regulatory agency determines that CSRC approval is required in
connection with the reverse acquisition of New Resources, the reverse
acquisition may be unwound, or we may become subject to penalties. </I></B></P>
<P align=justify>On August 8, 2006, six PRC regulatory agencies, including the
CSRC, promulgated the Provisions Regarding Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, or the M&amp;A Rule, which became effective on
September 8, 2006. The M&amp;A Rule, among other things, requires that an
offshore company controlled by PRC companies or individuals that have acquired a
PRC domestic company for the purpose of listing the PRC domestic company's
equity interest on an overseas stock exchange must obtain the approval of the
CSRC prior to the listing and trading of such offshore company's securities on
an overseas stock exchange. On September 21, 2006, the CSRC, pursuant to the
M&amp;A Rule, published on its official web site procedures specifying documents
and materials required to be submitted to it by offshore companies seeking CSRC
approval of their overseas listings.</P>
<P align=justify>We do not believe that the M&amp;A Rule concerning the CSRC
approval for acquisition of a PRC domestic company by an offshore company
controlled by PRC companies or individuals applies to our reverse acquisition of
New Resources because neither Nutrastar International Inc. nor New Resources was
a &#147;Special Purpose Vehicle&#148; or an &#147;offshore company controlled by PRC companies
or individuals&#148; as defined in the M&amp;A Rule. If the CSRC or another PRC
governmental agency subsequently determines that we must obtain CSRC approval
prior to the completion of the reverse acquisition, the reverse acquisition may
be unwound and we may face regulatory actions or other sanctions from the CSRC
or other PRC regulatory agencies. These regulatory agencies may impose fines and
penalties on our operations in China and limit our operating privileges in
China, or take other actions that could have a material adverse effect on our
business, financial condition, results of operations, reputation and prospects,
as well as the trading price of our shares.</P>
<P align=justify><B><I>If we do not fulfill our obligation to pay the transfer
  price for the equity interest of Heilongjiang Shuaiyi, then we may be subject
  to fines and prohibitions imposed by relevant PRC authorities that could have
  a material adverse effect on our business.</I></B> </P>
<P align=justify>On July 28, 2008, our subsidiary, New Resources entered into an
equity transfer agreement with the founders of Heilongjiang Shuaiyi to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB 60 million
(approximately $8.8 million). On November 24, 2008, Heilongjiang Shuaiyi
obtained the Certificate of Approval for Establishment of Enterprises of Foreign
Investment issued by Heilongjiang Provincial Government and a new business
license was issued to Heilongjiang Shuaiyi on December 1, 2008. According to the
M&amp;A Rule, the equity interest transfer price should be paid in full within
three months commencing from the issuance of the new business license to
Heilongjiang Shuaiyi. If the transfer price is not paid by this date, we may
apply to the relevant PRC regulatory agency for an extension of up to one year
from the date of the issuance of the license; provided, however, that 60% of the
transfer price will be required to be paid within six months from such date. On
March 10, 2009, we obtained the approval from the relevant PRC regulatory agency
allowing us to make the payment by December 1, 2009. On January 4, 2010 and July
12, 2010, the relevant PRC regulatory agency further extended the payment due
date to December 31, 2010. However, if we are unable to make the transfer
payment in full by the December 31, 2010 deadline we may subject to fines or
penalties imposed by the PRC regulatory agency. In addition, we may not be permitted to exercise any decision-making rights as a
shareholder in Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi&#146;s
financial results into our financial statements, both of which result would have
a material adverse effect on our business.</P>
<P align=center>14</P>
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<P align=justify><B><I>The M&amp;A Rule establishes more complex procedures for
some acquisitions of Chinese companies by foreign investors, which could make it
more difficult for us to pursue growth through acquisitions in China.
</I></B></P>
<P align=justify>The M&amp;A Rule establishes additional procedures and
requirements that could make some acquisitions of Chinese companies by foreign
investors more time-consuming and complex, including requirements in some
instances that the PRC Ministry of Commerce be notified in advance of any
change-of-control transaction and in some situations, require approval of the
PRC Ministry of Commerce when a foreign investor takes control of a Chinese
domestic enterprise. In the future, we may grow our business in part by
acquiring complementary businesses, although we do not have any plans to do so
at this time. The M&amp;A Rule also requires PRC Ministry of Commerce anti-trust
review of any change-of-control transactions involving certain types of foreign
acquirers. Complying with the requirements of the M&amp;A Rule to complete such
transactions could be time-consuming, and any required approval processes,
including obtaining approval from the PRC Ministry of Commerce, may delay or
inhibit our ability to complete such transactions, which could affect our
ability to expand our business or maintain our market share.</P>
<P align=justify><B><I>The implementation of the new PRC employment contract law
and increases in the labor costs in China may hurt our business and
profitability.</I></B> </P>
<P align=justify>A new employment contract law became effective on January 1,
2008 in China. It imposes more stringent requirements on employers in relation
to entry into fixed-term employment contracts, recruitment of temporary
employees and dismissal of employees. In addition, under the newly promulgated
Regulations on Paid Annual Leave for Employees, which also became effective on
January 1, 2008, employees who have worked continuously for more than one year
are entitled to paid vacation ranging from 5 to 15 days, depending on the length
of the employee&#146;s service. Employees who waive such vacation entitlements at the
request of the employer will be compensated for three times their normal daily
salaries for each vacation day so waived. As a result of the new law and
regulations, our labor costs may increase. There is no assurance that disputes,
work stoppages or strikes will not arise in the future. Increases in the labor
costs or future disputes with our employees could damage our business, financial
condition or operating results. </P>
<P align=justify><B><I>Any outbreak of the Swine Flu (H1N1), severe acute
respiratory syndrome, or SARS, the Avian Flu, or another widespread public
health problem in the PRC could adversely affect our operations.</I></B> </P>
<P align=justify>There have been recent outbreaks of the highly pathogenic Swine
Flu, caused by the H1N1 virus, in certain regions of the world, including parts
of China, where all of our manufacturing facilities are located and where all of
our sales occur. Our business is dependent upon our ability to continue to
manufacture and distribute our products, and an outbreak of the Swine Flu, or a
renewed outbreak of SARS, the Avian Flu, or another widespread public health
problem in China, could have a negative effect on our operations. Any such
outbreak could have an impact on our operations as a result of: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>quarantines or closures of our manufacturing or distribution facilities or
  the retail outlets, which would severely disrupt our operations,
  <LI>the sickness or death of our key officers and employees, and
  <LI>a general slowdown in the Chinese economy. </LI></UL>
<P align=justify>Any of the foregoing events or other unforeseen consequences of
public health problems could adversely affect our operations. </P>
<P align=justify><B><I>You may have difficulty enforcing judgments against us.</I></B></P>
<P align=justify>We are a Nevada holding company and most of our assets are
located outside of the United States. Most of our current operations are
conducted in the PRC. In addition, most of our directors and officers are
nationals and residents of countries other than the United States. A substantial
portion of the assets of these persons is located outside the United States. As
a result, it may be difficult for you to effect service of process within the
United States upon these persons. It may also be difficult for you to enforce in
U.S. courts judgments on the civil liability provisions of the U.S. federal
securities laws against us and our officers and directors, most of whom are not
residents in the United States and the substantial majority of whose assets are located
outside of the United States. In addition, there is uncertainty as to whether
the courts of the PRC would recognize or enforce judgments of U.S. courts.
Courts in China may recognize and enforce foreign judgments in accordance with
the requirements of the PRC Civil Procedures Law based on treaties between China
and the country where the judgment is made or on reciprocity between
jurisdictions. China does not have any treaties or other arrangements that
provide for the reciprocal recognition and enforcement of foreign judgments with
the United States. In addition, according to the PRC Civil Procedures Law,
courts in the PRC will not enforce a foreign judgment against us or our
directors and officers if they decide that the judgment violates basic
principles of PRC law or national sovereignty, security or the public interest.
So it is uncertain whether a PRC court would enforce a judgment rendered by a
court in the United States.</P>
<P align=center>15</P>
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<P align=justify><B>RISKS RELATED TO THE MARKET FOR OUR STOCK GENERALLY</B> </P>
<P align=justify><B><I>Our common stock is quoted on the OTCQB which may have an
unfavorable impact on our stock price and liquidity.</I></B> </P>
<P align=justify>Our common stock is quoted on the OTCQB. The OTCQB is a
significantly more limited market than the New York Stock Exchange or Nasdaq
system. The quotation of our shares on the OTCQB may result in a less liquid
market available for existing and potential stockholders to trade shares of our
common stock, could depress the trading price of our common stock and could have
a long-term adverse impact on our ability to raise capital in the future. </P>
<P align=justify><B><I>The market price of our common stock is volatile, leading
to the possibility of its value being depressed at a time when you may want to
sell your holdings.</I></B> </P>
<P align=justify>The market price of our common stock is volatile, and this
volatility may continue. Numerous factors, many of which are beyond our control,
may cause the market price of our common stock to fluctuate significantly. In
addition to market and industry factors, the price and trading volume for our
common stock may be highly volatile for specific business reasons. Factors such
as variations in our revenues, earnings and cash flow, announcements of new
investments, cooperation arrangements or acquisitions, and fluctuations in
market prices for our products could cause the market price for our shares to
change substantially.</P>
<P align=justify>Securities class action litigation is often instituted against
companies following periods of volatility in their stock price. This type of
litigation could result in substantial costs to us and divert our management&#146;s
attention and resources.</P>
<P align=justify>Moreover, the trading market for our common stock will be
influenced by research or reports that industry or securities analysts publish
about us or our business. If one or more analysts who cover us downgrade our
common stock, the market price for our common stock would likely decline. If one
or more of these analysts cease coverage of us or fail to regularly publish
reports on us, we could lose visibility in the financial markets, which, in
turn, could cause the market price for our common stock or trading volume to
decline.</P>
<P align=justify>Furthermore, securities markets may from time to time
experience significant price and volume fluctuations for reasons unrelated to
operating performance of particular companies. These market fluctuations may
adversely affect the price of our common stock and other interests in our
company at a time when you want to sell your interest in us. </P>
<P align=justify><B><I>We may be subject to penny stock regulations and
restrictions and you may have difficulty selling shares of our common
stock.</I></B> </P>
<P align=justify>The SEC has adopted regulations which generally define
so-called &#147;penny stocks&#148; to be an equity security that has a market price less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exemptions. If our common stock becomes a &#147;penny stock&#148;, we may
become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule.
This rule imposes additional sales practice requirements on broker-dealers that
sell such securities to persons other than established customers and &#147;accredited
investors&#148; (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. As a result, this rule may
affect the ability of broker-dealers to sell our securities and may affect the
ability of purchasers to sell any of our securities in the secondary market.
</P>
<P align=center>16</P>
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<P align=justify>For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. Disclosure is
also required to be made about sales commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock. </P>
<P align=justify>There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest. </P>
<P align=justify><B><I>Certain provisions of our Articles of Incorporation may
make it more difficult for a third party to effect a change-of-control.
</I></B></P>
<P align=justify>Our Articles of Incorporation authorizes our board of directors
to issue up to 1,000,000 shares of preferred stock. The preferred stock may be
issued in one or more series, the terms of which may be determined at the time
of issuance by the board of directors without further action by the
stockholders. These terms may include preferences as to dividends and
liquidation, conversion rights, redemption rights and sinking fund provisions.
The issuance of any preferred stock could diminish the rights of holders of our
common stock, and therefore could reduce the value of such common stock. In
addition, specific rights granted to future holders of preferred stock could be
used to restrict our ability to merge with, or sell assets to, a third party.
The ability of our board of directors to issue preferred stock could make it
more difficult, delay, discourage, prevent or make it more costly to acquire or
effect a change-in-control, which in turn could prevent our stockholders from
recognizing a gain in the event that a favorable offer is extended and could
materially and negatively affect the market price of our common stock.</P>
<P align=justify><B><I>The conversion of preferred stock or exercise of warrants
we issued in our previous private placements may result in dilution to the
holders of our common stock and cause the price of our common stock to
decline.</I></B></P>
<P align=justify>Dilution of the per share value of our common stock could
result from the conversion of our outstanding Series A Preferred Stock issued to
the investors in the recent private placement and the exercise of outstanding
warrants that we issued in connection with our previous private placement
transactions. As of August 9, 2010, there were 197,706 shares of our Series A
Preferred Stock outstanding, which may be converted into our common stock at the
option of the holders of the Series A Preferred Stock in whole or in part at any
time at an initial conversion ratio of 1-for-10. In addition, as of August 9,
2010, there were outstanding warrants to purchase 1,488,501 shares of our common
stock. When the conversion price of the Series A Preferred Stock or the exercise
price of the warrants is less than the trading price of our common stock, the
conversion of Series A Preferred Stock or the exercise of the warrants would
have a dilutive effect on our shareholders. The possibility of the issuance of
shares of our common stock upon the conversion of Series A Preferred Stock or
exercise of the warrants could cause the trading price of our common stock to
decline as well. </P>
<P align=justify><B><I>We may use these proceeds in ways with which you may not
agree.</I></B></P>
<P align=justify>While we currently intend to use the proceeds from this
offering for working capital and general corporate purposes, we have
considerable discretion in the application of the proceeds. You will not have
the opportunity, as part of your investment decision, to assess whether the
proceeds are being used in a manner agreeable to you. You must rely on our
judgment regarding the application of the net proceeds of this offering. The net
proceeds may be used for corporate purposes that do not immediately improve our
profitability or increase the price of our shares.</P>
<P align=justify><B><I>We do not intend to pay dividends for the foreseeable
future. </I></B></P>
<P align=justify>For the foreseeable future, we intend to retain any earnings to
finance the development and expansion of our business, and we do not anticipate
paying any cash dividends on our common stock. Accordingly, investors must be
prepared to rely on sales of their shares of common stock after price
appreciation to earn an investment return, which may never occur. Investors
seeking cash dividends should not purchase our common stock. Any determination
to pay dividends in the future will be made at the discretion of our board of
directors and will depend on our results of operations, financial condition,
contractual restrictions, restrictions imposed by applicable law and other
factors our board of directors deems relevant.</P>
<P align=center>17</P>
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<P align=center><B>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</B></P>
<P align=justify>We have made statements under the captions &#147;Prospectus
Summary,&#148; &#147;Risk Factors,&#148; &#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations,&#148; and &#147;Business&#148; and in other sections of
this prospectus that are forward-looking statements. In some cases, you can
identify these statements by forward-looking words such as &#147;may,&#148; &#147;might,&#148;
&#147;will,&#148; &#147;should,&#148; &#147;expect,&#148; &#147;plan,&#148; &#147;anticipate,&#148; &#147;believe,&#148; &#147;estimate,&#148;
&#147;predict,&#148; &#147;potential,&#148; or &#147;continue,&#148; the negative of these terms, and other
comparable terminology, although not all forward-looking statements contain
these identifying words. These forward-looking statements, which are subject to
risks, uncertainties, and assumptions, may include projections of our future
financial performance based on our growth strategies and anticipated trends in
our business. These statements are only predictions based on our current
expectations and projections about future events. There are important factors
that could cause our actual results, level of activity, performance, or
achievements to differ materially from the results, level of activity,
performance, or achievements expressed or implied by the forward-looking
statements. Those factors include, but are not limited to, the highly
competitive nature of the markets in which we sell our products, changes in
demand for our products and services, our ability to develop new products and
services, competitive pressures, changes in laws and regulations governing our
business and the other factors discussed under the caption &#147;Risk Factors.&#148; </P>
<P align=justify>Although we believe the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
level of activity, performance, or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy or completeness of any of
these forward-looking statements. You should not rely upon forward-looking
statements as predictions of future events. We are under no duty to update any
of these forward-looking statements after the date of this prospectus to conform
our prior statements to actual results or revised expectations. </P>
<P align=center><B>USE OF PROCEEDS</B></P>
<P align=justify>We will not receive proceeds from the sales by the selling
stockholders. If the warrants are exercised for cash, then we will receive the
proceeds of payable by the selling stockholders upon exercise of the warrants.
We will use these proceeds, if received, for general working capital purposes.
</P>
<P align=center><B>BUSINESS</B></P>
<P align=justify><B><I>Business Overview</I></B></P>
<P align=justify>We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading Chinese Golden Grass grower and
producer in China. We specialize in developing, processing, marketing and
distributing a variety of agricultural and nutraceutical products consisting of
Chinese Golden Grass, organic and specialty food products. In addition, we plan
to produce and market other products developed from Cordyceps Militaris within
the coming months and years, including specialty beverage products as indicated
in more detail below. </P>
<P align=justify>Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in north-eastern mountainous China. It is a precious
ingredient in traditional Chinese medicine, as Cordyceps Militaris is widely
believed in China to offer high medical and health benefits by nourishing the
<I>yin, </I>boosting the <I>yang, </I>and invigorating the meridians of the
lungs and kidneys. According to Georges Halpern's <I>Healing Mushrooms,
</I>certain research has shown that Cordyceps Militaris may boost our immune
system, and can be used as a supplement for the purposes of combating certain
effects of fatigue and aging, as well as reducing blood pressure, the
occurrences of certain tumors, and combating arteriosclerosis and certain
gastrointestinal disorders. In addition, Cordyceps Militaris has significantly
high economic values. According to Halpern<I>, </I>wild Cordyceps Militaris can
cost as much as $10,000 per kilogram. Due to the extremely sensitive growing
conditions of Cordyceps Militaris, it is very difficult to grow the plant in a
man-made environment. Through several years of laboratory tests, we developed
the technology to commercially grow and produce Cordyceps Militaris in 2006. We
generated 89.44% and 78.70% of our revenues from Chinese Golden Grass for the
three months ended March 31, 2010 and the fiscal year of 2009, respectively. We
believe that we own 19% of the world wide market share in the cultivated Chinese
Golden Grass industry. We plan to continue to focus on Chinese Golden Grass,
which is our fastest growing product line with the greatest market demand and a
significantly high profit margin.</P>
<P align=center>18</P>
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<A name=page_23></A>
<P align=center><IMG src="pic1.jpg" width="340" height="239" border=0> </P>
<P align=justify>We also sell organic and specialty food products through our
subsidiary, Harbin Shuaiyi, which was formed in 2001. After years of
development, we believe that we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.</P>
<P align=justify><B>Our Industry</B></P>
<P align=justify>The nutraceutical industry is currently made up of many small-
and medium-sized companies that manufacture and distribute products generally
intended to, or marketed for the purpose of maintaining, and sometimes
improving, health and general well being. According to China Enterprises
Association, there are currently over 3,000 manufacturers of nutraceutical
products in China, with an annual production value of over $6.25 billion. Of
these manufacturers, large enterprises with registered capital of over $12.5
million only account for 1.45%; medium-sized enterprises with registered capital
under $12.5 million, but over $6.25 million, make up 38%; and workshop-style
enterprises with registered capital below $12,500 make up 12.5% of the total
number of manufacturers.</P>
<P align=justify>Widespread economic development in China has not only increased
the disposable income of Chinese consumers, it has also lead to an increase in
consumer awareness of the risks of dietary imbalances and the importance of
maintaining appropriate levels of vitamins and minerals in the human body. Along
with a growing middle class, all of these facts have rapidly increased China&#146;s
480 million urban consumers&#146; demand for nutraceutical products. According to
<I>China Personal Health &amp; Supplemental Industry Survey 2005</I>, the sales
of nutraceutical products in China are expected to reach RMB 70 billion
(approximately $8.75 billion) in 2009, with a compounded annual growth rate of
15.24% . We believe that the next era of nutrition will focus on naturally
occurring properties provided from plants, fruits, and vegetables, which support
good health.<B> </B></P>
<P align=justify>Because of the rarity and high prices of the wild collected
variety, attempts have long been made to cultivate Cordyceps Militaris. By the
mid-1980s, the majority of Cordyceps Militaris available in the worldwide
marketplace were artificially cultivated. Because of the development of modern
biotechnology-based cultivation methods, the availability of this previously
rare health supplement has greatly increased in the last 20 years. The demand
for Cordyceps Militaris has also compounded exponentially, in this same time
frame, partly because of the opening of China to trade with the West in the
1970s, exposing many more people around the world to the concepts and practices
of traditional Chinese medicine. As Cordyceps Militaris has always been highly
revered in traditional Chinese medicine, we believe that with increased exposure
to traditional Chinese medicine, the demand for this plant has also increased.
Such an increase has lead to overharvesting of the wild stocks and a subsequent
shortage of wild collected varieties of Cordyceps Militaris. International
markets for Cordyceps Militaris are mainly in the United States, Canada, Japan,
Korea, Hong Kong and Southeast Asia. The European and Australian markets are
also emerging. According to <I>Market Survey of Cordyceps Militaris</I> <I>2008,
</I>published by China Market Monitoring Center in 2008, the current
international market demand for Cordyceps Militaris is about 1,000 tons a year,
while the Chinese domestic market demand is about 500 tons a year with an annual
growth rate of over 13%. With about 50 Cordyceps Militaris manufacturers in
China having an aggregate production capacity of only 250 tons a year, there is
a big gap between supply and demand and therefore a great potential for our
Chinese Golden Grass market.</P>
<P align=center>19</P>
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<P align=justify><B>Our Competitive Strengths</B></P>
<P align=justify>We believe that our success to date and potential for future
growth can be attributed to a combination of our strengths, including the
following:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P><B><I>High-end niche products. </I></B>We sell organic and specialty food
  products and Chinese Golden Grass products that the followers of traditional
  Chinese medicine believe have high nutrient concentration, potential health
  benefits and high value. Our products are positioned in the high-end market as
  premium healthy food and are distinguished from the common nutraceutical
  products in the market. </P>
  <LI>
  <P><B><I>Leading market position and significantly high margin. </I></B>We
  believe we have established ourselves as a dominant player in China&#146;s Chinese
  Golden Grass industry. We believe that we currently own approximately 19% of
  world market of Chinese Golden Grass. By successfully commercializing our
  Cordyceps Militaris planting technology, we believe that we have achieved
  economies of scale and accordingly significantly high margin that no other
  material competitor can match in the near future. </P>
  <LI>
  <P><B><I>Leading-edge R&amp;D team. </I></B>Our research and development team
  has a strong and extensive technology background and has been an early
  participant in the Chinese Golden Grass market. Currently we have 21
  technicians in our R&amp;D department. The head of our research and
  development team, Mr. Lichen Wang, is a lead expert in the field of edible
  fungus in China. Mr. Wang graduated with a Bachelor&#146;s degree in edible fungus
  and has served as the deputy director of several research institutes of edible
  fungus in Northeast China. </P>
  <LI>
  <P><B><I>Experienced management team with a strong track record. </I></B>Our
  management team has extensive operating experience and industry knowledge.
  Lianyun Han, our founder and chief executive officer, has more than 10 years
  experience in operational management and business development. Robert Tick,
  our chief financial officer, has over 16 years experience in accounting and
  finance. We believe that our management team&#146;s experience and capabilities
  have contributed greatly to our significant growth in the past three years.
  </P></LI></UL>
<P align=justify><B>Our Growth Strategy</B></P>
<P align=justify>As a leading nutraceutical producer in China, we believe we are
well positioned to capitalize on future industry growth in China. We are
dedicated to providing healthy and high nutritional products to our consumers.
We will implement the following strategic plans to take advantage of industry
opportunities and our competitive strengths:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P><B><I>Focus on brand development</I></B><B>. </B>With intense price
  competition among many similar or identical products in the industry, we
  believe that building brand awareness is the primary means to generate and
  sustain profitable growth in the future. We believe that developing close
  cooperative relationships with research centers of well-known universities in
  China and globally is key to building brand equity. We also market our
  products through an integrated marketing program that includes advertising in
  relevant media outlets, attending trade shows such as Harbin International
  Fair for Trade and Economic Corporation and Beijing Agriculture Exposition and
  offering seminars and lectures to local communities regarding the products and
  their heath benefits. </P>
  <LI>
  <P><B><I>Introducing new products</I></B><B>. </B>We constantly evaluate our
  products and seek to adapt to changing market conditions by updating our
  products to reflect new trends in consumer preferences. We endeavor to expand
  our market presence by introducing additional competitive nutraceutical
  products to our product offerings. Our new products under development include
  specialty beverage products. </P>
  <LI>
  <P><B><I>Increase production capacity. </I></B>Our existing production lines
  of Chinese Golden Grass have been running at close to full capacity while the
  market demand for our existing products continues to increase. In order to
  meet the raw material needs of our products and to expand sales of small
  packages of our Golden Grass products, we plan to add 10 plants to our
  production line, of which three plants are expected to begin
  operating during the second half of 2010. We anticipate that the entire
  project will be completed in 2012. Annual production capacity of Golden Grass
  is expected to increase to 72 tons in 2010, up from 55 tons in
  2009. We will convert more buildings into biotechnologically controlled cultivation
  plants to grow and process Cordyceps Militaris in the future. <br>
  <br>
  </P></LI></UL>
<P align=center>20</P>
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<A name=page_25></A>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-top: 0; margin-bottom: 12"><B><I>Further expand our distribution network to increase the prevalence
    of our products nationwide. </I></B>Our current sales depend heavily on the
    sales of our large-pack products to pharmaceutical companies. To support our
    rapid growth in sales, we plan to further expand our distribution network
    by selling our small-pack products through drug stores, supermarkets and franchise
    stores. We have one-year contracts with our major distributors which normally
    extend for one more year by the end of the contracts. We maintain constant
    communications with these distributors to keep us informed regarding consumer
    preferences and market trends in order to develop new products. We also organize
    monthly product promotion meetings with the distributors to increase the sales
    of small package products. <br>
  <LI>
  <p style="margin-top: 0; margin-bottom: 12"><B><I>Technology innovation. </I></B>We believe that the development of
    new technology is critical to our success. We will continuously improve the
    quality of our existing and future products through new technologies. We expect
    to maintain our long-term partnership with Chinese universities and research
    institutes in order to develop new technologies. </LI>
</UL>
<P align=justify><B>Our Products and Production Process</B></P>
<P align=justify><B><I>Chinese Golden Grass </I></B></P>
<P align=justify>Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in the north-eastern mountainous regions of China. As a
precious ingredient in traditional Chinese medicine, Cordyceps Militaris is
widely believed in China to offer high medical and health benefits by nourishing
the <I>yin, </I>boosting the <I>yang, </I>and invigorating the meridians of the
lungs and kidneys. Due to the extremely sensitive growing conditions of
Cordyceps Militaris, it is very difficult to grow the plants in man-made
environments. Through several years laboratory tests, we developed the
technology to commercially grow and produce Cordyceps Militaris in 2006. Our
production process primarily includes planting, purifying and packaging.</P>
<P align=justify>Our present production capacity of Chinese Golden Grass is
approximately 55 tons annually. We generated 89.44% and 78.70% of our revenues
from Chinese Golden Grass for the three months ended March 31, 2010 and the
fiscal year of 2009, respectively. We believe that we own approximately 19%
worldwide market share in the entire cultivated Chinese Golden Grass industry.
We plan to continue to focus on Chinese Golden Grass, which is our fastest
growing product with the greatest market demand and a significantly high profit
margin. To achieve this end, we plan to increase our annual production capacity
of 72 tons by the end of 2010.</P>
<P align=justify><B><I>Organic and Specialty Food</I></B></P>
<P align=justify>Growth in domestic demand for organic products has been driven
by rising incomes in China. Through our indirect subsidiary, Harbin Shuaiyi, we
act as either a sales agent or a distributor to market and sell organic and
specialty food products supplied by third-party producers. These products mainly
include Northeast Peculiar Rice. Northeast Peculiar Rice is grown in accordance
with organic product standards established by the Chinese Ministry of
Agriculture. To qualify as &#147;organic,&#148; food must be produced in an environment
which relies upon natural resources, without the use of conventional pesticides,
artificial fertilizers, in an appropriate ecological environment, and must
undergo a series of scientific and technological quality control processes. Our
Northeast Peculiar Rice is rich in protein, fiber fats, amino acids and calcium,
iron, zinc, selenium and other elements and vitamins. After years of
development, we believe we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.</P>
<P align=justify><B><I>New products under development</I></B></P>
<P align=justify>We plan to further diversify our Cordyceps Militaris based
product mix to cater to different customer tastes and preferences. Currently, we
have the following products under development. In 2010, we will be targeting
mass consumer markets by introducing  specialty beverage products with the
health benefits of enhancing immunity, reducing fatigue, enhancing circulations,
among other benefits derived from our Cordyceps Militaris.</P>
<P align=center>21</P>
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<UL style="TEXT-ALIGN: justify">
  <LI><I>Specialty Beverage Products</I>. This convenient and delicious Chinese
  traditional healthcare cereal beverage has various nutritional ingredients of
  Cordyceps Militaris, including Cordycepin and polysaccharides. We expect to
  begin manufacturing and selling this product by the second half of 2010.
</LI></UL>
<P align=justify><B>Marketing and Sales</B></P>
<P align=justify>Currently, we have 132 experienced marketing personnel who are
responsible for market research, promotion and advertisement. We strengthen our
market presence by employing various types of marketing strategies. We
participate in trade shows such as Harbin International Fair for Trade and
Economic Cooperation and Beijing Agriculture Exposition and offer seminars and
lectures to local communities regarding the health benefits of our products.
These activities help to promote our reputation and name recognition in the
industry.</P>
<P align=justify>Our sales depend heavily on the sales of our large-pack
products to pharmaceutical companies. To support our rapid growth in sales, we
plan to further expand our distribution network by selling our small-pack
products through drug stores, supermarkets and franchise stores.</P>
<P align=justify><B>Raw Materials and Suppliers</B></P>
<P align=justify>While all Cordyceps Militaris used to produce our Chinese
Golden Grass products are grown by us, the raw materials of our organic and
specialty food products primarily consist of carbamide, wheat,
glucose, citric acid, bitter salt, peptone, and pupa powder. The price for such
material fluctuates depending upon market conditions. However, since we have
long-term suppliers and clients, the influence of material price fluctuation is
not currently material to the Company.</P>
<P align=justify>We have established long-term relationships with our key
suppliers. However, we do not have long term supply contracts and we do not
exclusively rely on our key suppliers. We have adopted a dual supplier system
for raw materials. Therefore, if our primary suppliers cannot supply us with our
raw material for any reason, we are able to acquire raw material from another
supplier. All of our suppliers must meet our quality standards and delivery
requirements consistently in order to remain on our approved supplier list. If
deliveries are delayed repeatedly, we terminate the partnership with such
supplier.</P>
<P align=justify>The flexible sourcing arrangements are designed to ensure the
stable supply of raw materials and promote healthy competition among our
suppliers. We believe our supplier arrangements encourage our suppliers to
provide high quality raw materials timely and efficiently.</P>
<P align=justify><B><I>Our Major Suppliers in 2009 </I></B></P>
<P align=justify>The following table lists top suppliers of our raw materials in
2009:</P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="36%" >&nbsp; </TD>
    <TD align=left width="14%">&nbsp; </TD>
      <TD align=center width="16%"><B>Purchasing Value</B> </TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center ><B>Rank</B> </TD>
    <TD align=left width="36%" ><B>Company Name</B> </TD>
    <TD align=center width="14%"><B>Unit (Kg)</B> </TD>
      <TD align=center width="16%"><B>in 2009 ($)</B> </TD>
    <TD align=center width="14%"><B>Location</B> </TD>
    <TD align=center width="14%"><B>Material</B> </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="36%" >&nbsp; </TD>
    <TD width="14%">&nbsp; </TD>
      <TD width="16%">&nbsp; </TD>
    <TD width="14%">&nbsp; </TD>
    <TD width="14%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff >1
      <BR><BR><BR><BR><BR><BR><BR></TD>
    <TD align=left width="36%" bgColor=#e6efff >Heilongjiang
      Xianfeng Agricultural Goods <BR>Trading Market Co., Ltd.
      <BR><BR><BR><BR><BR><BR></TD>
      <TD align=center width="14%" bgColor=#E6EFFF>77,500 <BR>
        9,010 <BR>46,000
      <BR>4,100 <BR>117,819 <BR><BR>117,819 <BR></TD>
      <TD width="16%" align=center bgColor=#E6EFFF>428,409 <BR>
        <BR><BR><BR><BR><BR><BR></TD>
      <TD align=center width="14%" bgColor=#E6EFFF>Harbin <BR>
        <BR><BR><BR><BR><BR><BR></TD>
    <TD align=center width="14%" bgColor=#e6efff>Plastic film <BR>Disinfectant
      <BR>Plastic bag <BR>Carton <BR>Small packing <BR>boxes <BR>Small package
      <BR>bag </TD></TR>
  <TR vAlign=top>
    <TD align=center >2 <BR></TD>
    <TD align=left width="36%" >Harbin Zhenfengyuan
      Bio-technology Co., Ltd. <BR></TD>
    <TD align=center width="14%">32,472 <BR>191,270 </TD>
      <TD align=center width="16%">369,218 <BR></TD>
    <TD align=center width="14%">Harbin <BR></TD>
    <TD align=center width="14%">Peptone <BR>Vitamin-C </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff >3 </TD>
    <TD align=left width="36%" bgColor=#e6efff >Nehe Laocai Grain
      Depot </TD>
    <TD align=center width="14%" bgColor=#e6efff>452,320 </TD>
      <TD width="16%" align=center bgColor=#E6EFFF>165,539 </TD>
      <TD align=center width="14%" bgColor=#E6EFFF>Nehe </TD>
    <TD align=center width="14%" bgColor=#e6efff>Wheat </TD></TR>
  <TR vAlign=top>
    <TD align=center >4 </TD>
    <TD align=left width="36%" >Daqing Qingzhong Seed Co., Ltd.
    </TD>
    <TD align=center width="14%">79,500 </TD>
      <TD align=center width="16%">19,785 </TD>
    <TD align=center width="14%">Daqing </TD>
    <TD align=center width="14%">Potato </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff >5 <BR><BR></TD>
    <TD align=left width="36%" bgColor=#e6efff >Harbin Jiancheng
      Fine Chemical Plant <BR><BR></TD>
      <TD align=center width="14%" bgColor=#E6EFFF>14,900 <BR>
        1,420 <BR>2,150
</TD>
      <TD width="16%" align=center bgColor=#E6EFFF>13,670 <BR>
        <BR></TD>
      <TD align=center width="14%" bgColor=#E6EFFF>Harbin <BR>
        <BR></TD>
      <TD align=center width="14%" bgColor=#E6EFFF>Glucose <BR>
        Citric Acid
      <BR>Bitter Salt </TD></TR></TABLE></DIV>
<P align=center>22</P>
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<A name=page_27></A>
<P align=justify><B>Our Major Customers </B></P>
<P align=justify>The following table provides information on our major clients
in fiscal year 2009.</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="33%">&nbsp; </TD>
    <TD align=left width="33%">&nbsp; </TD>
    <TD align=center width="15%" ><B>Sales</B> </TD>
    <TD align=left width="15%" >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="33%">&nbsp; </TD>
    <TD align=left width="33%">&nbsp; </TD>
    <TD align=center width="15%" ><B>(in Thousands</B> </TD>
    <TD align=center width="15%" ><B>Percentage</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="33%">&nbsp; </TD>
    <TD align=left width="33%">&nbsp; </TD>
    <TD align=center width="15%" ><B>of</B> </TD>
    <TD align=center width="15%" ><B>of</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center ><B>Rank</B> </TD>
    <TD align=left width="33%"><B>Name</B> </TD>
    <TD align=left width="33%"><B>Description of Client</B> </TD>
    <TD align=center width="15%" ><B>US Dollars)</B> </TD>
    <TD align=center width="15%" ><B>Total Sales</B> </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff >1 </TD>
    <TD align=left width="33%" bgColor=#e6efff>Lai En Century Co. Ltd. </TD>
    <TD align=left width="33%" bgColor=#e6efff>Trading company in China </TD>
    <TD align=center width="15%" bgColor=#e6efff >2,249 </TD>
    <TD align=center width="15%" bgColor=#e6efff >14.7% </TD></TR>
  <TR vAlign=top>
    <TD align=center >2 </TD>
    <TD align=left width="33%">Zhejiang Wanfeng Group Pharmaceutical Co., Ltd.
    </TD>
    <TD align=left width="33%">Pharmaceutical Products Producer in China </TD>
    <TD align=center width="15%" >1,430 </TD>
    <TD align=center width="15%" >9.3% </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff >3 </TD>
    <TD align=left width="33%" bgColor=#e6efff>Disha Pharmaceutical Co., Ltd.
    </TD>
    <TD align=left width="33%" bgColor=#e6efff>Pharmaceutical Products
      Producer in China </TD>
    <TD align=center width="15%" bgColor=#e6efff >1,347 </TD>
    <TD align=center width="15%" bgColor=#e6efff >8.8% </TD></TR>
  <TR vAlign=top>
    <TD align=center >4 </TD>
    <TD align=left width="33%">Zhejiang Yinlong Trading Company </TD>
    <TD align=left width="33%">Trading company in China </TD>
    <TD align=center width="15%" >1,192 </TD>
    <TD align=center width="15%" >7.8% </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff >5 </TD>
    <TD align=left width="33%" bgColor=#e6efff>Hangzhou KangYuanTang Ganoderma
      Lucidum Co., Ltd. </TD>
    <TD align=left width="33%" bgColor=#e6efff>Health Products Producer in
      China </TD>
    <TD align=center width="15%" bgColor=#e6efff >1,190 </TD>
    <TD align=center width="15%" bgColor=#e6efff >7.8% </TD></TR>
  <TR vAlign=top>
    <TD align=center >6 </TD>
    <TD align=left width="33%">Si Chuan Ai Da Biotech Co. Ltd. </TD>
    <TD align=left width="33%" >Health Products Producer in China
    </TD>
    <TD align=center width="15%" >1,153 </TD>
    <TD align=center width="15%" >7.5% </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff >7 </TD>
    <TD align=left width="33%" bgColor=#e6efff>Xi&#146;an Yizhiliu Pharmaceutical
      Co., Ltd </TD>
    <TD align=left width="33%" bgColor=#e6efff>Pharmaceutical Products
      Producer in China </TD>
    <TD align=center width="15%" bgColor=#e6efff >1,146 </TD>
    <TD align=center width="15%" bgColor=#e6efff >7.5% </TD></TR>
  <TR vAlign=top>
    <TD align=center >8 </TD>
    <TD align=left width="33%">Beijing Ruichenboji Technology Development Co.,
      Ltd. </TD>
    <TD align=left width="33%" >Trading company in China </TD>
    <TD align=center width="15%" >794 </TD>
    <TD align=center width="15%" >5.2% </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff >9 </TD>
    <TD align=left width="33%" bgColor=#e6efff>Shenzhan Beilixin Biotech Co.,
      Ltd </TD>
    <TD align=left width="33%" bgColor=#e6efff>Health Products Producer in
      China </TD>
    <TD align=center width="15%" bgColor=#e6efff >240 </TD>
    <TD align=center width="15%" bgColor=#e6efff >1.6% </TD></TR>
  <TR vAlign=top>
    <TD align=center >10 </TD>
    <TD align=left width="33%">General Hospital of Shandong CAPF </TD>
    <TD align=left width="33%">Pharmaceutical Products Producer in China </TD>
    <TD align=center width="15%" >96 </TD>
    <TD align=center width="15%" >0.6% </TD></TR></TABLE></DIV>
<P align=justify><B>Our Competition</B></P>
<P align=justify>Most of our competitors for sales of Chinese Golden Grass
products are small-sized local producers and generally have a much lower
production capacity. Compared to these competitors, we believe we have a much
higher production capacity and more advanced growing and production technology.
Our major competitors in China include Heilongjiang Xinyisheng Pharmaceutical
Co., Ltd., Liangshan County Ganoderma and Cordyceps Sci-Tech Development Co.,
Ltd., Jiangsu Xuzhou Kangyuan Cordyceps Biology Co., Ltd., Xuzhou Baofu
Cordyceps Co., Ltd. and Jinzhou Cordyceps Militaris Co., Ltd.</P>
<P align=justify><B>Research and Development</B></P>
<P align=justify>Our research and development activities focus on developing new
products and new technologies. We currently have 21 employees dedicated to
research and development. Since 2003, we have also maintained a close
cooperation relationship with China Institute of Science, one of the most
prestigious academic institutions of scientific and technological research in
China, to improve commercially growing Cordyceps Militaris.</P>
<P align=justify>As described below, on April 10, 2006, we spent RMB 30 million
(approximately $4.4 million) in acquiring the technologies of Cordyceps
Militaris cultivation from Mr. Runjiao Wang. In 2009 and 2008, our research and
development expenses were insignificant.</P>
<P align=justify><B>Intellectual Property</B></P>
<P align=justify>We currently have the following patents pending approval:</P>
<P align=center>23 </P>
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<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%">&nbsp; </TD>
    <TD align=center width="15%"><B>Patent No. /</B> </TD>
    <TD align=center width="15%"><B>Expiration</B> </TD>
    <TD align=center width="15%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Patent Name</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%"><B>Patent type </B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="15%"
    ><STRONG>Application No.</STRONG> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%"><B>Date</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%"><B>Status</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Technology of Using Plastic Ware to
      Cultivate Cordyceps Militaris </TD>
    <TD align=center width="15%" bgColor=#e6efff>Invention </TD>
    <TD align=center width="15%" bgColor=#e6efff>200810064305.3 </TD>
    <TD align=center width="15%" bgColor=#e6efff>N/A </TD>
    <TD align=center width="15%" bgColor=#e6efff>Pending </TD></TR>
  <TR vAlign=top>
    <TD align=left>Planting Cordyceps militaris by the method of making liquid
      spawn. </TD>
    <TD align=center width="15%">Invention </TD>
    <TD align=center width="15%">200810064705.4 </TD>
    <TD align=center width="15%">N/A </TD>
    <TD align=center width="15%">Pending </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Formulation of Cordyceps Militaris and
      Green Bean Paste Beverage </TD>
    <TD align=center width="15%" bgColor=#e6efff>Invention </TD>
    <TD align=center width="15%" bgColor=#e6efff>200810064387.1 </TD>
    <TD align=center width="15%" bgColor=#e6efff>N/A </TD>
    <TD align=center width="15%" bgColor=#e6efff>Pending </TD></TR>
  <TR vAlign=top>
    <TD align=left>Formulation of Cordyceps Militaris and Corn Beverage </TD>
    <TD align=center width="15%">Invention </TD>
    <TD align=center width="15%">200810064389.0 </TD>
    <TD align=center width="15%">N/A </TD>
    <TD align=center width="15%">Pending </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Formulation of Cordyceps Militaris and
      Millet Beverage </TD>
    <TD align=center width="15%" bgColor=#e6efff>Invention </TD>
    <TD align=center width="15%" bgColor=#e6efff>200810064390.3 </TD>
    <TD align=center width="15%" bgColor=#e6efff>N/A </TD>
    <TD align=center width="15%" bgColor=#e6efff>Pending </TD></TR>
  <TR vAlign=top>
    <TD align=left>Formulation of Cordyceps Militaris and Red Bean Paste
      Beverage </TD>
    <TD align=center width="15%">Invention </TD>
    <TD align=center width="15%">200810064388.6 </TD>
    <TD align=center width="15%">N/A </TD>
    <TD align=center width="15%">Pending </TD></TR></TABLE></DIV>
<P align=justify>On April 10, 2006, Daqing Shuaiyi entered into an exclusive
licensing agreement with Mr. Runjiao Wang, pursuant to which Mr. Wang agreed to
grant Daqing Shuaiyi an exclusive right to use the cultivation technology of
Cordyceps Militaries that Mr. Wang developed. According to this licensing
agreement, Daqing Shuaiyi is allowed to use this technology exclusively in China
for ten years beginning on April 10, 2006. In consideration of the rights
granted to Daqing Shuaiyi under this licensing agreement, Daqing Shuaiyi agreed
to pay Mr. Wang a licensing fee in an amount of RMB 30 million (approximately
$4.4 million). In addition, Daqing Shuaiyi has the right of first refusal with
respect to the cultivation technology when the licensing agreement expires.</P>
<P align=justify>We have applied for the trademark of &#147;<font lang="ZH-CN" style="font-size: 10.0pt; font-family: SimSun">&#24069;&#20159;&#19996;&#26041;&#31070;</font>&#148; with the Trademark
Office of the State Administration for Industry and Commerce of China. Under
Chinese laws, we are allowed to use &#147;<font lang="ZH-CN" style="font-size: 10.0pt; font-family: SimSun">&#24069;&#20159;&#19996;&#26041;&#31070;</font>&#148; for the sales and marketing of our
products even if our trademark application is still pending. Once our
application is approved, the trademark will have a term of ten years and may be
continually renewed thereafter.</P>
<P align=justify>We rely on trade secret protection and confidentiality
agreements to protect our proprietary information and knowhow. Our management
and each of our research and development personnel have entered into a standard
confidentiality agreement, which includes a clause acknowledging that all
inventions, designs, trade secrets, works of authorship, developments and other
processes generated by them on our behalf are our property, and assigning to us
any ownership rights that they may claim in those works. Despite our
precautions, it may be possible for third parties to obtain and use, without our
consent, intellectual property that we own or are licensed to use. Unauthorized
use of our intellectual property by third parties, and the expenses incurred in
protecting our intellectual property rights, may adversely affect our business.
See Item 1A, &#147;Risk factors&#151;Risks Related to Our Business&#151;Failure to adequately
protect our intellectual property rights may undermine our competitive position,
and litigation to protect our intellectual property rights may be costly.&#148;</P>
<P align=justify><B>Regulation</B></P>
<P align=justify>Because our operating subsidiaries are located in the PRC, we
are regulated by the national and local laws of the PRC. Currently only the
general rules of commerce in China are applicable to us.</P>
<P align=justify>We are also subject to the PRC&#146;s foreign currency regulations.
The PRC government has controlled Renminbi reserves primarily through direct
regulation of the conversion of Renminbi into other foreign currencies. Although
foreign currencies, which are required for &#147;current account&#148; transactions, can
be bought freely at authorized PRC banks, the proper procedural requirements
prescribed by PRC law must be met. At the same time, PRC companies are also
required to sell their foreign exchange earnings to authorized PRC banks and the
purchase of foreign currencies for capital account transactions still requires
prior approval of the PRC government.</P>
<P align=justify><B>Our Employees</B></P>
<P align=justify>As of December 31, 2009, we employed a total of 302 full-time
employees. The following table sets forth the number of our employees by
function as of December 31, 2009.</P>
<P align=center>24</P>
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<TABLE
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cellSpacing=0 cellPadding=0 width="80%" border=0>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>FUNCTION</B>
</TD>
    <TD align=center width="10%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="45%"><B>NUMBER OF EMPLOYEES</B> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="10%"  >&nbsp;</TD>
    <TD width="45%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Capital Department </TD>
    <TD align=center width="10%"  bgColor=#e6efff
    >&nbsp;</TD>
    <TD align=center width="45%" bgColor=#e6efff>5 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Sales Department </TD>
    <TD align=center width="10%"  >&nbsp;</TD>
    <TD align=center width="45%">132 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Production Department </TD>
    <TD align=center width="10%"  bgColor=#e6efff
    >&nbsp;</TD>
    <TD align=center width="45%" bgColor=#e6efff>121 </TD></TR>
  <TR vAlign=top>
    <TD align=left>R&amp;D Department </TD>
    <TD align=center width="10%"  >&nbsp;</TD>
    <TD align=center width="45%">21 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Financial Department </TD>
    <TD align=center width="10%"  bgColor=#e6efff
    >&nbsp;</TD>
    <TD align=center width="45%" bgColor=#e6efff>13 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Administrative Office </TD>
    <TD align=center width="10%"  >&nbsp;</TD>
    <TD align=center width="45%">10 </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>TOTAL</B> </TD>
    <TD align=center width="10%"  bgColor=#e6efff
    >&nbsp;</TD>
    <TD align=center width="45%" bgColor=#e6efff><B>302</B>
</TD></TR></TABLE></DIV>
<P align=justify>Our employees are not represented by a labor organization or
covered by a collective bargaining agreement. We have not experienced any work
stoppages.</P>
<P align=justify>We are required under PRC law to make contributions to the
employee benefit plans at specified percentages of the after-tax profit. In
addition, we are required by the PRC law to cover employees in China with
various types of social insurance. We believe that we are in material compliance
with the relevant PRC laws.</P>
<P align=justify><B>Seasonality</B></P>
<P align=justify>The production and sale of our primary product, Chinese Golden
Grass, historically have not been subject to seasonal variations.</P>
<P align=justify><B>Insurance</B></P>
<P align=justify>We do not have any business liability, interruption or
litigation insurance coverage for our operations in China. Insurance companies
in China offer limited business insurance products. While business interruption
insurance is available to a limited extent in China, we have determined that the
risks of interruption, cost of such insurance and the difficulties associated
with acquiring such insurance on commercially reasonable terms make it
impractical for us to have such insurance. Therefore, we are subject to business
and product liability exposure. See &#147;Risk Factors &#150; We do not carry any business
interruption insurance, third-party liability insurance for our production
facilities or insurance that covers the risk of loss of our products in
shipment.&#148;</P>
<P align=justify><B>Litigation</B></P>
<P align=justify>From time to time, we may become involved in various lawsuits
and legal proceedings, which arise, in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will
have a material adverse affect on our business, financial condition or operating
results. </P>
<P align=center><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
<BR>AND RESULTS OF OPERATIONS </B></P>
<P align=justify>We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading Chinese Golden Grass grower and
producer in China. We specialize in developing, processing, marketing and
distributing a variety of agricultural and nutraceutical products consisting of
Chinese Golden Grass, organic and specialty food products. In addition, we plan
to produce and market other products developed from Cordyceps Militaris within
the coming months and years, including specialty beverage products. </P>
<P align=center>25</P>
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<P align=justify>Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. We sell our products through an extensive nationwide
sales and distribution network covering four provinces and eight cities in
China. Our Chinese Golden Grass products are grown and processed by our
indirect, wholly-owned subsidiary, Daqing Shuaiyi, and are mainly sold to
pharmaceutical companies for further processing into drugs and nutraceutical
products. We generated approximately 89.44% of our revenues from sales of
Chinese Golden Grass during the first quarter of 2010. We believe that we own
approximately 19% worldwide market share in the entire cultivated Chinese Golden
Grass industry. </P>
<P align=justify>We also sell organic and specialty food products through our
subsidiary, Harbin Shuaiyi, which was formed in 2001. After years of
development, we believe that we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China. </P>
<P align=justify>Our sales revenue grew by 18.0% in the fiscal year ended
December 31, 2009 to approximately $15.3 million, from approximately $13.0
million for 2008. Our gross margin for 2009 was 70.2% . </P>
<P align=justify><B>Industry Wide Factors that are Relevant to Our
Business</B></P>
<P align=justify>We expect several key demographic, healthcare, and lifestyle
trends to drive the growth of our business in the coming future:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P><B><I>Increased Focus on Healthy Living</I></B><B>: </B>Our management
  believes that as China becomes more affluent, its citizens are becoming more
  health conscious. They are leading more active lifestyles and becoming
  increasingly focused on healthy living, nutrition, and supplementation.
  According to <I>the Nutrition Business</I> <I>Journal</I>, a higher percentage
  of today&#146;s global population is involved to some degree in health and wellness
  than a few years ago. We believe that growth in the health supplements
  industry will continue to be driven by consumers who increasingly embrace
  health and wellness as a critical part of their lifestyles. </P>
  <LI>
  <P><B><I>Aging Population</I></B><B>: </B>The average age of the Chinese
  population is increasing. According to <I>World Population</I> <I>Prospects:
  The 2004 Revision </I>(2005), the percentage of elderly persons in China is
  projected to triple between 2006 and 2050, from 8 percent to 24 percent, a
  total of 322 million people. We believe that these consumers are significantly
  more likely to use health supplements than younger persons and have higher
  levels of disposable income to pursue healthy lifestyles. </P>
  <LI>
  <P><B><I>Rising Healthcare Costs and Use of Preventive Measures</I></B><B>:
  </B>Healthcare related costs have increased substantially in China. A research
  released by Chinese Academy of Social Sciences in 2007 indicated that the
  out-of-pocket health expenditures in China increased by 1,900% from 1990 to
  2004. To reduce medical costs and avoid the complexities of dealing with the
  healthcare system, and given increasing incidence of medical problems and
  concern over the use and effects of prescription drugs, many consumers take
  preventive measures, including alternative medicines and nutritional
  supplements. </P></LI></UL>
<P align=justify><B>Taxation</B></P>
<P align=justify><B><I>United States</I></B></P>
<P align=justify>Nutrastar International Inc. is subject to United States tax at
a tax rate of 34%. No provision for income taxes in the United States has been
made as Nutrastar International Inc. had no income taxable in the United
States.</P>
<P align=justify><B><I>British Virgin Islands</I></B></P>
<P align=justify>New Resources was incorporated in the BVI. Under the current
law of the BVI, New Resources is not subject to income or capital gains tax. In
addition, dividend payments are not subject to withholding tax in the BVI. </P>
<P align=justify><B><I>PRC</I></B></P>
<P align=justify>In 2007, the PRC government promulgated the New EIT Law, and
the relevant implementation rules, which became effective on January 1, 2008.
Under the New EIT Law and its implementation rules, all domestic and foreign
investment companies will be subject to a uniform enterprise income tax at the
rate of 25%. As a result, our PRC subsidiaries were subject to enterprise income
tax at the rates of 25% in both 2008 and 2009.</P>
<P align=center>26</P>
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<P align=justify>Under the New EIT Law, dividends from PRC subsidiaries to their
non-PRC shareholders will be subject to a withholding tax at a rate of 20%,
which is further reduced to 10% by the implementation rules, if the non-PRC
shareholder is considered to be a non-PRC tax resident enterprise without any
establishment or place within China or if the dividends payable has no
connection with the non-PRC shareholder&#146;s establishment or place within China,
unless any such non-PRC shareholder&#146;s jurisdiction of incorporation has a tax
treaty with China that provides for a different withholding arrangement.</P>
<P align=justify>In addition, pursuant to the New EIT Law, enterprises
established under the laws of non-PRC jurisdictions, but whose &#147;de facto
management body&#148; is located in the PRC, should be treated as resident
enterprises for PRC tax purposes. However, it is currently uncertain whether we
may be deemed a resident enterprise, or how to interpret whether any income or
gain is derived from sources within China. See Item 1A, &#147;Risk Factors - Under
the New EIT Law, we may be classified as a &#145;resident enterprise&#146; of China. Such
classification will likely result in unfavorable tax consequences to us and our
non-PRC stockholders.&#148; If we, as a Nevada company with substantially all of our
management located in China, were treated as a resident enterprise for PRC tax
purposes, we will be subject to PRC tax on our worldwide income at the 25%
uniform tax rate, which would have an impact on our effective tax rate.</P>
<P align=justify><B>Business Segment Information</B></P>
<P align=justify>Our business operations can be categorized into two segments
based on the type of products we manufacture and sell, specifically (i) Chinese
Golden Grass, and (ii) other agricultural products. </P>
<P align=justify>For the three months ended March 31, 2010, our sales revenue
from our Chinese Golden Grass was approximately $4.27 million, and our sales
revenue from our other agricultural products was approximately $0.5 million. In
2009, our sales revenue from our Chinese Golden Grass was approximately $12.07
million, and our sales revenue from our other agricultural products was
approximately $ 3.26 million.</P>
<P align=justify>We grow and sell our Chinese Golden Grass through our
subsidiary, Daqing Shuaiyi. Our subsidiary, Harbin Shuaiyi is mainly engaged in
the business of selling our other agricultural products. </P>
<P align=justify>Additional information regarding our products can be found in
the notes of our consolidated financial statements contained elsewhere in this
prospectus.</P>
<P align=justify><B>Results of Operations</B></P>
<P align=justify><U>Three Months Ended March 31, 2010 Compared to Three Months
Ended March 31, 2009</U></P>
<P align=justify>The following table sets forth key components of our results of
operations for the periods indicated, both in dollars and as a percentage of our
revenue.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD colspan="4" align=center><B>Three Months Ended </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD colspan="4" align=center><B>Three Months Ended </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31, 2010 </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>March
      31, 2009 </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="12%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><B>As a </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><B>As a </B></TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="12%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><B>percentage of </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><B>percentage of </B></TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>In Thousands </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>revenues </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>In Thousands </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>revenues </B></TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Revenues </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>4,768 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>100% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>4,643 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>100% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Cost of goods sold </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(1,056</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">22.1% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(1,756 </TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">37.8% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Gross Profit </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>3,712 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>77.9% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>2,887 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>62.2% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Selling expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%">(172</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">3.6%
    </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%">(112</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">2.4%
    </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>General and administrative expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(430</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>9% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(303</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>6.5% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Income from operations </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">3,110 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">65.2% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">2,472 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">53.2% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Other income and (expenses) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="12%"
    bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="12%"
    bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="12%"
    bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="12%"
    bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Interest income </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">33 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">0.69% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">12 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">0.3% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Other income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>0.15 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>0.003% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Exchange gain </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">0.43 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">0.01% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">1 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">0.02% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Income before income tax </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>3,144 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>65.9% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>2,486 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>53.5% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Provision for income tax </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(423</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">8.9% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(316</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">6.8% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>2,721 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>57.1% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>2,170 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>46.7% </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>27</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_32></A>
<P align=justify><I>Revenues</I>. Revenues increased approximately $0.13
million, or 2.7%, to approximately $4.77 million for the three months ended
March 31, 2010, from approximately $4.64 million for the same period in 2009.
This increase was mainly attributable to the increase of our sales of our core
product, Chinese Golden Grass, driven by the continued increase in market demand
for our products as well as the sales of our small package Chinese Golden Grass
products. In addition, we increased our selling prices for our packaged Chinese
Golden Grass products.</P>
<P align=justify>Our business operations can be categorized into two segments
based on the type of products we manufacture and sell, specifically (i) Chinese
Golden Grass, and (ii) other agricultural products. The following table shows
the different segments comprising our total sales revenue: </P>
<P align=center><B>Sales Revenue by Product Segments <BR></B>(all amounts, other
than percentages, in thousands of U.S. dollars) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>Three
      Months Ended March 31,</B> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="12%"><B>Percent</B> </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>2010</B> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>2009</B> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>Change</B> </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Components of Sales Revenue</B> </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Chinese Golden Grass </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD width="14%" align=right bgColor=#E6EFFF>&nbsp;4,265 </TD>
    <TD align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD width="14%" align=right bgColor=#E6EFFF>&nbsp;2,901 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>47.02% </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Other agricultural products </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="14%">503 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="14%">1,742
    </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(71.13%</TD>
    <TD align=left width="2%">) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#E6EFFF>Total revenues </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#E6EFFF>$</TD>
    <TD width="14%" align=right
    bgColor=#E6EFFF style="BORDER-BOTTOM: #000000 1px solid">&nbsp;4,768 </TD>
    <TD align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#E6EFFF>$</TD>
    <TD width="14%" align=right
    bgColor=#E6EFFF style="BORDER-BOTTOM: #000000 1px solid">&nbsp;4,643 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>2.69% </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify><I>Cost of Goods Sold. </I>Our cost of goods sold decreased by
$699,189, or 39.8%, to approximately $1.06 million for the three months ended
March 31, 2010 from approximately $1.76 million during the same period in 2009.
This decrease was mainly due to improved production process and economy of
scale. As a percentage of revenues, the cost of goods sold decreased to 22.1%
for the three months ended March 31, 2010 from 37.8% in 2009. Such decrease of
cost of goods sold as a percentage of sales was mainly attributable to the fact
that the increase of sales volume of small package products with higher unit
selling price. Because the gross margin of small package products is higher than
big package products, the percentage of cost of sales to total sales revenue
decreased in the first quarter of 2010. </P>
<P align=justify><I>Gross Profit. </I>Our gross profit increased by
approximately $0.82 million, or 28.4%, to approximately $3.71 million for the
three months ended March 31, 2010 from approximately $2.89 million during the
same period in 2009. Gross profit as a percentage of revenues, or gross margin,
was 77.9% for the three months ended March 31, 2010, an increase of 15.6% from
62.2% during the same period in 2009. Such percentage increase was mainly due to
continued product mix shift towards Chinese Golden Grass and the increased sales
of our higher margin small package Chinese Golden Grass products.</P>
<P align=justify><I>Selling Expenses</I> . Our selling expenses include sales
commissions, the cost of advertising and promotional materials, salaries and
fringe benefits of sales personnel, and other sales related costs. Selling
expenses increased approximately $0.06 million, or 54.5%, to approximately $0.17
million for the three months ended March 31, 2010 from approximately $0.11
million during the same period in 2009. As a percentage of revenues, selling
expenses increased to 3.6% for the three months ended March 31, 2010 from 2.4%
for the same period in 2009. The increase in the amount and percentage of
selling expenses was mainly attributable to the increase of salaries and
travelling expenses of our sales representatives and more marketing activities
to promote our products.</P>
<P align=justify><I>General and Administrative Expenses</I> . General and
administrative expenses increased approximately $0.13 million, or 42.9%, to
approximately $0.43 million for the three months ended March 31, 2010 from
approximately $0.30 million for the same period in 2009. As a percentage of
revenues, general and administrative expenses increased to 9% for the three
months ended March 31, 2010 from 6.5% for the same period in 2009. The increase
in the amount and percentage of general and administrative expenses was mainly
attributable to the increase of services expenses associated with legal and
audit fees. </P>
<P align=justify><I>Income Before Income Tax</I> . Income before income tax
increased approximately $0.65 million, or 26.1%, to approximately $3.14 million
during the three months ended March 31, 2010 from approximately $2.49 million
during the same period in 2009. As a percentage of revenues, income before
income tax increased to 65.9% during the three months ended March 31, 2010 from
53.5% during the same period in 2009. The increase of income before income tax
is mainly attributable to the increase in our gross profit as a result of the
increase in our sales..</P>
<P align=justify><I>Income Taxes</I>. Nutrastar International Inc. is subject to
United States tax at a rate of 34%. No provision for income taxes in the United
States has been made as Nutrastar International Inc. had no income taxable in
the United States. New Resources was incorporated in the BVI and under the
current laws of the BVI, is not subject to income taxes. Our PRC subsidiaries
are subject to national and local income taxes within China at the applicable
tax rate on the taxable income as reported in their PRC statutory financial
statements in accordance with relevant income tax laws. China passed a new
Enterprise Income Tax Law, or the new EIT Law, and its implementing rules, both
of which became effective on January 1, 2008. Under the New EIT Law, newly established
high-technology enterprises, such as our subsidiary Daqing Shuaiyi, are entitled
to a three-year 50% tax reduction. Daqing Shuaiyi has been subject to a 12.5%
income tax rate since 2008 and Harbin Shuaiyi was subject to a tax
rate of 25% in 2009 and is subject to a tax rate of 25% in 2010. </P>
<P align=center>28</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_33></A>
<P align=justify>Income tax increased approximately $0.1 million to
approximately $0.42 million for the three months ended March 31, 2010 from
approximately $0.32 million for the same period in 2009. We paid more tax in
2010 because of the increase in sales and taxable income.</P>
<P align=justify><I>Net Income </I>. Net income increased by approximately $0.55
million, or 25.3% to approximately $2.72 million for the three months ended
March 31, 2010 from approximately $2.17 million for the same period of 2009, as
a result of the factors described above. </P>
<P align=justify><U>Year Ended December 31, 2009 Compared to Year Ended December
31, 2008</U></P>
<P align=justify>The following table sets forth key components of our results of
operations for the periods indicated, in dollars and as a percentage of
revenue.</P>
<P align=center>(All amounts, other than percentage, in thousands of US
dollars)</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>Year
      Ended December 31, 2009 </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>Year
      Ended December 31, 2008 </B></TD>
    <TD align=right width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="14%"><B>As a </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="14%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="14%"><B>As a </B></TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="14%"><B>In </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="14%"><B>Percentage </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="14%"><B>In </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="14%"><B>Percentage </B></TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>Thousands </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>of Revenue </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>Thousands </B></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>of Revenue </B></TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Sales Revenue </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="14%" bgColor=#e6efff>&nbsp;15,332 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="14%" bgColor=#e6efff>&nbsp;100% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="14%" bgColor=#e6efff>&nbsp;12,990 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="14%" bgColor=#e6efff>&nbsp;100% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Cost of goods sold </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">(4,564</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">29.77% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">(4,605</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">35.5% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Gross Profit </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>10,768 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>70.23% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>8,385 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>64.5% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Selling expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">(508</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">3.31% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">(196</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">1.5% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>General and administrative expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>(1,356</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>8.84% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>(1,416</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>10.9% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Loss on disposal of fixed assets </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">(31</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">0.24% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Income from operations </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>8,904 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>58.07% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>6,741 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>51.9% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Other income and (expenses) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Interest
      income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>82 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>0.53% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>30 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>0.23% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Other income </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">6 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">0.04% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">12 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">0.08% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Interest
      expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="14%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="14%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="14%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="14%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Exchange loss </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">(15</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">0.10% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">(20</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">0.15% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Merger
      costs </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="14%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="14%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>(2,068</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>15.9% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Income before income tax </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">8,977 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">58.55% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">4,694 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="14%">36.1% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Provision for income tax </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>(1,235</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>8.06% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>(975</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="14%" bgColor=#e6efff>7.5% </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Net income </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="14%">&nbsp;7,742 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="14%">&nbsp;50.50% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="14%">&nbsp;3,719 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="14%">&nbsp;28.6% </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify><I>Sales Revenue</I>. Revenues increased approximately $2.3 million,
  or 18.0%, to approximately $15.3 million in fiscal year 2009 from approximately
  $13.0 million for 2008. This increase was mainly attributable to the increase
  of our sales of our core product, Chinese Golden Grass, driven by the continued
  increase in market demand for our products as well as the sales of our small
  package Chinese Golden Grass products, which consisted a larger portion of our
  total revenues in 2009 as compared to last year.</P>
<P align=justify>The following table shows the different segments comprising our
total sales revenue:</P>
<P align=center><B>Sales Revenue by Product Segments<BR></B>(all amounts, other
than percentages, in thousands of U.S. dollars)</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>Year
      Ended December 31, </B></TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" align=center width="2%"
    >&nbsp;</TD>
    <TD align=center width="1%" style="border-style: none; border-width: medium" >&nbsp;</TD>
    <TD align=center width="12%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium"><B>Percent </B></TD>
    <TD align=left width="2%" style="border-style: none; border-width: medium" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" align=center
      width="14%"><B>2009 </B></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>2008 </B></TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium" align=center
      width="12%"><B>Change </B></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="2%"
    >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left><B>Components of Sales Revenue </B></TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="14%" style="border-right-style: none; border-right-width: medium">&nbsp; </TD>
    <TD align=left width="2%" style="border-style: none; border-width: medium" >&nbsp;</TD>
    <TD align=left width="1%" style="border-left-style: none; border-left-width: medium" >&nbsp;</TD>
    <TD align=left width="14%">&nbsp; </TD>
    <TD align=left width="2%" style="border-right-style: none; border-right-width: medium" >&nbsp;</TD>
    <TD align=left width="1%" style="border-style: none; border-width: medium" >&nbsp;</TD>
    <TD align=left width="12%" style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium">&nbsp; </TD>
    <TD align=left width="2%" style="border-style: none; border-width: medium" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Chinese Golden Grass </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="14%" bgColor=#e6efff style="border-right-style: none; border-right-width: medium">&nbsp;12,074 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="border-left-style: none; border-left-width: medium">$</TD>
    <TD align=right width="14%" bgColor=#e6efff>&nbsp;8,893 </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="border-right-style: none; border-right-width: medium">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff style="border-left-style: none; border-left-width: medium; border-right-style: none; border-right-width: medium">35.77% </TD>
    <TD align=left width="2%"  bgColor=#e6efff style="border-style: none; border-width: medium">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>Other agricultural
      products </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" align=right width="14%">3,258
    </TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="14%">4,097
    </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" align=left width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium" align=right
      width="12%">(20.46%</TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="2%"
    >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Total revenues </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" align=right width="14%"
    bgColor=#e6efff>&nbsp;15,332 </TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="14%"
    bgColor=#e6efff>&nbsp;12,990 </TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium" align=right width="12%"
    bgColor=#e6efff>18.04% </TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="2%"
     bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P align=justify><I>Cost of Goods Sold</I>. Our cost of goods sold decreased by
$40,983, or 0.9%, to approximately $4.56 million in 2009 from approximately
$4.60 million in 2008. This decrease was mainly due to improved production
process and economy of scale. As a percentage of revenues, the cost of goods
sold decreased to 29.8% in 2009 from 35.5% in 2008. Such increase of gross margin was mainly attributable to the
fact that a larger portion of our total revenues was generated from our small
package Chinese Golden Grass products with higher unit selling price as compared
to 2008. Because the gross margin of small package products is higher than that
of larger package products, the percentage of cost of sales to total sales
revenue decreased during 2009.</P>
<P align=center>29</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_34></A>
<P align=justify><I>Gross Profit</I>. Our gross profit increased approximately
$2.4 million, or 28%, to approximately $10.8 million in 2009 from approximately
$8.4 million in 2008. Gross profit as a percentage of revenues was 70.2% in
2009, an increase of 570 basis points from 64.5% in 2008. Such percentage
increase was mainly due to continued product mix shift towards Chinese Golden
Grass and the increased sales of our higher margin small package Chinese Golden
Grass products.</P>
<P align=justify><I>Selling Expenses</I>. <I>S</I>elling expenses increased
approximately $0.31 million, or 159%, to $0.51 million in 2009 from $0.20
million in 2008. As a percentage of revenues, selling expenses increased to 3.3%
in 2009 from 1.5% in 2008. The increase in the amount and percentage of selling
expenses was mainly attributable to the increase of salaries and travelling
expenses of our sales representatives and more marketing activities to promote
our products.</P>
<P align=justify><I>General and Administrative Expenses</I>. General and
administrative expenses decreased by $60,000, or 4%, to approximately $1.36
million in 2009 from approximately $1.42 million in 2008. As a percentage of
revenues, general and administrative expenses decreased to 8.8% in 2009 from
10.9% in 2008. The decrease in the amount of general and administrative expenses
was mainly attributable to tight cost control during 2009.</P>
<P align=justify><I>Merger Cost.</I> We incurred expenses related to our merger
during 2008 of approximately $2.07 million. In accordance with the requirements
of and guidance in Staff Accounting Bulletin No. 107 and SFAS 123(R), we charged
$1,693,326 to merger costs based on the grant-date fair value of the 91,088
shares of Series A Preferred Stock transferred by our majority shareholder to
our consultants in the merger. On December 23, 2008, the Company also entered
into a subscription agreement with Tan Zhen Investment Limited, pursuant to
which the Company issued and sold to such investor 20,168 shares of our Series A
Preferred Stock for $375,000, or $18.59 per share, which was expended on payment
of merger costs.</P>
<P align=justify><I>Income Before Income Tax</I>. Income before income tax
increased approximately $4.3 million, or 91%, to approximately $9.0 million in
2009 from approximately $4.7 million in 2008. As a percentage of revenues,
income before income tax increased to 58.6% in 2009 from 36.1% in 2008. The
increase in income before income tax is mainly attributable to the increase in
our gross profit as a result of the increase in our sales.</P>
<P align=justify><I>Income Tax</I>. Income tax increased approximately $0.3
million to approximately $1.2 million in 2009 from approximately $1.0 million in
2008. We paid more tax in 2009 because of the increase in sales and taxable
income.</P>
<P align=justify><I>Net Income</I>. Net income increased approximately $4.0
million, or 108%, to $7.7 million in 2009 from approximately $3.7 million in
2008, as a result of the factors described above.</P>
<P align=justify><B><I>Liquidity and Capital Resources</I></B></P>
<P align=justify>As of March 31, 2010, we had cash and cash equivalents
(excluding restricted cash) of approximately $23.29 million. The following table
provides detailed information about our net cash flow for all financial
statement periods presented in this prospectus. </P>
<P align=center><B>Cash Flow</B> <BR>
  (All amounts in thousands of U.S. dollars)</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>Three
      Months Ended March 31,</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>Year
      Ended December 31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>2010</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>2009</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>2009</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="14%"><B>2008</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top bgcolor="#E6EFFF">
    <TD align=left>Net cash provided by operating activities </TD>
    <TD width="1%" align=left valign="bottom">$</TD>
    <TD width="14%" align=right valign="bottom">3,173 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">$</TD>
    <TD width="14%" align=right valign="bottom">2,774 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">$</TD>
    <TD width="14%" align=right valign="bottom">9,324 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">$</TD>
    <TD width="14%" align=right valign="bottom">6,467 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Net cash provided by (used in) investing activities </TD>
    <TD width="1%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">(5</TD>
    <TD width="2%" align=left valign="bottom" >) </TD>
    <TD width="1%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">- </TD>
    <TD width="2%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="1%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">(49</TD>
    <TD width="2%" align=left valign="bottom" >) </TD>
    <TD width="1%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">744 </TD>
    <TD width="2%" align=left valign="bottom" >&nbsp;</TD>
  </TR>
  <TR vAlign=top bgcolor="#E6EFFF">
    <TD align=left>Net cash provided by (used in) financing activities </TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">(0.4 </TD>
    <TD width="2%" align=left valign="bottom">)</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">11 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">1,621 </TD>
    <TD width="2%" align=left valign="bottom">&nbsp;</TD>
    <TD width="1%" align=left valign="bottom">&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">(438</TD>
    <TD width="2%" align=left valign="bottom">) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Net cash flow </TD>
    <TD width="1%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">3,174 </TD>
    <TD width="2%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="1%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">2,782 </TD>
    <TD width="2%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="1%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">10,917 </TD>
    <TD width="2%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="1%" align=left valign="bottom" >&nbsp;</TD>
    <TD width="14%" align=right valign="bottom">7,050 </TD>
    <TD width="2%" align=left valign="bottom" >&nbsp;</TD>
  </TR>
</TABLE>
<P align=center>30
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<P align=justify><U>Operating Activities</U></P>
<P align=justify>Net cash provided by operating activities was approximately
$3.17 million for the three-month period ended March 31, 2010, which is an
increase of approximately $0.39 million from approximately $2.78 million net
cash provided by operating activities for the same period of 2009. The increase
of the cash provided by operating activities was mainly attributable to
increased sales. </P>
<P align=justify>Net cash provided by operating activities was approximately
$9.3 million in fiscal year ended December 31, 2009, an increase of
approximately $2.9 million from approximately $6.5 million net cash provided by
operating activities in fiscal year ended December 31, 2008. The increase of the
cash provided by operating activities was mainly attributable to increased
sales.</P>
<P align=justify><U>Investing Activities</U></P>
<P align=justify>Our primary uses of cash for investing activities are payments
for the acquisition of property, plant and equipment.</P>
<P align=justify>Net cash used in investing activities for the three-month
period ended March 31, 2010 was approximately $0.005 million, while we did not
have net cash used in investing activities for the same period in 2009. The
increase of the cash used in investing activities was mainly due to increase the
investment in payments for the acquisition of property, plant and equipment.</P>
<P align=justify>Net cash used by investing activities was approximately $0.05
million in fiscal year 2009, a decrease of approximately $0.8 million from
approximately $0.74 million provided by investing activities in fiscal year
2008. The decrease in net cash provided by investing activities was mainly
attributable to the increase in our purchase of property, plan and equipment, or
PPE, in 2009 while at the same time there was no sale of PPE by us. </P>
<P align=justify><U>Financing Activities</U></P>
<P align=justify>Net cash used in financing activities for the three-month
period ended March 31, 2010 was approximately $0.0004 million, which is a
decrease of approximately $0.0114 million from approximately $0.011 million net
cash provided by financing activities for the same period of 2009. </P>
<P align=justify>Net cash used in financing activities for the fiscal year ended
December 31, 2008 was approximately $0.44 million as Net cash provided by
financing activities for the fiscal year ended December 31, 2009 was
approximately $1.6 million as compared to approximately $0.44 million used in
financing activities in fiscal year 2008. The increase of the net cash provided
by financing activities was mainly attributable to the $2.5 million capital
raising in December 2009. </P>
<P align=justify>On June 7, 2010 and June 28, 2010, we consummated the first and
the second closing of the private placement transaction contemplated by the 2010
Securities Purchase Agreement, respectively, in which we issued in aggregate
approximately 197,700 Units to certain investors at a purchase price of $28.56
per Unit for gross proceeds of approximately $5.65 million. </P>
<P align=justify>We believe that our cash on hand, cash flow from operations as
well as the proceeds we received from the recent private placement transaction
will meet our expected capital expenditure and working capital for the next 12
months. However, we may in the future require additional cash resources due to
changed business conditions, implementation of our strategy to expand our
production capacity or other investments or acquisitions we may decide to
pursue. If our own financial resources are insufficient to satisfy our capital
requirements, we may seek to sell additional equity or debt securities or obtain
additional credit facilities. The sale of additional equity securities could
result in dilution to our stockholders. The incurrence of indebtedness would
result in increased debt service obligations and could require us to agree to
operating and financial covenants that would restrict our operations. Financing
may not be available in amounts or on terms acceptable to us, if at all. Any
failure by us to raise additional funds on terms favorable to us, or at all,
could limit our ability to expand our business operations and could harm our
overall business prospects.</P>
<P align=justify><B><I>Effects of Inflation</I></B></P>
<P align=justify>Inflation and changing prices have not had a material effect on
our business and we do not expect that inflation or changing prices will
materially affect our business in the foreseeable future. However, our
management will closely monitor the price change and continually maintain
effective cost control in operations.</P>
<P align=center>31</P>
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<P align=justify><B><I>Off Balance Sheet Arrangements</I></B></P>
<P align=justify>We do not have any off balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity or capital expenditures or capital resources that is
material to an investor in our securities.</P>
<P align=justify><B>Critical Accounting Policies</B></P>
<P align=justify>The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America, or
U.S. GAAP, requires our management to make assumptions, estimates and judgments
that affect the amounts reported in the financial statements, including the
notes thereto, and related disclosures of commitments and contingencies, if any.
We consider our critical accounting policies to be those that require the most
significant judgments and estimates in the preparation of financial statements,
including the following:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P><B><I>Accounts Receivable</I></B>. The Company maintains allowances for
  doubtful accounts for estimated losses resulting from the failure of customers
  to make required payments. The Company reviews the accounts receivable on a
  periodic basis and makes allowances where there is doubt as to the
  collectability of individual balances. In evaluating the collectability of
  individual receivable balances, the Company considers many factors, including
  the age of the balance, the customer&#146;s payment history, its current
  credit-worthiness and current economic trends. </P>
  <LI>
  <P><B><I>Inventories</I></B>. Inventories are stated at the lower of cost,
  determined on a weighted average basis, or market. Costs of inventories
  include purchase and related costs incurred in bringing the products to their
  present location and condition. Market value is determined by reference to
  selling prices after the balance sheet date or to management&#146;s estimates based
  on prevailing market conditions. The management will write down the
  inventories to market value if it is below cost. The management also regularly
  evaluates the composition of its inventories to identify slow-moving and
  obsolete inventories to determine if valuation allowance is required. </P>
  <LI>
  <P><B><I>Impairment</I></B>. The Company reviews and evaluates its long-lived
  assets for impairment when events or changes in circumstances indicate that
  the related carrying amounts may not be recoverable. An impairment is
  considered to exist if the total estimated future cash flows on an
  undiscounted basis are less than the carrying amount of the assets, including
  goodwill, if any. An impairment loss is measured and recorded based on
  discounted estimated future cash flows. In estimating future cash flows,
  assets are grouped at the lowest level for which there is identifiable cash
  flows that are largely independent of future cash flows from other asset
  groups. </P>
  <LI>
  <P><B><I>Property, plant and equipment. </I></B>The carrying value of
  property, plant and equipment is assessed annually and when factors indicating
  impairment is present, the carrying value of the property, plant and equipment
  is reduced by the amount of the impairment. The Company determines the
  existence of such impairment by measuring the expected future cash flows
  (undiscounted and without interest charges) and comparing such amount to the
  net asset carrying value. An impairment loss, if exists, is measured as the
  amount by which the carrying amount of the asset exceeds the fair value of the
  asset. </P>
  <LI>
  <P><B><I>Intangible assets. </I></B>The Company&#146;s intangible assets include a
  ten-year exclusive right to use a secret process and computer software. The
  Company accounts for its intangible assets pursuant to FASB ASC Subtopic
  350-30, &#147;General Intangibles Other Than Goodwill&#148;. Under ASC 350-30-35,
  intangibles with definite lives continue to be amortized on a straight-line
  basis over the lesser of their estimated useful lives or contractual terms.
  Intangibles with indefinite lives are evaluated at least annually for
  impairment by comparing the asset&#146;s estimated fair value with its carrying
  value, based on cash flow methodology. </P>
  <LI>
  <P><B><I>Revenue Recognition</I></B>. Revenue is recognized when the following
  four revenue criteria are met: persuasive evidence of an arrangement exists,
  delivery has occurred, the selling price is fixed or determinable, and
  collectability is reasonably assured. Sales revenue is recognized net of value
  added and sales related taxes, sales discounts and returns at the time when
  the merchandise is delivered to the customer. Based on historical experience,
  management estimates that sales returns are immaterial and has not made
  allowance for estimated sales returns. </P></LI></UL>
<P align=center>32</P>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <P><B><I>Foreign currency translation</I></B>. The Company uses the United
  States dollars (&#147;US Dollar&#148; or &#147;US$&#148; or &#147;$&#148;) for financial reporting purposes.
  The PRC subsidiaries within the Company maintains the books and records in
  their functional currency, Chinese Renminbi (&#147;RMB&#148;), being the lawful currency
  in the PRC. Assets and liabilities of the PRC subsidiaries are translated from
  RMB into US Dollars using the applicable exchange rates prevailing at the
  balance sheet date. Items on the statement of operations are translated at
  average exchange rates during the reporting period. Equity accounts are
  translated at historical rates. Adjustments resulting from the translation of
  the Company&#146;s financial statements are recorded as accumulated other
  comprehensive income. The exchange rates used to translate amounts in RMB into
  U.S. Dollars for the purposes of preparing the consolidated financial
  statements are based on the rates as published on the website of People&#146;s Bank
  of China. The value of RMB against U.S. dollars and other currencies may
  fluctuate and is affected by, among other things, changes in China&#146;s political
  and economic conditions. Any significant revaluation of RMB may materially
  affect the Company&#146;s results and financial position in terms of U.S. dollar
  reporting. </P>
  <LI>
  <P><B><I>Stock-based Compensation. </I></B>The Company accounts for
  share-based compensation awards to employees in accordance with FASB ASC Topic
  718, &#147;Compensation &#150; Stock Compensation&#148;, which requires that share-based
  payment transactions with employees be measured based on the grant-date fair
  value of the equity instrument issued and recognized as compensation expense
  over the requisite service period. The Company accounts for share-based
  compensation awards to non-employees in accordance with FASB ASC Topic 718 and
  FASB ASC Subtopic 505-50, &#147;Equity-Based Payments to Non-employees&#148;. Under FASB
  ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to
  non-employees has been determined as the fair value of the consideration
  received or the fair value of equity instrument issued, whichever is more
  reliably measured and is recognized as expenses as the goods or services are
  received. </P></LI></UL>
<P align=justify><B><I>New Accounting Pronouncements</I></B></P>
<P align=justify>Effective January 1, 2010, the Company adopted the provisions
in ASU 2009-17, &#147;Consolidation (ASC Topic 810): Improvements to Financial
Reporting by Enterprises Involved with Variable Interest Entities&#148;, which
changes how a company determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. The adoption of the provisions in ASU 2009-17 did not have an
impact on the Company&#146;s consolidated financial statements. </P>
<P align=justify>Effective January 1, 2010, the Company adopted ASU 2010-01,
&#147;Equity (ASC Topic 505): Accounting for Distributions to Shareholders with
Components of Stock and Cash&#148;, which clarifies that the stock portion of a
distribution to shareholders that allow them to elect to receive cash or stock
with a potential limitation on the total amount of cash that all shareholders
can elect to receive in the aggregate is considered a share issuance that is
reflected prospectively in earnings per share and is not considered a stock
dividend for purposes of ASC Topic 505 and ASC Topic 260. The adoption of the
provisions in ASU 2010-01 did not have an impact on the Company&#146;s consolidated
financial statements.</P>
<P align=justify>Effective January 1, 2010, the Company adopted the provisions
in ASU 2010-06, &#147;Fair Value Measurements and Disclosures (ASC Topic 820):
Improving Disclosures about Fair Value Measurements, which requires new
disclosures related to transfers in and out of levels 1 and 2 and activity in
level 3 fair value measurements, as well as amends existing disclosure
requirements on level of disaggregation and inputs and valuation techniques. The
adoption of the provisions in ASU 2010-06 did not have an impact on the
Company&#146;s consolidated financial statements.</P>
<P align=justify>Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company&#146;s
Consolidated Financial Statements upon adoption.</P>
<P align=center><B>HISTORY AND CORPORATE STRUCTURE</B></P>
<P align=justify><B>General</B></P>
<P align=justify>We were originally incorporated in the State of Nevada on
December 22, 2002. On October 15, 2003, we acquired all the outstanding common
stock of YzApp Solutions Inc., a company under common control. We sold our
ownership in YzApp Solutions Inc. on December 3, 2008. Following incorporation,
we engaged in the business of developing software which allowed us to act as an
application service provider acting as a conduit between retailers and
financial institutions. Because this business was not successful, we were
focused on the identification of suitable businesses with which to enter into a
business opportunity or business combination until December 23, 2008, when we
completed our reverse acquisition of New Resources. As a result of our reverse
acquisition of New Resources, we are no longer a shell company and active
business operations were revived.</P>
<P align=center>33</P>
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<P align=justify>On May 19, 2009, we filed amended and restated articles of
incorporation with the Nevada Secretary of State to amend our articles of
incorporation to, among other things, (1) change our name from &#147;YzApp
International Inc.&#148; to &#147;Shuaiyi International New Resources Development Inc.,&#148;
(2) increase the total number of shares of common stock that we have the
authority to issue from 50,000,000 to 190,000,000 shares and (3) effect a
1-for-114.59 reverse split of our outstanding common stock. </P>
<P align=justify>On January 11, 2010, we changed our name to Nutrastar
International Inc. to more accurately reflect our marketing and branding
strategy and products. Our common stock is currently quoted on the OTCQB under
the symbol NUIN.</P>
<P align=justify><B>Background and History of New Resources and Heilongjiang
Shuaiyi</B></P>
<P align=justify>New Resources is a holding company, which was incorporated in
the BVI under the BVI Business Company Act on March 13, 2008. New Resources was
wholly-owned by New Zealand WAYNE's Investment Holdings Co., Ltd., or the
Shareholder, a BVI company, before we acquired New Resources on December 23,
2008. </P>
<P align=justify>Heilongjiang Shuaiyi was established on July 11, 2006 under the
laws of the PRC. Heilongjiang Shuaiyi has two wholly-owned subsidiaries, Daqing
Shuaiyi and Harbin Shuaiyi. On July 28, 2008, pursuant to a restructuring plan
intended to ensure compliance with regulatory requirements of the PRC, the nine
original shareholders of Heilongjiang Shuaiyi, or the Founders, including our
chairperson and chief executive officer, Lianyun Han, entered into an equity
transfer agreement, or the Equity Transfer Agreement with New Resources,
pursuant to which the Founders transferred all of their equity interests in
Heilongjiang Shuaiyi to New Resources for a purchase price of RMB 60 million
(approximately $8.8 million). As a result, New Resources became the 100% owner
of Heilongjiang Shuaiyi and, indirectly, Daqing Shuaiyi and Harbin Shuaiyi. On
November 24, 2008, Heilongjiang Shuaiyi obtained the Certificate of Approval for
Establishment of Enterprises of Foreign Investment issued by Heilongjiang
Provincial Government and a new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008.</P>
<P align=justify>On September 12, 2008, the Shareholder entered into separate
Earn-In Agreements with the Founders of Heilongjiang Shuaiyi, which entitle the
Founders to acquire a majority interest in the Shareholder upon the satisfaction
of the conditions set forth in the Earn-In Agreements. Pursuant to the Earn-In
Agreements, each Founder has an option to purchase shares of the Shareholder&#146;s
ordinary shares at a purchase price of $0.01 per share (the par value of the
Shareholder&#146;s ordinary shares), <I>provided </I>that the aggregate price with
respect to the shares eligible to be purchased relating to the satisfaction of
condition (4) below is the sum of $0.01 per share, multiplied the number of such
shares, plus $1,000, upon the satisfaction of each of the following conditions:
(1) six months have expired since the date of the Share Exchange Agreement,
<I>provided </I>that on or before that date, the Founder and Heilongjiang
Shuaiyi have entered into a binding employment agreement and the Founder is
employed by Heilongjiang Shuaiyi pursuant to that agreement on such date; (2)
the SEC has declared a registration statement filed by the Company under the
Securities Act effective, or investors who purchased common stock from the
Company pursuant to a securities purchase agreement being able to sell their
common stock under Rule 144; (3) Heilongjiang Shuaiyi and its subsidiaries have
achieved not less than $1,560,000 in after-tax net income, as determined under
United States generally accepted accounting principals, or US GAAP, for the six
months ended June 2009; and (4) Heilongjiang Shuaiyi has achieved not less than
$3,900,000 in pre-tax profits, as determined under US GAAP for the fiscal year
ending 2009. Notwithstanding the foregoing, for purposes of determining whether
or not the financial thresholds described above have been achieved, the purchase
of the shares by the Founder or any other person designated by the Founder shall
not be deemed to be an expense, charge, or other deduction from revenues of the
Company even though US GAAP may require contrary treatment. On February 12,
2009, each Founder and the Shareholder entered into an amendment to the Earn-In
Agreements, or the First Amendment, to amend the definition of the first
condition. As a result, pursuant to the First Amendment, in order to satisfy the
first condition for each Founder, only Ms. Lianyun Han needs to enter into a
binding employment agreement with Heilongjiang Shuaiyi within six months after
the share exchange transaction dated December 23, 2008.</P>
<P align=justify>Each Founder may purchase 25% of the total number of shares
that he or she is eligible to purchase under his or her Earn-In Agreement, as
amended, upon the satisfaction of each condition described above. The aggregate
number of shares eligible for purchase by all of the Founders under the
Earn-In Agreements is 100,000. Therefore, upon purchase of the above shares by
the Founders, the total number of outstanding shares of the Shareholder will be
100,001 and the Founders will be the controlling shareholders of the
Shareholder.</P>
<P align=center>34</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_39></A>
<P align=justify>Pursuant to the Earn-in Agreement, as amended, the Shareholder
further agrees, among others, that throughout the exercise period of the Earn-in
Agreement, without the prior written approval of the Founders:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>it will not increase the number of authorized shares of the Shareholder&#146;s
  common stock, or any increased authorized shares will be deemed as part of the
  option shares that the Founders are entitled to acquire under the Earn-In
  Agreements; </P>
  <LI>
  <P>(ii) keeps available the services of current officers and employees of the
  Shareholder and Heilongjiang Shuaiyi; and </P>
  <LI>
  <P>(iii) New Resources and Heilongjiang Shuaiyi will not declare or pay any
  dividend or make any other distribution, nor do they repurchase, redeem or
  otherwise reacquire any equity of shares of capital stock or other securities.
  </P></LI></UL>
<P align=justify>The sole purpose of the Earn-In Agreements is to enable
Founders to reacquire ultimate controlling legal ownership of Heilongjiang
Shuaiyi in compliance with regulatory requirements of China.</P>
<P align=justify>On December 8, 2008, Heilongjiang Shuaiyi entered into separate
loan agreement and promissory notes, or the Notes, with the Founders, pursuant
to which Heilongjiang Shuaiyi borrowed an aggregate of RMB 60 million
(approximately $8.8 million) from the Founders, which amount is exactly equal to
the proceeds that they are entitled to receive for the transfer of their
ownership of Heilongjiang Shuaiyi under the Equity Transfer Agreement. The Notes
bear no interest and are payable in successive equal yearly payments beginning
on the tenth anniversary of the Notes, December 8, 2018, and within the first
month of each year thereafter. The final payment is due on January 1, 2028. On
February 12, 2009, Heilongjiang Shuaiyi and the Founders amended the Notes,
pursuant to which the Founders subordinate any right to receive any payment with
respect to this loan to the payment or provision for payment in full of all
claims of all present and future creditors of Heilongjiang Shuaiyi. During and
after this restructuring plan, there has been no change to the composition of
the board of directors of Heilongjiang Shuaiyi. Heilongjiang Shuaiyi&#146;s board of
directors, chaired by Ms. Han, has continued to comprise representatives of the
Founders. Therefore, Heilongjiang Shuaiyi is still under the same operating and
management control of the Founders. Through this subordinated loan, the Founders
will not receive any cash amount, nor will there be any cash flow out of the
combined entity during the whole period from the date of the Equity Transfer
Agreement though the expiry of the Earn-in Agreements, at which time it is
expected that the Founders will have reacquired the ultimate legal controlling
ownership of Heilongjiang Shuaiyi.</P>
<P align=justify>The loan to Heilongjiang Shuaiyi by the Founders is an integral
and inseparable part of the restructuring plan and has the sole purpose of
achieving the restructuring in compliance with PRC regulations. Furthermore, by
providing the subordinated loan to Heilongjiang Shuaiyi and obtaining the
Shareholder&#146;s agreement on not declaring any dividend throughout the exercise
period of the Earn-in Agreements without the prior written approval of the
Founders, the Founders continue to bear the residual risks and rewards relating
to Heilongjiang Shuaiyi. As a result, this restructuring plan will be accounted
for as a recapitalization of Heilongjiang Shuaiyi with no adjustment to the
historical basis of the assets and liabilities of Heilongjiang Shuaiyi. New
Resources&#146; financial statements for the subsequent period in which the
restructuring occurred will report Heilongjiang Shuaiyi&#146;s results of operation
will be consolidated from the beginning of the first period presented in New
Resources&#146; financial statements as if the restructuring had occurred as of the
beginning of that period.</P>
<P align=justify>The following charts demonstrate the ownership information of
the relevant entities before and after the consummation of the restructuring
plan:</P>
<P align=justify><I>Before the Equity Transfer Agreement:</I></P>
<P align=center>35</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_40></A>
<P align=center><IMG src="orgchart2.jpg" width="271" height="194" border=0> </P>
<P align=justify><I>After the consummation of the restructuring plan </I></P>
<P align=center><IMG src="orgchart3.jpg" width="381" height="269" border=0> </P>
<P align=justify><B><I>Acquisition of New Resources</I></B></P>
<P align=justify>On December 23, 2008, pursuant to a share exchange agreement,
or Share Exchange Agreement, we completed a reverse acquisition transaction of
New Resources whereby we issued to the Shareholder 689,390 shares of our Series
A Preferred Stock, constituting approximately 94% of our issued and outstanding
capital stock on a fully-diluted basis, in exchange for all of the issued and
outstanding capital stock of New Resources. New Resources thereby became our
wholly owned subsidiary and the Shareholder became our controlling
stockholder.</P>
<P align=justify>Immediately following closing of the reverse acquisition of New
Resources, the Shareholder transferred 176,529 of the 689,390 shares issued to
it under the share exchange to 14 individuals and entities, pursuant to a
securities allocation agreement that the Shareholder entered into with these
people on December 23, 2008. Among them, ten individuals and entities received
91,088 shares from the Shareholder for providing consulting services to New
Resources and its subsidiaries in assisting them to consummate the share
exchange transaction contemplated by the Share Exchange Agreement prior to
December 23, 2008. The remaining 85,441 shares were gifted from the Shareholder
to four individuals and entities who did not provide services to New Resources
or its subsidiaries.</P>
<P align=justify>Upon the closing of the reverse acquisition, Eugene M. Weiss,
our then sole director and officer, submitted a resignation letter pursuant to
which he resigned from all offices that he held effective immediately and from
his position as our director that became effective on January 12, 2009. Lianyun
Han was appointed to our board of directors effective as of the closing of the
reverse acquisition on December 23, 2008. In addition, our board of directors on
December 23, 2008 increased the size of our board of directors to five (5) and
appointed Nana Jiang, Chunming Zhang, John Jing Zhang and Xi Zhu to fill the
vacancies created by such increase, which appointments became effective upon the
effectiveness of the resignation of Mr. Weiss on January 12, 2009. In addition,
our executive officers were replaced by the New Resources executive officers
upon the closing of the reverse acquisition as indicated in more detail
below.</P>
<P align=center>36 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_41></A>
<P align=justify>For accounting purposes, the share exchange transaction was
treated as a reverse acquisition with New Resources as the acquiror and the
Company as the acquired party. Unless the context suggests otherwise, when we
refer in this report to business and financial information for periods prior to
the consummation of the reverse acquisition, we are referring to the business
and financial information of our subsidiary Heilongjiang Shuaiyi because
Heilongjiang Shuaiyi currently conducts all our business operations. </P>
<P align=justify>The following chart reflects our organizational structure as of
the date of this prospectus:</P>
<P align=center><IMG
src="orgchart4.jpg" width="578" height="314"
border=0></P>
<P align=center><B>MANAGEMENT </B></P>
<P align=justify><B><I>Directors and Executive Officers </I></B></P>
<P align=justify>The following sets forth information about our directors and
executive officers as of the date of this prospectus: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Name</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%"
    ><B>Age</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="65%"
    ><B>Position</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Lianyun Han </TD>
    <TD align=center width="10%" bgColor=#e6efff >52 </TD>
    <TD align=left width="65%" bgColor=#e6efff >Chairperson, CEO
      and President </TD></TR>
  <TR vAlign=top>
    <TD align=left>Robert Tick </TD>
    <TD align=center width="10%" >41 </TD>
    <TD align=left width="65%" >Chief Financial Officer and
      Treasurer </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Hongbing Hua </TD>
    <TD align=center width="10%" bgColor=#e6efff >42 </TD>
    <TD align=left width="65%" bgColor=#e6efff >Chief Marketing
      Officer </TD></TR>
  <TR vAlign=top>
    <TD align=left>Nana Jiang </TD>
    <TD align=center width="10%" >31 </TD>
    <TD align=left width="65%" >Director </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Chunming Zhang </TD>
    <TD align=center width="10%" bgColor=#e6efff >39 </TD>
    <TD align=left width="65%" bgColor=#e6efff >Director
  </TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>John Jing Zhang </TD>
    <TD align=center width="10%" >37 </TD>
    <TD align=left width="65%" >Director </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Xi Zhu </TD>
    <TD align=center width="10%" bgColor=#e6efff >26 </TD>
    <TD align=left width="65%" bgColor=#e6efff >Director
  </TD></TR></TABLE>
<P align=center>37 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_42></A><BR>
<P align=justify><B>Lianyun Han.</B> Ms. Han has extensive experience in
operational management and business development. Ms. Han is the founder of our
company and has been our Chief Executive Officer, President and the chairperson
of our board of directors since the completion of the reverse acquisition of New
Resources on December 23, 2008. Ms. Han has been the chairman and chief
executive officer of our subsidiary Heilongjiang Shuaiyi since its formation in
2006. From 1998 to 2006, Ms. Han was the president of Heilongjiang Shuaiyi
Technology Development Co., Ltd., a company that is engaged in the business of
developing, manufacturing, marketing and selling high-tech agricultural
products. Ms. Han holds a Bachelor&#146;s degree in Chinese Language and Literature
from Harbin Normal University. </P>
<P align=justify><B>Robert Tick.</B> Mr. Tick has over 16 years experience in
accounting and finance. Mr. Tick was the Chief Financial Officer of ANDA
Networks, Inc., a telecom equipment provider, from July 2007 to August 2010,
Vice President of Finance from October 2005 to July 2007 and Corporate
Controller from April 2003 to November 2004. From November 2004 to October 2005,
Mr. Tick served as the Controller for T-RAM Semiconductors Inc., a fabless
semiconductor company. Mr. Tick is a Certified Public Accountant and holds a
B.S. in Accounting and Finance from San Francisco State University and an M.B.A.
from Washington State University.</P>
<P align=justify><B>Hongbing Hua.</B> Mr. Hua has over 15 years experience in
sales and marketing management. Prior to joining the Company, from 2003 to 2004,
Mr. Hua was the Project General Planning Principle of Wanglaoji Herbal Tea, JDB
Group, one of the largest herbal tea manufacturers in China. From 1998 to 2001,
he was the VP Sales &amp; Marketing of Beijing Huiyuan Beverage and Food Group
Co., Ltd., a leading company engaged in the manufacture and sales of juice and
other beverage products in China. Mr. Hua holds a Bachelor&#146;s degree in
international finance from Tianjin University. </P>
<P align=justify><B>Chunming Zhang.</B> Mr. Zhang has decades of working
experience in production management. Mr. Zhang became our director on January
12, 2009. Mr. Zhang joined Heilongjiang Shuaiyi in 2006 as the production
manager. From 1998 to 2006, Mr. Zhang was the vice president of Heilongjiang
Shuangyasha Boiler Factory. Mr. Zhang holds a Bachelor&#146;s degree in economics
from Northeast Agricultural University. </P>
<P align=justify><B>Nana Jiang.</B> Ms. Jiang became our director on January 12,
2009. Ms. Jiang joined Heilongjiang Shuaiyi in 2006 as the managing accountant.
From 1998 to 2006, Ms. Jiang was the managing accountant of Heilongjiang Shuaiyi
Technology Development Co., Ltd., a company that is engaged in the business of
developing, manufacturing, marketing and selling high-tech agricultural
products. Ms. Jiang holds a Bachelor&#146;s degree in English from Harbin Normal
University. </P>
<P align=justify><B>John Jing Zhang.</B> Mr. Zhang became our director on
January 12, 2009. Mr. Zhang currently serves as the chief executive officer of
JC Global Capital Partners, LLC, a financial consulting firm located in
Shanghai, China that specializes in cross-border capital market transactions.
Prior to funding JC Global Capital Partners, LLC in September 2006, from
September 2003 to August 2006, Mr. Zhang was the Managing Director of FirsTrust
Group, a US merchant bank headquartered in Atlanta, GA, where he was responsible
for its entire China operation. Prior to joining FirsTrust Group, Mr. Zhang held
senior positions in two U.S. corporations, ASI Computer Technology, Inc. and CTX
International, Inc., a company that engages in the business of manufacturing and
selling LCD Flat Panel Displays. Mr. Zhang holds an MBA from Emory University.
</P>
<P align=justify><B>Xi Zhu.</B> Mr. Zhu became our director on January 12, 2009.
Mr. Zhu has years of experience in auditing and financial consulting. Currently
he is a Senior Financial Advisor for JINDU Investment, a financial consulting
firm that specializes in PIPE deals. Prior to JINDU Investment, Mr. Zhu was an
auditor of in the International Business Department at BDO Qingdao Branch. BDO
is a world wide network of public accounting firms, serving international
clients. Mr. Zhu was an Auditor Assistant of Foreign Investment Service in Shan
Dong De Sheng Accounting Firm from 2005 to 2006. Mr. Zhu holds a Bachelor&#146;s
degree in Administrative Management from Qingdao University. There are no
agreements or understandings for any of our executive officers or director to
resign at the request of another person and no officer or director is acting on
behalf of nor will any of them act at the direction of any other person. </P>
<P align=justify>Directors are elected until their successors are duly elected
and qualified.</P>
<P align=center>38</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_43></A>
<P align=justify><B><I>Director Qualifications</I></B></P>
<P align=justify>Below is a summary of the qualifications, attributes, skills
and experience of each of our directors that led us to the conclusion that such
director should serve as a director of our Company, in light of our business and
structure.</P>
<P align=justify><U>Ms. Lianyun Han</U></P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Leadership and Management experience &#150; founder of Heilongjiang Shuaiyi and
  has been Heilongjiang Shuaiyi&#146;s Chairwoman and Chief Executive Officer since
  2006 and the Company&#146;s Chairwoman and Chief Officer since 2008 </P>
  <LI>
  <P>Industry background &#150; president of Heilongjiang Shuaiyi Technology
  Development Co., Ltd., a company that is engaged in the business of
  developing, manufacturing, marketing and selling high-tech agricultural
  products, from 1998 to 2006 </P></LI></UL>
<P align=justify><U>Mr. Chunming Zhang</U></P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Leadership and Management experience &#150;became our director on January 12,
  2009 and joined Heilongjiang Shuaiyi in 2006 as the production manager </P>
  <LI>
  <P>Education background &#150; holds a Bachelor&#146;s degree in economics from
  Northeast Agricultural University </P></LI></UL>
<P align=justify><U>Ms. Nana Jiang</U></P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Leadership and Management experience &#150; became our director on January 12,
  2009 and joined Heilongjiang Shuaiyi in 2006 as the managing accountant </P>
  <LI>
  <P>Education background &#150; holds a Bachelor&#146;s degree in English from Harbin
  Normal University </P></LI></UL>
<P align=justify><U>Mr. John Jing Zhang</U></P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Leadership and Management experience &#150; became our director on January 12,
  2009 and from September 2003 to August 2006, the Managing Director of
  FirsTrust Group, a US merchant bank headquartered in Atlanta, GA </P>
  <LI>
  <P>Education background &#150; MBA from Emory University </P></LI></UL>
<P align=justify><U>Mr. Xi Zhu</U></P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>Leadership and Management experience &#150; became our director on January 12,
  2009 and is a Senior Financial Advisor for JINDU Investment, a financial
  consulting firm that specializes in PIPE deals </P>
  <LI>
  <P>Education background - Bachelor&#146;s degree in Administrative Management from
  Qingdao University </P></LI></UL>
<P align=justify><B><I>Board Composition and Committees</I></B></P>
<P align=justify>The board of directors is currently composed of five members,
Ms. Lianyun Han, Ms. Nana Jiang, Mr. Chunming Zhang, Mr. John Jing Zhang and Mr.
Xi Zhu. All Board action requires the approval of a majority of the directors in
attendance at a meeting at which a quorum is present. We may increase the size
of our board of directors in the future but have not determined the approximate
time to take such action. </P>
<P align=justify>We currently do not have standing audit, nominating or
compensation committees. Our board of directors handles the functions that would
otherwise be handled by each of the committees. We intend, however, to establish
an audit committee, a nominating committee and a compensation committee of the
board of directors as soon as practicable. We envision that the audit committee
will be primarily responsible for reviewing the services performed by our
independent auditors, evaluating our accounting policies and our system of
internal controls. The nominating committee would be primarily responsible for
nominating directors and setting policies and procedures for the nomination of
directors. The nominating committee would also be responsible for overseeing the
creation and implementation of our corporate governance policies and procedures.
The compensation committee will be primarily responsible for reviewing and
approving our compensation and benefit policies, including compensation of
executive officers. </P>
<P align=center>39</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_44></A>
<P align=justify>Our board of directors has not made a determination as to
whether any member of our board is an audit committee financial expert. Upon the
establishment of an audit committee, the board will determine whether any of the
directors qualify as an audit committee financial expert. </P>
<P align=justify><B><I>Family Relationships</I></B></P>
<P align=justify>There is no family relationship among any of our officers or
directors.</P>
<P align=justify><B><I>Code of Ethics</I></B></P>
<P align=justify>Our board of directors has adopted a code of ethics that
applies to Chief Executive Officer, President, Chief Financial Officer,
Principal Executive Officer, Principal Financial Officer, Principal Accounting
Officer, Controller and persons performing similar functions. The code of ethics
addresses, among other things, ethical conduct, conflicts of interest,
compliance with laws, regulations and policies, including disclosure
requirements under the federal securities laws, confidentiality, trading on
inside information, and reporting of violations of the code. A copy of the code
of ethics has been filed as Exhibit 14.1 to our Annual Report on Form 10-KSB
filed on November 20, 2007. We are in the process of building up the Company
website. Once our website is available, we will make the code of ethics
available on the website. Thereafter, any amendments or waivers to the code of
ethics will be posted on our website within four business days of such amendment
or waiver. Until such time, however, any amendments or waivers to our code of
ethics will be filed with the SEC in a Current Report on Form 8-K.</P>
<P align=justify><B><I>Involvement in Certain Legal Proceedings</I></B></P>
<P align=justify>None of our directors or executive officers has, during the
past ten years:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>been convicted in a criminal proceeding or been subject to a pending
  criminal proceeding (excluding traffic violations and other minor offences);
  </P>
  <LI>
  <P>had any bankruptcy petition filed by or against the business or property of
  the person, or of any partnership, corporation or business association of
  which he was a general partner or executive officer, either at the time of the
  bankruptcy filing or within two years prior to that time; </P>
  <LI>
  <P>been subject to any order, judgment, or decree, not subsequently reversed,
  suspended or vacated, of any court of competent jurisdiction or federal or
  state authority, permanently or temporarily enjoining, barring, suspending or
  otherwise limiting, his involvement in any type of business, securities,
  futures, commodities, investment, banking, savings and loan, or insurance
  activities, or to be associated with persons engaged in any such activity;
</P>
  <LI>
  <P>been found by a court of competent jurisdiction in a civil action or by the
  Securities and Exchange Commission or the Commodity Futures Trading Commission
  to have violated a federal or state securities or commodities law, and the
  judgment has not been reversed, suspended, or vacated; </P>
  <LI>
  <P>been the subject of, or a party to, any federal or state judicial or
  administrative order, judgment, decree, or finding, not subsequently reversed,
  suspended or vacated (not including any settlement of a civil proceeding among
  private litigants), relating to an alleged violation of any federal or state
  securities or commodities law or regulation, any law or regulation respecting
  financial institutions or insurance companies including, but not limited to, a
  temporary or permanent injunction, order of disgorgement or restitution, civil
  money penalty or temporary or permanent cease-and-desist order, or removal or
  prohibition order, or any law or regulation prohibiting mail or wire fraud or
  fraud in connection with any business entity; or </P>
  <LI>
  <P>been the subject of, or a party to, any sanction or order, not subsequently
  reversed, suspended or vacated, of any self-regulatory organization (as
  defined in Section 3(a)(26) of the Exchange Act, any registered entity (as
  defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent
  exchange, association, entity or organization that has disciplinary authority
  over its members or persons associated with a member. </P></LI></UL>
<P align=center>40</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_45></A>
<P align=center><B>EXECUTIVE COMPENSATION</B></P>
<P align=justify><B><I>Summary Compensation Table &#150; 2009 and 2008</I></B>
</P>
<P align=justify>The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No executive
officer received total annual salary and bonus compensation in excess of
$100,000 during the fiscal years 2009 and 2008.</P>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="15%">&nbsp; </TD>
    <TD align=center width="15%"><B>Salary </B></TD>
    <TD align=center width="15%"><B>Bonus </B></TD>
    <TD align=center width="15%"><B>Total </B></TD>
    <TD align=left width="15%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Name and Principal Position </B></TD>
    <TD align=center width="15%"><B>Year </B></TD>
    <TD align=center width="15%"><B>($) </B></TD>
    <TD align=center width="15%"><B>($) </B></TD>
    <TD align=center width="15%"><B>($) </B></TD>
    <TD align=left width="15%">&nbsp; </TD></TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left>Lianyun Han, <BR>
        CEO and President <SUP>(1)
      </SUP></TD>
      <TD align=center width="15%">2009 <BR>
        2008 </TD>
      <TD align=right width="15%">12,000 <BR>
        12,000 </TD>
      <TD align=right width="15%">3,000 <BR>
        3,000 </TD>
      <TD align=right width="15%">15,000 <BR>
        15,000 </TD>
      <TD align=right width="15%"><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left>Eugene M. Weiss, <BR>former President and Director
      <SUP>(2</SUP><SUP>)</SUP></TD>
    <TD align=center width="15%">2009 <BR>2008 </TD>
    <TD align=right width="15%"><BR></TD>
    <TD align=right width="15%">- <BR>- </TD>
    <TD align=right width="15%">- <BR>- </TD>
    <TD align=right width="15%">- <BR>- </TD></TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left>Joseph Meuse, <BR>
        former President and Director <SUP>(3) </SUP></TD>
      <TD align=center width="15%">2009 <BR>
        2008 </TD>
      <TD align=right width="15%"><BR></TD>
      <TD align=right width="15%">- <BR>
        - </TD>
      <TD align=right width="15%">- <BR>
        - </TD>
      <TD align=right width="15%">- <BR>
        - </TD></TR>
  <TR vAlign=top>
    <TD align=left>Brian Jaggard, <BR>former CEO, President, CFO and Director
      <SUP>(4) </SUP></TD>
    <TD align=center width="15%">2009 <BR>2008 </TD>
    <TD align=right width="15%"><BR></TD>
    <TD align=right width="15%">- <BR>- </TD>
    <TD align=right width="15%">- <BR>- </TD>
    <TD align=right width="15%">- <BR>- </TD></TR></TABLE></DIV><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>On December 23, 2008, we acquired New Resources in a
      reverse acquisition transaction that was structured as a share exchange
      and in connection with that transaction, Ms. Lianyun Han became our Chief
      Executive Officer, President and director. Prior to the effective date of
      the reverse acquisition, Ms. Han served at New Resources&#146; wholly owned
      subsidiary Heilongjiang Shuaiyi as its chairperson and chief executive
      officer. The annual, long term and other compensation shown in this table
      include the amount Ms. Han received from Heilongjiang Shuaiyi prior to the
      consummation of the reverse acquisition.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD>
      <P align=justify>Eugene M. Weiss resigned from all offices he held with us
      upon the closing of the reverse acquisition of New Resources on December
      23, 2008. Mr. Weiss was our director until January 12, 2009.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD>
      <P align=justify>Joseph Meuse resigned from his position as our President
      on August 8, 2008 and appointed Eugene Weiss as our sole officer and
      director.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(4) </TD>
    <TD>
      <P align=justify>Brian Jaggard resigned from his position as our President
      on August 1, 2008 and appointed Joseph Meuse as our sole officer and
      director.</P></TD></TR></TABLE>
<P align=justify><B>Employment Agreements</B></P>
<P align=justify>Our indirect subsidiary Heilongjiang Shuaiyi entered into an
employment agreement with our CEO and President, Ms. Lianyun Han. Ms. Han&#146;s
employment agreement has a five-year term beginning on December 7, 2008 and
ending on December 7, 2013. Ms. Han&#146;s employment agreement provides for a
monthly salary of approximately $1,000 and an annual bonus of approximately
$3,000. Ms. Han is subject to customary non-competition and confidentiality
covenants under the agreement. The employment agreement does not entitle Ms. Han
to severance payments or payments following a change in control.</P>
<P align=justify>On August 18, 2009, Heilongjiang Shuaiyi and Mr. Hongbin Hua
entered into an employment agreement. The term of the employment agreement is
for five years commencing on August 18, 2009. The employment agreement provides,
among other things, that Mr. Hua&#146;s annual base salary will be RMB 1,000,000
(approximately $147,000), or Annual Salary. During the term of the employment
agreement, if either party terminates the employment for any reason, the other
party will be entitled to the compensation equal to 30% of the Annual Salary
from the terminating party. The Employment Agreement also contains covenants
prohibiting Mr. Hua from disclosing any confidential information of the
Company.</P>
<P align=center>41</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_46></A>
<P align=justify>On July 16, 2010, we and Mr. Tick entered into an employment
agreement. The term of the employment agreement is for three years commencing on
July 16, 2010. The employment agreement provides, among other things, that Mr.
Tick&#146;s monthly base salary will be $12,650.</P>
<P align=justify>During the term of the employment agreement, if either party
terminates the employment for any reason, a minimum of sixty (60) days notice
must be given in writing to the other party. The employment agreement also
contains covenants prohibiting Mr. Tick from competing with the Company during
his employment with the Company or disclosing any confidential information of
the Company both during his employment and after the termination of
employment.</P>
<P align=justify>On July 16, 2010, we and Mr. Tick entered into a stock option
agreement under the Company&#146;s 2009 Equity Incentive Plan, or the Plan. Pursuant
to the terms of the stock option agreement, Mr. Tick was granted options to
purchase an aggregate 150,000 shares of common stock of the Company, among
which, an option to purchase 75,000 shares will be vested on December 31, 2011
with an exercise price of $5.00 per share, an option to purchase 100,000 shares
will be vested on December 31, 2012 with an exercise price of $7.00 per share.
Each of the options expires three years after its respective vesting date.</P>
<P align=justify>According to the stock option agreement, in the event Mr.
Tick&#146;s employment with us is terminated for any reason except for death or
disability, he may exercise the options only to the extent that the options
would have been exercisable on the termination date and no later than three
months after the termination date. If Mr. Tick&#146;s employment is terminated
because of his death or disability, the options may be exercised only to the
extent that such options would have been exercisable by Mr. Tick on the
termination date and must be exercised by Mr. Tick no later than twelve months
after the termination date. If the employment is terminated for Cause as defined
in the stock option agreement, the options will terminate immediately. In no
event will the options be exercised later than December 31, 2015.</P>
<P align=justify>On the same date, we also entered into a restricted shares
grant agreement under the Plan with Mr. Tick. Pursuant to the terms of the
restricted shares grant agreement, we granted to Mr. Tick 150,000 restricted
shares of the Company&#146;s common stock subject to the vesting schedule therein. If
Mr. Tick&#146;s service with the Company ceases for any reason other than Mr. Tick&#146;s
(a) death, (b) Disability, (c) Retirement, or (d) termination by the Company
without cause, any nonvested restricted shares will be automatically forfeited
to the Company. </P>
<P align=justify>Both the options and the restricted shares are also subject to
certain acceleration provision provided in the stock option agreement and the
restricted shares grant agreement, respectively. </P>
<P align=justify>We have not provided retirement benefits (other than a state
pension scheme in which all of our employees in China participate) or severance
or change of control benefits to our named executive officer.</P>
<P align=justify><B>Outstanding Equity Awards at Fiscal Year End</B></P>
<P align=justify>None of our executive officers received any equity awards,
including, options, restricted stock or other equity incentives during the
fiscal year ended December 31, 2009. </P>
<P align=justify><B>Compensation of Directors</B></P>
<P align=justify>The table below sets forth the compensation of our directors
for the fiscal year ended December 31, 2009: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 9pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%"><B>Non-Equity </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%"><B>Incentive Plan </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%"><B>All Other </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=left width="12%"><B>Fees Earned or </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%"><B>Stock Awards </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%"><B>Option Awards </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%"><B>Compensation </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%"><B>Compensation </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Name </B></TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      width="12%"><B>Paid in Cash ($) </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="12%"><B>($)
      </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="12%"><B>($)
      </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="12%"><B>($)
      </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="12%"><B>($)
      </B></TD>
    <TD align=left width="1%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
      width="12%"><B>Total ($) </B></TD></TR>
  <TR vAlign=top bgcolor="#E6EFFF">
    <TD align=left>Lianyun Han<SUP>(1) </SUP></TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">15,000 </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">15,000 </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>Nana Jiang </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">3,470 </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">3,470 </TD></TR>
  <TR vAlign=top bgcolor="#E6EFFF">
    <TD align=left>Chunming Zhang </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left>John Jing Zhang </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"  >&nbsp;</TD>
    <TD align=right width="12%">- </TD></TR>
  <TR vAlign=top bgcolor="#E6EFFF">
    <TD align=left>Xi Zhu </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=right width="1%"
    >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
  </TR></TABLE>
<P align=justify><SUP>(1)</SUP> Ms. Han does not receive additional compensation
for her service as our director. The compensation disclosed herein is her
compensation for serving as our CEO and President as disclosed in the Summary
Compensation Table above.</P>
<P align=center>42</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_47></A>
<P align=center><B>TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS; CORPORATE GOVERNANCE </B></P>
<P align=justify><B><I>Transactions with Related Persons</I></B></P>
<P align=justify>The following includes a summary of transactions since the
beginning of the 2009 fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved exceeded or
exceeds the lesser of $120,000 or one percent of the average of our total assets
at year-end for the last two completed fiscal years, and in which any related
person had or will have a direct or indirect material interest (other than
compensation described in the section of &#147;Executive Compensation&#148; above). We
believe the terms obtained or consideration that we paid or received, as
applicable, in connection with the transactions described below were comparable
to terms available or the amounts that would be paid or received, as applicable,
in arm&#146;s-length transactions.</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>On January 10, 2008, Daqing Shuaiyi entered into a land lease agreement
  with Heilongjiang Shuaiyi Technology Development Co., Ltd., pursuant to which
  Daqing Shuaiyi leased a land use right for 20 years over a 410,000 square
  meter tract on which it has nine factory buildings to grow and cultivate
  Chinese Golden Grass. </P>
  <LI>
  <P>On October 15, 2007, Heilongjiang Shuaiyi entered into a loan agreement
  with its wholly-owned subsidiary, Daqing Shuaiyi, pursuant to which
  Heilongjiang Shuaiyi agreed to loan RMB 35 million (approximately $5.1
  million) to Daqing Shuiayi. The loan is non-interest bearing and unsecured.
  Daqing Shuaiyi is obligated under the loan agreement to pay off RMB 7 million
  (approximately $1 million) by October 30 each year starting from 2008. The
  loan matures on October 15, 2012. </P>
  <LI>
  <P>On September 12, 2008, the Shareholder entered into separate Earn-In
  Agreements with the Funders of Heilongjiang Shuaiyi, including our chairperson
  and chief executive officer, Lianyun Han. Pursuant to the Earn-In Agreements,
  each Founder has an option to purchase shares of the Shareholder&#146;s ordinary
  shares at a purchase price of $0.01 per share (the par value of the
  Shareholder&#146;s ordinary shares), <I>provided </I>that the aggregate price with
  respect to the shares eligible to be purchased relating to the satisfaction of
  condition (4) below is the sum of $0.01 per share, multiplied the number of
  such shares, plus $1,000, upon the satisfaction of each of the following
  conditions: (1) six months have expired since the date of the Share Exchange
  Agreement, <I>provided </I>that on or before that date, the Founder and
  Heilongjiang Shuaiyi have entered into a binding employment agreement and the
  Founder is employed by Heilongjiang Shuaiyi pursuant to that agreement on such
  date; (2) the SEC has declared a registration statement filed by the Company
  under the Securities Act effective, or investors who purchased common stock
  from the Company pursuant to a securities purchase agreement being able to
  sell their common stock under Rule 144; (3) Heilongjiang Shuaiyi and its
  subsidiaries have achieved not less than $1,560,000 in after-tax net income,
  as determined under US GAAP for the six months ended June 2009; and (4)
  Heilongjiang Shuaiyi has achieved not less than $3,900,000 in pre-tax profits,
  as determined under US GAAP for the fiscal year ending 2009. Notwithstanding
  the foregoing, for purposes of determining whether or not the financial
  thresholds described above have been achieved, the purchase of the shares by
  the Founder or any other person designated by the Founder shall not be deemed
  to be an expense, charge, or other deduction from revenues of the Company even
  though GAAP may require contrary treatment. Each Founder may purchase 25% of
  the total number of shares that he or she is eligible to purchase under his or
  her Earn-In Agreement upon the satisfaction of each condition described above
  and the aggregate number of shares eligible for purchase by all of the
  Founders under the Earn-In Agreements is 100,000. On February 12, 2009, each
  Founder and the Shareholder entered into the First Amendment to amend the
  definition of the first condition. As a result, pursuant to the First
  Amendment, in order to satisfy the first condition for each Founder, only Ms.
  Lianyun Han needs to enter into a binding employment agreement with
  Heilongjiang Shuaiyi within six months after the date of the Share Exchange
  Agreement. </P>
  <LI>
  <P>On December 8, 2008, Heilongjiang Shuaiyi entered into separate loan
  agreement and promissory notes, or the Notes, with the Founders, pursuant to
  which Heilongjiang Shuaiyi borrowed an aggregate of RMB 60 million (approximately $8.8 million)
from the Founders, including from our chairperson and chief executive officer.
The Notes bear no interest and are payable in successive equal yearly payments
beginning on the tenth anniversary of the Notes, December 8, 2018, and within
the first month of each year thereafter. The final payment is due on January 1,
2028. On February 12, 2009, Heilongjiang Shuaiyi and the Founders amended the
Notes, pursuant to which the Shuaiyi Founders subordinate any right to receive
any payment with respect to this loan to the payment or provision for payment in
full of all claims of all present and future creditors of Heilongjiang
Shuaiyi.</P></LI></UL>
<P align=center>43</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_48></A>
<P align=justify>Except as set forth in our discussion above, none of our
directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.</P>
<P align=justify><B>Promoters and Certain Control Persons</B></P>
<P align=justify>We did not have any promoters at any time during the past five
fiscal years.</P>
<P align=justify><B>Parents of the Company</B></P>
<P align=justify>New Zealand WAYNE&#146;s Investment Holdings Co., Ltd. currently
owns 54.87% of Nutrastar International Inc.</P>
<P align=justify><B>Director Independence</B></P>
<P align=justify>We currently do not have any independent directors, as the term
  &#147;independent&#148; is defined by the rules of the Nasdaq Stock Market.
</P>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="center"><a name="CHANGE IN ACCOUNTANTS">CHANGE IN ACCOUNTANTS </a> </p>
</b>
<p align="justify">(a) Dismissal of Previous Independent Registered Public
Accounting Firm.</font><font FACE="Times New Roman"> </p>
</font>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; font-size:10pt" bordercolor="#111111" width="100%">
  <tr>
    <td width="5%" valign="top" align="center">i.<font FACE="Times New Roman"> </td>
    <td width="95%" align="justify">
    <p ALIGN="justify">Effective July 12,
    2010, our Board of Directors approved the dismissal of AGCA, Inc., or AGCA,
    as the Company's independent registered public accounting firm.<font FACE="Times New Roman"> </td>
  </tr>
  <tr>
    <td width="5%" valign="top" align="center">&nbsp;</td>
    <td width="95%" align="justify">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" valign="top" align="center">ii.</td>
    <td width="95%" align="justify">AGCA&#146;s reports on the
    Company&#146;s financial statements as of and for the fiscal years ended December
    31, 2009 and 2008 did not contain an adverse opinion or disclaimer of
    opinion and were not qualified or modified as to uncertainty, audit scope,
    or accounting principles.</td>
  </tr>
  <tr>
    <td width="5%" valign="top" align="center">&nbsp;</td>
    <td width="95%" align="justify">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" valign="top" align="center">iii.<font FACE="Times New Roman"> </td>
    <td width="95%" align="justify">During the Company&#146;s
    two most recent fiscal years (ended December 31, 2009 and 2008) and during
    the subsequent interim period through July 12, 2010, there were (1) no
    disagreements with AGCA on any matter of accounting principles or practices,
    financial statement disclosure, or auditing scope or procedures, which
    disagreements, if not resolved to the satisfaction of AGCA, would have
    caused AGCA to make reference to the subject matter of the disagreements in
    connection with its reports, and (2) no events of the type listed in
    paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.<font FACE="Times New Roman"> </td>
  </tr>
</table>
</font>
</font>
</font>
</font>
<p ALIGN="justify"><font FACE="Times New Roman">&nbsp;</font><font FACE="Times New Roman" SIZE="2">(b)
Engagement of New Independent Registered Public Accounting Firm</font><font FACE="Times New Roman">
</p>
</font>
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; font-size:10pt" bordercolor="#111111" width="100%">
  <tr>
    <td width="5%" valign="top" align="center">i.<font FACE="Times New Roman"> </td>
    <td width="95%">Concurrent with the
    decision to dismiss AGCA as the Company&#146;s independent auditor, the Board
    approved the engagement of Crowe Horwath (HK) CPA Limited, or Crowe Horwath,
    as the Company&#146;s new independent registered public accounting firm. </td>
  </tr>
  <tr>
    <td width="5%" valign="top" align="center">&nbsp;</td>
    <td width="95%">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" valign="top" align="center">ii.<font FACE="Times New Roman"> </td>
    <td width="95%">
    <p align="justify">During the Company&#146;s
    two most recent fiscal years (ended December 31, 2009 and 2008) and through
    the subsequent interim period to July 12, 2010, the Company did not consult
    Crowe Horwath with respect to (a) the application of accounting principles
    to a specified transaction, either completed or proposed; or the type of
    audit opinion that might be rendered on the Company&#146;s consolidated financial
    statements, and neither a written report was provided to the Company or oral
    advice was provided that Crowe Horwath concluded was an important factor
    considered by the Company in reaching a decision as to the accounting,
    auditing or financial reporting issue; or (b) any matter that was the
    subject of either a disagreement as defined in Item 304(a)(1)(iv) of
    Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of
    Regulation S-K. </td>
  </tr>
</table>
</font>
</font><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">We provided AGCA with a copy of this disclosure on July 15,
2010, providing AGCA with the opportunity to furnish us with a letter addressed
to the SEC containing any new information, clarification of the Company's
expression of its views, or the respect in which AGCA does not agree with the
statements contained herein. A letter from AGCA dated July 16, 2010 was attached
as Exhibit 16.1 to the Current Report on Form 8-K filed on July 16, 2010. </font>
</p>
<P align=center><B>SELLING STOCKHOLDERS</B></P>
<P align=justify>This prospectus relates to the resale by the selling
stockholders named below from time to time of up to a total of 2,965,561 shares
of our common stock that were issued or are issuable to selling stockholders
pursuant to transactions exempt from registration under the Securities Act. All
of the common stock offered by this prospectus is being offered by the selling
stockholders for their own accounts.</P>
<P align=justify><B><I>Private Placement Transaction</I></B></P>
<P align=justify>On June 28, 2010, we completed a private placement transaction
disclosed above and issued to certain investors approximately 197,700 Units at a
purchase price of $28.56 per Unit for gross proceeds of $5,646,270. Each Unit
consists of (i) one share of Series A Preferred Stock, with an initial
one-to-ten conversion ratio into shares of the Company&#146;s common stock, and (ii)
Series C Warrants to purchase five shares of common stock at an exercise price
of $3.40 per share with a term of three years. As a result, we issued in
aggregate 197,706 shares of our Series A Preferred Stock, initially convertible
into 1,977,060 shares of our common stock, and Series C Warrants to purchase an
aggregate of 988,501 shares of our common stock. The Units were issued in
reliance upon exemptions provided by Section 4(2) of the Securities Act for the
offer and sale of securities not involving a public offering and Regulation D or
Regulation S promulgated thereunder. </P>
<P align=justify>Gilford Securities Incorporated served as the placement agent
in connection with this private placement and as partial compensation for its
services, we issued Series C Warrants to it to purchase an aggregate of 39,539
shares of our common stock, representing 2% of the aggregate number of shares of
common stock issuable upon conversion of the Series A Preferred Stock purchased
by the investors in this transaction. The foregoing issuance was made in
reliance upon exemptions provided by Section 4(2) of the Securities Act for the
offer and sale of securities not involving a public offering and Regulation D
promulgated thereunder.</P>
<P align=justify><B><I>Selling Stockholders</I></B></P>
<P align=justify>The table below, which was prepared based on information filed
publicly or supplied to us by the selling stockholders, sets forth information
regarding the beneficial ownership of outstanding shares of our common stock
owned by the selling stockholders and the shares that they may sell or otherwise
dispose of from time to time under this prospectus. Each of the selling
stockholders, or their respective transferees, donees or their successors, may
resell, from time to time, all, some or none of the shares of our common stock
covered by this prospectus, as provided in this prospectus under the section entitled &#147;Plan of Distribution&#148; and in any
applicable prospectus supplement. However, we do not know when or in what amount
the selling stockholders may offer their shares for sale under this prospectus,
if any.</P>
<P align=center>44</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_49></A>
<P align=justify>The number of shares disclosed in the table below as
&#147;beneficially owned&#148; are those beneficially owned as determined under the rules
of the SEC. Such information is not necessarily indicative of ownership for any
other purpose. Under the rules of the SEC, a person is deemed to be a
&#147;beneficial owner&#148; of a security if that person has or shares &#147;voting power,&#148;
which includes the power to vote or to direct the voting of such security, or
&#147;investment power,&#148; which includes the power to dispose of or to direct the
disposition of such security. In computing the number of shares beneficially
owned by a selling stockholder and the percentage of ownership of that selling
stockholder, shares of common stock underlying shares of convertible preferred
stock, options or warrants held by that selling stockholder that are convertible
or exercisable, as the case may be, within 60 days of August 9, 2010 are
included. Those shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other selling stockholder. Each
selling stockholder&#146;s percentage of ownership in the following table is based
upon 14,332,731 shares of common stock outstanding as of August 9, 2010.</P>
<P align=justify>Unless otherwise indicated and subject to community property
laws where applicable, the selling stockholders named in the following table
have, to our knowledge, sole voting and investment power with respect to the
shares beneficially owned by them. In addition, none of the selling stockholders
has any family relationships with our officers, directors or controlling
stockholders. Furthermore, unless otherwise indicated below, no selling
stockholder is a registered broker-dealer or an affiliate of a registered
broker-dealer.</P>
<P align=justify>Information concerning any of the selling stockholders may
change from time to time, and any changed information will be presented in a
prospectus supplement as necessary. Please carefully read the footnotes located
below the table in conjunction with the information presented in the table.</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD align=left ><BR><BR><BR><BR><B>Name and Address</B> </TD>
    <TD align=center width="17%"><B>Shares of</B> <BR><B>Common Stock</B>
      <BR><B>Beneficially</B> <BR><B>Owned Before</B> <BR><B>the Offering
      </B><B><SUP>(1)</SUP></B> </TD>
    <TD align=center width="17%"><BR><B>Shares of</B> <BR><B>Common Stock</B>
      <BR><B>Included in</B> <BR><B>Prospectus</B> </TD>
    <TD align=center width="17%"><BR><B>Beneficial</B> <BR><B>Ownership</B>
      <BR><B>After the</B> <BR><B>Offering**</B> </TD>
    <TD align=center width="17%"><B>Percentage of</B> <BR><B>Common Stock</B>
      <BR><B>Beneficially</B> <BR><B>Owned After</B> <BR><B>Offering
      </B><B><SUP>(2)</SUP></B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >ARC China Investment Funds<SUP>(3)</SUP>
      <BR>Banque Priv&#233;e Edmond de Rothschild Europe <BR>20, Boulevard Emmanuel
      Servais <BR>L-2535 Luxembourg </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">1,425,077<SUP>(3)</SUP> <BR><BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">1,425,077<SUP>(3)</SUP> <BR><BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 <BR><BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* <BR><BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >Wilshire Investments, LLC<SUP>(4)</SUP>
      <BR>410 17th Street #1705 <BR>Denver, CO 80224 </TD>
    <TD align=center width="17%">38,865<SUP>(4)</SUP> <BR><BR></TD>
    <TD align=center width="17%">38,865<SUP>(4)</SUP> <BR><BR></TD>
    <TD align=center width="17%">0 <BR><BR></TD>
    <TD align=center width="17%">* <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >Martin Key <BR>1003 Cherokee Avenue
      <BR>Arken, SC 29801 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">9,028<SUP>(5)</SUP> <BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">9,028<SUP>(5)</SUP> <BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 <BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >Hao Xu <BR>2299 Jinshajiang Road <BR>Building
      27, Room 1401 <BR>Shanghai 200333 <BR>People's Republic of China </TD>
    <TD align=center width="17%">51,800<SUP>(6)</SUP> <BR><BR><BR><BR></TD>
    <TD align=center width="17%">51,800<SUP>(6)</SUP> <BR><BR><BR><BR></TD>
    <TD align=center width="17%">0 <BR><BR><BR><BR></TD>
    <TD align=center width="17%">* <BR><BR><BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >Jeffrey A. Grossman <BR>35 Rochelle Dr.
      <BR>New City, NY 10956 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">52,862<SUP>(7)</SUP> <BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">52,862<SUP>(7)</SUP> <BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 <BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* <BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left >Ruiyi Sun <BR>1200 Huaihai Middle Road
      <BR>2nd Floor, No. 25 <BR>Xuhui District, Shanghai 200031 <BR>People's
      Republic of China </TD>
    <TD align=center width="17%">51,800<SUP>(8)</SUP> <BR><BR><BR><BR></TD>
    <TD align=center width="17%">51,800<SUP>(8)</SUP> <BR><BR><BR><BR></TD>
    <TD align=center width="17%">0 <BR><BR><BR><BR></TD>
    <TD align=center width="17%">* <BR><BR><BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF" >Gal Shmuel Dymant <BR>Suite 1806, Building A
      <BR>Oriental Media Centre <BR>4 Guanghua Road <br>
    Chaoyang District, Beijing 100026 <BR>People's Republic of
      China </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">196,926<SUP>(9)</SUP> <BR><BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">196,926<SUP>(9)</SUP> <BR><BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 <BR><BR><BR></TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* <BR><BR><BR></TD></TR></TABLE></DIV>
<P align=center>45</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_50></A><BR>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>

  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Fitel Nominees Limited<SUP>(10)</SUP> <BR>11 St. Jame's
      Square Manchester, M2, <BR>6WH, UK </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">24,346<SUP>(10)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">24,346<SUP>(10)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR vAlign=top>
    <TD align=left>Aran Asset Management SA<SUP>(11)</SUP> <BR>AAM SA,
      Bahnhohplatz 6304 <BR>Zug/Switzerland </TD>
    <TD align=center width="17%">51,830<SUP>(11)</SUP> </TD>
    <TD align=center width="17%">51,830<SUP>(11)</SUP> </TD>
    <TD align=center width="17%">0 </TD>
    <TD align=center width="17%">* </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Sequoia Aggressive Growth Fund<SUP>(12)</SUP> <BR>c/o Nemo
      Asset Management PO Box <BR>60374 Abu Dhabi, U.A.E. </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">259,114<SUP>(12)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">259,114<SUP>(12)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR vAlign=top>
    <TD align=left>Steven B. Berman Revocable Trust <BR>Dated
      5/11/09<SUP>(13)</SUP> <BR>1930 Harrison Street, Suite 505 <BR>Hollywood,
      FL 33020 </TD>
    <TD align=center width="17%">51,815<SUP>(13)</SUP> </TD>
    <TD align=center width="17%">51,815<SUP>(13)</SUP> </TD>
    <TD align=center width="17%">0 </TD>
    <TD align=center width="17%">* </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">W. Michael Ogie <BR>6940 Hilton Ct. Columbus, GA 31904 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">25,914<SUP>(14)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">25,914<SUP>(14)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR vAlign=top>
    <TD align=left>Wilds Michael Ogie <BR>1530 Hilton Ave. Columbus, GA
      <BR>31906 </TD>
    <TD align=center width="17%">25,914<SUP>(15)</SUP> </TD>
    <TD align=center width="17%">25,914<SUP>(15)</SUP> </TD>
    <TD align=center width="17%">0 </TD>
    <TD align=center width="17%">* </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Di Zhu ep Chevallier <BR>Lane 100 Yushan Road, Building 17
      <BR>Room 401 Pudong, 299135, <BR>Shanghai, China </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">51,812<SUP>(16)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">51,812<SUP>(16)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR vAlign=top>
    <TD align=left>Moonlight Investments Ltd. <SUP>(17)</SUP> <BR>c/o North
      Atlantic SAM Le Patio <BR>Palace 41 Avenue Hector Otto MC <BR>98000 Monaco
    </TD>
    <TD align=center width="17%">51,828<SUP>(17)</SUP> </TD>
    <TD align=center width="17%">51,828<SUP>(17)</SUP> </TD>
    <TD align=center width="17%">0 </TD>
    <TD align=center width="17%">* </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Cons Family Holdings Inc<SUP>(18)</SUP> <BR>370 Rue des
      Seigneurs, Montreal <BR>Quebec H3J2M9 Canada </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">51,814<SUP>(18)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">51,814<SUP>(18)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR vAlign=top>
    <TD align=left>NBAD Private Bank (Suisse) SA<SUP>(19)</SUP> <BR>Quai de
      L'lle 5 PO Box 5055 1204 <BR>Geneva 11 Switzerland </TD>
    <TD align=center width="17%">51,828<SUP>(19)</SUP> </TD>
    <TD align=center width="17%">51,828<SUP>(19)</SUP> </TD>
    <TD align=center width="17%">0 </TD>
    <TD align=center width="17%">* </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Loeb Enterprises II, LLC<SUP>(20)</SUP> <BR>70 East 55th
      Street, 4th Floor <BR>NY, NY 10022-2524 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">90,692<SUP>(20)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">90,692<SUP>(20)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR vAlign=top>
    <TD align=left>Hillside Ventures Investments SA<SUP>(21)</SUP> <BR>12
      Carlos Place <BR>London W1k 2ET, UK </TD>
    <TD align=center width="17%">51,828<SUP>(21)</SUP> </TD>
    <TD align=center width="17%">51,828<SUP>(21)</SUP> </TD>
    <TD align=center width="17%">0 </TD>
    <TD align=center width="17%">* </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Steven Kruss Living Trust<SUP>(22)</SUP> <BR>2401 SW 145th
      Avenue, <BR>Miramar, FL 33027 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">51,815<SUP>(22)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">51,815<SUP>(22)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR vAlign=top>
    <TD align=left>Anthony Bobulinski<SUP>(23)</SUP> <BR>1801 Century Park
      West 5th Floor, <BR>Los Angeles, CA 90067 </TD>
    <TD align=center width="17%">129,544<SUP>(23)</SUP> </TD>
    <TD align=center width="17%">129,544<SUP>(23)</SUP> </TD>
    <TD align=center width="17%">0 </TD>
    <TD align=center width="17%">* </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">ARC China Investment Fund, L.P. <SUP>(24)</SUP> <BR>23 on
      the Bund, Bank of China <BR>Building, 14th Floor 23 Zhongshan <BR>East No.
      1 Road, Shanghai 200002, <BR>PRC </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">77,740<SUP>(24)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">77,740<SUP>(24)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR vAlign=top>
    <TD align=left>Zachs Family Investment Fund II, LLC<SUP>(25)</SUP> <BR>40
      Woodland Street, <BR>Hartford, CT 06105 </TD>
    <TD align=center width="17%">51,830<SUP>(25)</SUP> </TD>
    <TD align=center width="17%">51,830<SUP>(25)</SUP> </TD>
    <TD align=center width="17%">0 </TD>
    <TD align=center width="17%">* </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Gilford Securities Incorporated<SUP>(26)</SUP> <BR>777
      3<SUP>rd </SUP>Ave, 17<SUP>th </SUP>Floor <BR>New York, NY 10017 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">39,539<SUP>(26)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">39,539<SUP>(26)</SUP> </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">0 </TD>
    <TD align=center width="17%" bgcolor="#E6EFFF">* </TD></TR>
  <TR>
    <TD align=left ><STRONG>TOTAL</STRONG></TD>
    <TD align=center width="17%" >&nbsp;2,965,561</TD>
    <TD align=center width="17%" >2,965,561&nbsp;</TD>
    <TD align=center width="17%" >&nbsp;</TD>
    <TD align=center width="17%"
>&nbsp;</TD></TR></TABLE></DIV>
<P align=center>46</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_51></A><BR>
<P align=justify>* Less than 1%. <BR>
  ** Assumes that all securities offered are sold. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><SUP>(1) </SUP></TD>
    <TD>
      <P align=justify>Represents total ownership with respect to all shares of
      our common stock underlying the Series C Warrants and Series A Preferred Stock, as
      a single class and on an &#147;as converted&#148; basis.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(2) </SUP></TD>
    <TD>
      <P align=justify>As of August 9, 2010, a total of 14,332,731 shares of our
      common stock are considered to be outstanding pursuant to SEC Rule
      13d-3(d)(1). For each beneficial owner above, any options or warrants
      exercisable within 60 days have been included in the
denominator.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(3) </SUP></TD>
    <TD>
      <P align=justify>Includes 962,890 shares of our common stock underlying
      the Series A Preferred Stock and 462,187 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Adam Roseman is the director of
      ARC China Investment Funds and has sole voting and investment control over
      the securities held by ARC China Investment Funds.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(4) </SUP></TD>
    <TD>
      <P align=justify>Includes 26,260 shares of our common stock underlying the
      Series A Preferred Stock and 12,605 shares underlying the Warrants to
      purchase shares of our common stock. Mr. James A. Lustig is the President
      of Wilshire Investments, LLC and has sole voting and investment control
      over the securities held by Wilshire Investments, LLC.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(5) </SUP></TD>
    <TD>
      <P align=justify>Includes 6,100 shares of our common stock underlying the
      Series A Preferred Stock and 2,928 shares underlying the Warrants to
      purchase shares of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(6) </SUP></TD>
    <TD>
      <P align=justify>Includes 35,000 shares of our common stock underlying the
      Series A Preferred Stock and 16,800 shares underlying the Warrants to
      purchase shares of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(7) </SUP></TD>
    <TD>
      <P align=justify>Includes 35,720 shares of our common stock underlying the
      Series A Preferred Stock and 17,142 shares underlying the Warrants to
      purchase shares of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(8) </SUP></TD>
    <TD>
      <P align=justify>Includes 35,000 shares of our common stock underlying the
      Series A Preferred Stock and 16,800 shares underlying the Warrant to
      purchase shares of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%"><SUP>&nbsp;</SUP></TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(9) </SUP></TD>
    <TD>
      <P align=justify>Includes 133,060 shares of our common stock underlying
      the Series A Preferred Stock and 63,866 shares underlying the Warrant to
      purchase shares of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(10)</SUP> </TD>
    <TD>
      <P align=justify>Includes 16,450 shares of our common stock underlying the
      Series A Preferred Stock and 7,896 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Douglas Barlow is the Director of
      Fitel Nominees Limited and has shared voting and investment control over
      the securities held by Fitel Nominees Limited.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(11)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,810 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Michael C. Thalmann is the
      Chairman and CEO of Aran Asset Management SA and has sole voting and
      investment control over the securities held by Aran Asset Management
      SA.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(12)</SUP> </TD>
    <TD>
      <P align=justify>Includes 175,080 shares of our common stock underlying
      the Series A Preferred Stock and 84,034 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Christian Naville is the Director
      of Sequoia Aggressive Growth Fund and has shared voting and investment
      control over the securities held by Sequoia Aggressive Growth
  Fund.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(13)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,010 shares of our common stock underlying the
      Series A Preferred Stock and 16,805 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Steven B. Berman is the Trustee
      of Steven B. Berman Revocable Trust Dated 5/11/09 and has sole voting and
      investment control over the securities held by Steven B. Berman Revocable
      Trust Dated 5/11/09.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(14)</SUP> </TD>
    <TD>
      <P align=justify>Includes 17,510 shares of our common stock underlying the
      Series A Preferred Stock and 8,404 shares underlying the Warrant to
      purchase shares of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(15)</SUP> </TD>
    <TD>
      <P align=justify>Includes 17,510 shares of our common stock underlying the
      Series A Preferred Stock and 8,404 shares underlying the Warrant to
      purchase shares of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(16)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,010 shares of our common stock underlying the
      Series A Preferred Stock and 16,802 shares underlying the Warrant to purchase shares of our common
      stock.</P></TD></TR></TABLE>
<P align=center>47 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><SUP>(17)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,808 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Diego Lissi is the Director of
      Moonlight Investments Ltd. and has sole voting and investment control over
      the securities held by Moonlight Investments Ltd.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(18)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,010 shares of our common stock underlying the
      Series A Preferred Stock and 16,804 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Ronal P Cons is the President of
      Cons Family Holdings Inc and has sole voting and investment control over
      the securities held by Cons Family Holdings Inc.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(19)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,808 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Valerie Anson is the Director of
      NBAD Private Bank (Suisse) SA and has shared voting and investment control
      over the securities held by NBAD Private Bank (Suisse) SA.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(20)</SUP> </TD>
    <TD>
      <P align=justify>Includes 61,280 shares of our common stock underlying the
      Series A Preferred Stock and 29,412 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Michael Loeb is the CEO of Loeb
      Enterprises II, LLC and has shared voting and investment control over the
      securities held by Loeb Enterprises II, LLC.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(21)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,808 shares underlying the Warrants to
      purchase shares of our common stock. Mr. David Ishag is the Director of
      Hillside Ventures Investments SA and has sole voting and investment
      control over the securities held by Hillside Ventures Investments
    SA.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(22)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,010 shares of our common stock underlying the
      Series A Preferred Stock and 16,805 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Steven Kruss is the Trustee of
      Steven Kruss Living Trust and has sole voting and investment control over
      the securities held by Steven Kruss Living Trust.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(23)</SUP> </TD>
    <TD>
      <P align=justify>Includes 87,530 shares of our common stock underlying the
      Series A Preferred Stock and 42,014 shares underlying the Warrants to
      purchase shares of our common stock.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(24)</SUP> </TD>
    <TD>
      <P align=justify>Includes 52,530 shares of our common stock underlying the
      Series A Preferred Stock and 25,210 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Adam Roseman is the Director of
      ARC China Investment Fund, L.P. and has sole voting and investment control
      over the securities held by ARC China Investment Fund, L.P.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(25)</SUP> </TD>
    <TD>
      <P align=justify>Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,810 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Eric M. Zachs is the Managing
      Director of Zachs Family Investment Fund II, LLC and has sole voting and
      investment control over the securities held by Zachs Family Investment
      Fund II, LLC.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%"><SUP>(26)</SUP> </TD>
    <TD>
      <P align=justify>Includes 39,539 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Robert A. Maley is the President
      of Gilford Securities Incorporated and has sole voting and investment
      control over the securities held by Gilford Securities Incorporated.
      Gilford Securities Incorporated is a
broker-dealer.</P></TD></TR></TABLE>
<P align=justify>We will not receive any proceeds from the sale of any shares by
the selling stockholders but we will receive funds from the exercise of the
warrants held by the selling stockholders if and when those warrants are
exercised for cash. We have agreed to bear expenses incurred by the selling
stockholders that relate to the registration of the shares being offered and
sold by the selling stockholders, including the SEC registration fee and legal,
accounting, printing and other expenses of this offering. </P>
<P align=center><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT</B></P>
<P align=justify>The following table sets forth information regarding beneficial
ownership of our common stock as of August 9, 2010 (i) by each person who is
known by us to beneficially own more than 5% of our voting securities; (ii) by
each of our officers and directors; and (iii) by all of our officers and
directors as a group. Unless otherwise specified, the address of each of the persons set forth below is in care of Nutrastar
International Inc., 7/F Jinhua Mansion, 41 Hanguang Street, Nangang District,
Harbin 150080, People&#146;s Republic of China.</P>
<P align=center>48</P>
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noShade SIZE=5><br>
<A name=page_53></A>
<DIV>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=top>
      <TD vAlign=bottom align=left rowSpan=3><BR> <BR> <U>Name and Address of</U>
        <BR> <U>Beneficial</U> <BR> <U>Owner</U> </TD>
      <TD vAlign=bottom align=left width="24%"
      rowSpan=3><BR> <BR> <BR> <BR> <U>Office, If Any</U> </TD>
      <TD colspan="5" align=center vAlign=bottom> &nbsp; &nbsp;<U>Shares Beneficially
        Owned</U><SUP>(1)</SUP> </TD>
    </TR>
    <TR vAlign=top>
      <TD colspan="2" align=center vAlign=bottom bgColor=#ffffff><U>Common Stock</U><SUP>(2)</SUP>
      </TD>
      <TD colspan="2" align=center vAlign=bottom><U>Series A Preferred Stock</U><SUP>(3)</SUP>
      </TD>
      <TD vAlign=bottom align=center width="10%" bgColor=#ffffff
      rowSpan=2><BR> <U>% Total</U> <BR> <U>Voting</U> <BR> <U>Power</U><SUP>(4)</SUP>
      </TD>
    </TR>
    <TR vAlign=top>
      <TD vAlign=bottom align=center width="10%"
      bgColor=#ffffff><BR> <U>Shares</U> </TD>
      <TD vAlign=bottom align=center width="10%" bgColor=#ffffff><U>% of</U> <BR>
        <U>Class</U> </TD>
      <TD vAlign=bottom align=center width="12%"><BR> <U>Shares</U> </TD>
      <TD vAlign=bottom align=center width="12%"><U>% of</U> <BR> <U>Class</U>
      </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="7" align=center bgColor=#E6EFFF>&nbsp;<B>Directors and Officers</B>&nbsp;&nbsp;&nbsp;
      </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Lianyun Han </TD>
      <TD align=left width="24%">Chairperson, President and CEO </TD>
      <TD align=center width="10%">8,949,424<SUP>(5)</SUP> </TD>
      <TD align=center width="10%">62.44% </TD>
      <TD align=center width="12%">0 </TD>
      <TD align=center width="12%">* </TD>
      <TD align=center width="10%">54.87% </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Robert Tick </TD>
      <TD width="24%" align=left bgColor=#E6EFFF>Chief Financial Officer and Treasurer
      </TD>
      <TD align=center width="10%" bgColor=#E6EFFF>0 </TD>
      <TD align=center width="10%" bgColor=#E6EFFF>* </TD>
      <TD width="12%" align=center bgColor=#E6EFFF>0 </TD>
      <TD width="12%" align=center bgColor=#E6EFFF>* </TD>
      <TD align=center width="10%" bgColor=#e6efff>* </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Hongbin Hua </TD>
      <TD align=left width="24%">Chief Marketing Officer </TD>
      <TD align=center width="10%">0 </TD>
      <TD align=center width="10%">* </TD>
      <TD align=center width="12%">0 </TD>
      <TD align=center width="12%">* </TD>
      <TD align=center width="10%">* </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Chunming Zhang </TD>
      <TD width="24%" align=left bgColor=#E6EFFF>Director </TD>
      <TD align=center width="10%" bgColor=#e6efff>0 </TD>
      <TD align=center width="10%" bgColor=#e6efff>* </TD>
      <TD width="12%" align=center bgColor=#E6EFFF>0 </TD>
      <TD width="12%" align=center bgColor=#E6EFFF>* </TD>
      <TD align=center width="10%" bgColor=#e6efff>* </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Nana Jiang </TD>
      <TD align=left width="24%">Director </TD>
      <TD align=center width="10%">0 </TD>
      <TD align=center width="10%">* </TD>
      <TD align=center width="12%">0 </TD>
      <TD align=center width="12%">* </TD>
      <TD align=center width="10%">* </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>John Jing Zhang </TD>
      <TD width="24%" align=left bgColor=#E6EFFF>Director </TD>
      <TD align=center width="10%" bgColor=#e6efff>543,899<SUP>(6)</SUP> </TD>
      <TD align=center width="10%" bgColor=#e6efff>3.79% </TD>
      <TD width="12%" align=center bgColor=#E6EFFF>0 </TD>
      <TD width="12%" align=center bgColor=#E6EFFF>* </TD>
      <TD align=center width="10%" bgColor=#e6efff>3.33% </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Xi Zhu </TD>
      <TD align=left width="24%">Director </TD>
      <TD align=center width="10%">0 </TD>
      <TD align=center width="10%">* </TD>
      <TD align=center width="12%">0 </TD>
      <TD align=center width="12%">* </TD>
      <TD align=center width="10%">* </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>All officers and directors as a group (7
        persons named above) </TD>
      <TD width="24%" align=left bgColor=#E6EFFF>&nbsp;&nbsp;</TD>
      <TD align=center width="10%" bgColor=#E6EFFF>9,493,323 </TD>
      <TD align=center width="10%" bgColor=#E6EFFF>66.24% </TD>
      <TD width="12%" align=center bgColor=#E6EFFF>0 </TD>
      <TD width="12%" align=center bgColor=#E6EFFF>* </TD>
      <TD align=center width="10%" bgColor=#e6efff>58.20% </TD>
    </TR>
    <TR vAlign=bottom>
      <TD colspan="7" align=center>&nbsp;<B>5% Security Holders</B>&nbsp;&nbsp;&nbsp;
      </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>New Zealand WAYNE&#146;s <BR>
        Investment Holdings Co., <BR>
        Ltd. 4/F, Yushan Plaza <BR>
        No.51 Yushan Road <BR>
        Harbin, China 150090 <SUP>(5)</SUP> </TD>
      <TD width="24%" align=left bgColor=#E6EFFF><BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%" bgColor=#E6EFFF>8,949,424<SUP>(5)</SUP> <BR>
        <BR> <BR> <BR></TD>
      <TD align=center width="10%" bgColor=#E6EFFF>62.44% <BR> <BR> <BR> <BR></TD>
      <TD width="12%" align=center bgColor=#E6EFFF>0 <BR> <BR> <BR> <BR></TD>
      <TD width="12%" align=center bgColor=#E6EFFF>* <BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%" bgColor=#e6efff>54.87% <BR> <BR> <BR> <BR></TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>ARC China Investment <BR>
        Funds<SUP>(7)</SUP> <BR>
        Banque Priv&#233;e Edmond <BR>
        de Rothschild Europe <BR>
        20, Boulevard Emmanuel <BR>
        Servais <BR>
        L-2535 Luxembourg </TD>
      <TD align=left width="24%"><BR> <BR> <BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%">462,187<SUP>(7)</SUP> <BR> <BR> <BR> <BR> <BR>
        <BR></TD>
      <TD align=center width="10%">3.12% <BR> <BR> <BR> <BR> <BR> <BR></TD>
      <TD align=center width="12%">96,289 <BR> <BR> <BR> <BR> <BR> <BR></TD>
      <TD align=center width="12%">48.70% <BR> <BR> <BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%">8.50% <BR> <BR> <BR> <BR> <BR> <BR></TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Gal Shmuel Dymant <BR>
        Suite 1806, Building A <BR>
        Oriental Media Centre <BR>
        4 Guanghua Road <BR>
        Chaoyang District, <BR>
        Beijing 100026 <BR>
        People's Republic of <BR>
        China </TD>
      <TD width="24%" align=left bgColor=#E6EFFF><BR> <BR> <BR> <BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%" bgColor=#E6EFFF>63,866<SUP>(8)</SUP> <BR> <BR>
        <BR> <BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%" bgColor=#E6EFFF>* <BR> <BR> <BR> <BR> <BR>
        <BR> <BR></TD>
      <TD width="12%" align=center bgColor=#E6EFFF>13,306 <BR> <BR> <BR> <BR> <BR> <BR> <BR></TD>
      <TD width="12%" align=center bgColor=#E6EFFF>6.73% <BR> <BR> <BR> <BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%" bgColor=#E6EFFF>1.20% <BR> <BR> <BR> <BR> <BR>
        <BR> <BR></TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>Sequoia Aggressive <BR>
        Growth Fund<SUP>(9)</SUP> <BR>
        c/o Nemo Asset <BR>
        Management PO Box <BR>
        60374 Abu Dhabi, U.A.E. </TD>
      <TD align=left width="24%"><BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%">84,034<SUP>(9)</SUP> <BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%">* <BR> <BR> <BR> <BR></TD>
      <TD align=center width="12%">17,508 <BR> <BR> <BR> <BR></TD>
      <TD align=center width="12%">8.86% <BR> <BR> <BR> <BR></TD>
      <TD align=center width="10%">1.58% <BR> <BR> <BR> <BR></TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#e6efff>Adam Roseman<SUP>(10)</SUP> <BR>
        c/o ARC China <BR>
        Investment Funds </TD>
      <TD width="24%" align=left bgColor=#E6EFFF><BR> <BR></TD>
      <TD align=center width="10%" bgColor=#E6EFFF>487,397<SUP>(10)</SUP> <BR>
        <BR></TD>
      <TD align=center width="10%" bgColor=#E6EFFF>3.29% <BR> <BR></TD>
      <TD width="12%" align=center bgColor=#E6EFFF>101,542 <BR> <BR></TD>
      <TD width="12%" align=center bgColor=#E6EFFF>51.36% <BR> <BR></TD>
      <TD align=center width="10%" bgColor=#E6EFFF>8.95% <BR> <BR></TD>
    </TR>
  </TABLE>
</DIV>
  <TABLE
style="FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; border-left-color:black; border-right-color:black; border-top-color:black; border-top-width:0; border-bottom-color:black"
borderColor=#000000 cellSpacing=0 cellPadding=3 width="100%" border=1>
    <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF style="border-top-style: none; border-top-width: medium">Banque Priv&#233;e Edmond <BR>de Rothschild
      Europe <BR>20, Boulevard Emmanuel <BR>Servais <BR>L-2535 Luxembourg </TD>
    <TD align=left width="24%" bgColor=#FFFFFF style="border-top-style: none; border-top-width: medium"><BR><BR><BR><BR></TD>
    <TD align=center width="10%" bgColor=#FFFFFF style="border-top-style: none; border-top-width: medium"><BR><BR><BR><BR></TD>
    <TD align=center width="10%" bgColor=#FFFFFF style="border-top-style: none; border-top-width: medium"><BR><BR><BR><BR></TD>
      <TD width="12%" align=center bgColor=#FFFFFF style="border-top-style: none; border-top-width: medium"><BR>
        <BR><BR><BR></TD>
      <TD width="12%" align=center bgColor=#FFFFFF style="border-top-style: none; border-top-width: medium"><BR>
        <BR><BR><BR></TD>
      <TD align=center width="10%" bgColor=#FFFFFF style="border-top-style: none; border-top-width: medium"><BR>
        <BR><BR><BR></TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Lianyun Han </TD>
    <TD align=left width="24%" bgcolor="#E6EFFF">Chairperson, President and CEO </TD>
    <TD align=center width="10%" bgcolor="#E6EFFF">8,949,424<SUP>(5)</SUP> </TD>
    <TD align=center width="10%" bgcolor="#E6EFFF">62.44% </TD>
      <TD align=center width="12%" bgcolor="#E6EFFF">0 </TD>
      <TD align=center width="12%" bgcolor="#E6EFFF">* </TD>
    <TD align=center width="10%" bgcolor="#E6EFFF">54.87% </TD></TR></TABLE>
<P align=center>49</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_54></A><BR>
<P align=justify>* Less than 1%</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>Beneficial Ownership is determined in accordance with the
      rules of the SEC and generally includes voting or investment power with
      respect to securities. For each beneficial owner above, any options
      exercisable within 60 days have been included in the
denominator.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(2) </TD>
    <TD>
      <P align=justify>Based on 14,332,731 shares of common stock issued and
      outstanding as of August 9, 2010.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(3) </TD>
    <TD>
      <P align=justify>Based on 197,706 shares of Series A Preferred Stock
      issued and outstanding as of August 9, 2010. Each share of Series A
      Preferred Stock is convertible initially into ten (10) shares of common
      stock (subject to customary adjustments for stock splits, combinations, or
      equity dividends on common stock). Holders of Series A Preferred Stock
      vote with the holders of common stock on all matters on an &#147;as converted&#148;
      basis. See &#147;Description of Securities &#150; Preference Shares&#148; below for more
      information regarding our Series A Preferred Stock.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(4) </TD>
    <TD>
      <P align=justify>Percentage of Total Capital Stock represents total
      ownership with respect to all shares of our common stock and Series A
      Preferred Stock, as a single class and on an &#147;as-converted&#148; to common
      stock basis.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(5) </TD>
    <TD>
      <P align=justify>Includes 8,949,424 shares of common stock owned by New
      Zealand WAYNE&#146;s Investment Holdings Co., Ltd. Pursuant to the Earn-In
      Agreement, dated September 12, 2008, as amended, the Founders, including
      Ms. Han, have the options to acquire a majority interest in New Zealand
      WAYNE&#146;s Investment Holdings Co., Ltd. upon the satisfaction of certain
      conditions set forth in the Earn-In Agreement. Upon the passage of six
      months after the date of Share Exchange Agreement, which was entered into
      among the Company, New Resources, along with the subsidiaries of New
      Resources, including Heilongjiang Shuaiyi, Daqing Shuaiyi and Harbin
      Shuaiyi, and New Zealand WAYNE&#146;s Investment Holdings Co., Ltd., dated
      December 23, 2008, Ms. Han will own at least a majority ownership of
      Investment Holdings if she exercises her option pursuant to the Earn-In
      Agreement. Ms. Han may be deemed to be a beneficial owner of the shares
      held by Investment Holdings. In addition, pursuant to the Securities
      Purchase Agreement, dated December 17, 2009, New Zealand WAYNE&#146;s
      Investment Holdings Co., Ltd., agreed by the Founders, placed a total of
      1,000,000 shares held by it into escrow that may be released to the
      investors in the event we do not meet the performance thresholds for 2010
      and 2011. The remaining 7,949,424 shares of common stock owned by New
      Zealand WAYNE&#146;s Investment Holdings Co., Ltd. are subject to a lock up
      agreement with ARC China, Inc., dated May 27, 2010 for a 12-month lock up
      period.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(6) </TD>
    <TD>
      <P align=justify>Including 127,978 shares of common stock held by his
      spouse.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(7) </TD>
    <TD>
      <P align=justify>Includes 462,187 shares underlying a warrant to purchase
      our common stock. Mr. Adam Roseman is the director of ARC China Investment
      Funds and has sole voting and investment control over the securities held
      by ARC China Investment Funds.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(8) </TD>
    <TD>
      <P align=justify>Includes 63,866 shares underlying a warrant to purchase
      our common stock.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(9) </TD>
    <TD>
      <P align=justify>Includes 84,034 shares underlying a warrant to purchase
      our common stock. Mr. Christian Naville is the Director of Sequoia
      Aggressive Growth Fund and has shared voting and investment control over
      the securities held by Sequoia Aggressive Growth Fund.</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="5%">(10) </TD>
    <TD>
      <P align=justify>Includes (i) 462,187 shares underlying a warrant to
      purchase our common stock and 96,289 shares of Series A Preferred Stock
      directly owned by ARC China Investment Funds, and (ii) 25,210 shares
      underlying a warrant to purchase our common stock and 5,253 shares of
      Series A Preferred Stock. Mr. Adam Roseman is the Director of both ARC
      China Investment Funds and ARC China Investment Fund, L.P. and has sole
      voting and investment control over the securities held by both
    firms.</P></TD></TR></TABLE>
<P align=center>50</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_55></A>
<P align=center><B>DESCRIPTION OF SECURITIES</B></P>
<P align=justify><B><I>Common Stock</I></B></P>
<P align=justify>We are authorized to issue up to 190,000,000 shares of common
  stock. On May 19, 2009, we amended our articles of incorporation to effect a
  1-for-114.59 reverse split of our outstanding common stock.</P>
<P align=justify>Each outstanding share of common stock entitles the holder
thereof to one vote per share on all matters. Stockholders do not have
preemptive rights to purchase shares in any future issuance of our common stock.
The holders of shares of our common stock are entitled to dividends out of funds
legally available when and as declared by our board of directors. We have never
declared or paid cash dividends. Our board of directors does not anticipate
declaring a dividend in the foreseeable future. Should we decide in the future
to pay dividends, as a holding company, our ability to do so and meet other
obligations depends upon the receipt of dividends or other payments from our
operating subsidiaries and other holdings and investments. In addition, our PRC
operating subsidiaries, from time to time, may be subject to restrictions on its
ability to make distributions to us, including as a result of restrictive
covenants in loan agreements, restrictions on the conversion of local currency
into U.S. dollars or other hard currency and other regulatory restrictions.</P>
<P align=justify>All of the issued and outstanding shares of our common stock
are duly authorized, validly issued, fully paid and non-assessable. To the
extent that additional shares of our common stock are issued, the relative
interests of existing stockholders will be diluted. </P>
<P align=justify><B><I>Preferred Stock</I></B></P>
<P align=justify>We may issue up to 1,000,000 shares of preferred stock, par
value $0.001 per share, in one or more classes or series within a class as may
be determined by our board of directors, who may establish, from time to time,
the number of shares to be included in each class or series, may fix the
designation, powers, preferences and rights of the shares of each such class or
series and any qualifications, limitations or restrictions thereof. Any
preferred stock so issued by our board of directors may rank senior to the
common stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding up of us, or both.</P>
<P align=justify>On December 22, 2008, we filed a Certificate of Designation of
Series A Preferred Stock, or the 2008 Certificate with the State of Nevada
designating and authorizing the issuance of up to 800,000 shares of our series A
voting preferred stock, par value $0.001 per share, or the 2008 Series A
Preferred Stock. On December 23, 2008, we issued 689,390 shares of our 2008
Series A Preferred Stock to the Shareholder of New Resources. The total
consideration for the 689,390 shares of our 2008 Series A Preferred Stock is
50,000 shares of New Resources, which is all the issued and outstanding capital
stock of New Resources. We did not receive any cash consideration in connection
with the share exchange. On December 23, 2008, we also issued and sold to ACI
17,962 shares of our 2008 Series A Preferred Stock for $52,530.50, or $2.92 per
share. In addition, on December 23, 2008, we issued and sold to Tan Zhen
Investment Limited 20,168 shares of our 2008 Series A Preferred Stock for
$375,000, or $18.59 per share. </P>
<P align=justify>Following effectiveness of the 1-for-114.59 reverse split of
our outstanding common stock and in accordance with Section 6(a) of the 2008
Certificate, all issued and outstanding shares of the 2008 Series A Preferred
Stock were automatically converted into shares of common stock, on the basis of
17.45 shares of common stock for each one share of 2008 Series A Preferred Stock,
effective on May 29, 2009. After the completion of the conversion, we withdrew
the 2008 Certificate.</P>
<P align=justify>In connection with the private placement transaction as
contemplated by the 2010 Securities Purchase Agreement, dated May 27, 2010, we
filed a Certificate of Designation of Series A Preferred Stock, or the 2010
Certificate, with the Secretary of State of the State of Nevada on May 27, 2010,
which became effective upon filing. Pursuant to the 2010 Certificate, there were
300,000 shares of Series A Preferred Stock authorized.</P>
<P align=justify>On June 28, 2010, we completed the private placement
transaction and issued to certain investors approximately 197,700 Units at a
purchase price of $28.56 per Unit for gross proceeds of $5,646,270. Each Unit
consists of (i) one share of Series A Preferred Stock, with an initial
one-to-ten conversion ratio into shares of the Company&#146;s common stock, and (ii)
Series C Warrants to purchase five shares of common stock at an exercise price
of $3.40 per share with a term of three years. As a result, we issued in
aggregate 197,706 shares of our Series A Preferred Stock, initially convertible
into 1,977,060 shares of our common stock, and Series C Warrants to purchase an
aggregate of 988,501 shares of our common stock.</P>
<P align=center>51</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_56></A>
<P align=justify>As of the date of this Prospectus, we have 197,706 shares of
our Series A Preferred Stock outstanding.</P>
<P align=justify><B><I>Warrant</I></B></P>
<P align=justify>In connection with our private placement which was closed on
December 17, 2009, we issued to each of the investors two warrants to purchase
in aggregate 500,000 shares of our common stock, including a Series A Warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B Warrant having a term of three years with an exercise price of $4.00
per share, both of which are subject to the usual adjustments for certain
corporate events. The shares underlying the warrants are being included in this
registration statement, but none of the Series A or Series B Warrants has been
exercised.</P>
<P align=justify>On June 28, 2010, we closed the private placement transaction
as contemplated by the 2010 Securities Purchase Agreement, dated May 27, 2010
and issued to the investors Series C Warrants to purchase an aggregate of
988,501 shares of our common stock. A Series C Warrant has a term of three years
with an exercise price of $3.40 per share. None of the Series C Warrants has
been exercised.</P>
<P align=justify>On July 1, 2010, as partial compensation for its services, we
issued to our IR firm, American Capital Adventures, Inc. and its designees, a
Series D Warrant to purchase 100,000 shares of our common stock, which has a
term of three years with an exercise price of $3.80 per share. None of the
Series D Warrant has been exercised.</P>
<P align=justify><B>Anti-takeover Effects of Our Articles of Incorporation and
By-laws</B> </P>
<P align=justify>Our Articles of Incorporation and Bylaws contain certain
provisions that may have anti-takeover effects, making it more difficult for or
preventing a third party from acquiring control of the Company or changing our
board of directors and management. Our Articles of Incorporation provide that
our board of directors may issue, without further stockholder approval, up to
1,000,000 shares of preferred stock, par value $0.001 per share, in one or more
classes or series within a class. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of our outstanding voting stock. According to our Bylaws and Articles
of Incorporation, neither the holders of our common stock nor the holders of our
preferred stock have cumulative voting rights in the election of our directors.
The combination of the present ownership by a few stockholders of a significant
portion of our issued and outstanding capital stock and lack of cumulative
voting makes it more difficult for other stockholders to replace our board of
directors or for a third party to obtain control of the Company by replacing our
board of directors. </P>
<P align=justify><B>Anti-takeover Effects of Nevada Law</B></P>
<P align=justify><B><I>Business Combinations</I></B> </P>
<P align=justify>The &#147;business combination&#148; provisions of Sections 78.411 to
78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada
corporation with at least 200 stockholders from engaging in various
&#147;combination&#148; transactions with any interested stockholder: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>for a period of three years after the date of the transaction in which the
  person became an interested stockholder, unless the transaction is approved by
  the board of directors prior to the date the interested stockholder obtained
  such status; or
  <LI>after the expiration of the three-year period, unless:
  <LI>the transaction is approved by the board of directors or a majority of the
  voting power held by disinterested stockholders, or
  <LI>if the consideration to be paid by the interested stockholder is at least
  equal to the highest of: (a) the highest price per share paid by the
  interested stockholder within the three years immediately preceding the date
  of the announcement of the combination or in the transaction in which it
  became an interested stockholder, whichever is higher, (b) the market value
  per share of common stock on the date of announcement of the combination and
  the date the interested stockholder acquired the shares, whichever is higher,
  or (c) for holders of preferred stock, the highest liquidation value of the
  preferred stock, if it is higher. </LI></UL>
<P align=center>52</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_57></A>
<P align=justify>A &#147;combination&#148; is defined to include mergers or consolidations
or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in
one transaction or a series of transactions, with an &#147;interested stockholder&#148;
having: (a) an aggregate market value equal to 5% or more of the aggregate
market value of the assets of the corporation, (b) an aggregate market value
equal to 5% or more of the aggregate market value of all outstanding shares of
the corporation, or (c) 10% or more of the earning power or net income of the
corporation. </P>
<P align=justify>In general, an &#147;interested stockholder&#148; is a person who,
together with affiliates and associates, owns (or within three years, did own)
10% or more of a corporation's voting stock. The statute could prohibit or delay
mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire our company even though such a transaction may
offer our stockholders the opportunity to sell their stock at a price above the
prevailing market price. </P>
<P align=justify>Although we do not believe that we are currently subject to
these &#147;business combination&#148; provisions since we only have approximately 68
stockholders of record, there can be no assurance that in the future such
provisions will not apply to us. </P>
<P align=justify><B><I>Control Share Acquisitions</I></B></P>
<P align=justify>The &#147;control share&#148; provisions of Sections 78.378 to 78.3793,
inclusive, of the NRS, which apply only to Nevada corporations with at least 200
stockholders, including at least 100 stockholders of record who are Nevada
residents, and which conduct business directly or indirectly in Nevada, prohibit
an acquiror, under certain circumstances, from voting its shares of a target
corporation's stock after crossing certain ownership threshold percentages,
unless the acquiror obtains approval of the target corporation's disinterested
stockholders. The statute specifies three thresholds: one-fifth or more but less
than one-third, one-third but less than a majority, and a majority or more, of
the outstanding voting power. Once an acquiror crosses one of the above
thresholds, those shares in an offer or acquisition and acquired within 90 days
thereof become &#147;control shares&#148; and such control shares are deprived of the
right to vote until disinterested stockholders restore the right. These
provisions also provide that if control shares are accorded full voting rights
and the acquiring person has acquired a majority or more of all voting power,
all other stockholders who do not vote in favor of authorizing voting rights to
the control shares are entitled to demand payment for the fair value of their
shares in accordance with statutory procedures established for dissenters'
rights. </P>
<P align=justify>Although we are not currently subject to these &#147;control share&#148;
provisions since we only have approximately 68 stockholders of record, there can
be no assurance that in the future such provisions will not apply to us. </P>
<P align=justify><B><I>Transfer Agent and Registrar</I></B></P>
<P align=justify>Our independent stock transfer agent is Interwest Transfer
Company, Inc, located in 1981 E. Murray Holladay Road, Suite 100, Salt Lake
City, Utah 84117. Their phone number is (801) 272-9294 and facsimile number is
(801) 277-3147.</P>
<P align=center><B>MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER
MATTERS</B></P>
<P align=justify>Our common stock is quoted under the symbol &#147;NUIN&#148; on the OTCQB
but had not been traded in the OTCQB except on a limited and sporadic basis. The
CUSIP number is 67060M 107. </P>
<P align=justify>The following table sets forth, for the periods indicated, the
high and low closing prices of our common stock. These prices reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may
not represent actual transactions. These prices have been adjusted to give
retroactive effect to the 1-for-114.59 reverse split of our common stock that
occurred on May 19, 2009. The last reported sale price of our common stock on
January 25, 2010 was $3.76 per share.</P>
<DIV align=center>
  <TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
borderColor=#000000 cellSpacing=0 cellPadding=3 width="90%" border=1>
    <TR vAlign=top>
      <TD align=left>&nbsp; </TD>
      <TD colspan="2" align=center>Closing Bid Prices <SUP>(1)</SUP> </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>&nbsp; </TD>
      <TD align=center width="25%">High </TD>
      <TD align=center width="25%">Low </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left><B><I>Year Ended December 31, 2010</I></B> </TD>
      <TD align=left width="25%">&nbsp; </TD>
      <TD align=left width="25%">&nbsp; </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#E6EFFF>1<SUP>st </SUP>Quarter </TD>
      <TD width="25%" align=center bgColor=#E6EFFF>$5.00 </TD>
      <TD width="25%" align=center bgColor=#E6EFFF>$3.16 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left>2<SUP>nd </SUP>Quarter </TD>
      <TD align=center width="25%">$3.95 </TD>
      <TD align=center width="25%">$1.01 </TD>
    </TR>
    <TR vAlign=top>
      <TD align=left bgColor=#E6EFFF>3<SUP>rd </SUP>Quarter (through August 9,
        2010) </TD>
      <TD width="25%" align=center bgColor=#E6EFFF>$3.03 </TD>
      <TD width="25%" align=center bgColor=#E6EFFF>$2.55 </TD>
    </TR>
  </TABLE>
</DIV>
<div align="center">
  <center>
  <TABLE
style="FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; border-left-color:black; border-right-color:black; border-top-color:black; border-top-width:0; border-bottom-color:black"
borderColor=#000000 cellSpacing=0 cellPadding=3 width="90%" border=1>
    <TR vAlign=top>
    <TD align=left style="border-top-style: none; border-top-width: medium"><B><I>Year Ended December 31, 2009</I></B> </TD>
    <TD align=center width="25%" style="border-top-style: none; border-top-width: medium">&nbsp; </TD>
    <TD align=center width="25%" style="border-top-style: none; border-top-width: medium">&nbsp; </TD></TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left>1<SUP>st </SUP>Quarter </TD>
      <TD align=center width="25%">$28.65 </TD>
      <TD align=center width="25%">$5.73 </TD>
    </TR>
  <TR vAlign=top>
    <TD align=left>2<SUP>nd </SUP>Quarter </TD>
    <TD align=center width="25%">$6.25 </TD>
    <TD align=center width="25%">$5.73 </TD></TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left>3<SUP>rd </SUP>Quarter </TD>
      <TD align=center width="25%">$6.25 </TD>
      <TD align=center width="25%">$6.25 </TD>
    </TR>
  <TR vAlign=top>
    <TD align=left>4<SUP>th </SUP>Quarter </TD>
    <TD align=center width="25%">$6.25 </TD>
    <TD align=center width="25%">$6.25 </TD></TR>
  <TR>
      <TD bgColor=#E6EFFF>&nbsp; </TD>
      <TD align=center width="25%" bgColor=#E6EFFF>&nbsp; </TD>
      <TD align=center width="25%" bgColor=#E6EFFF>&nbsp; </TD>
    </TR>
  <TR vAlign=top>
    <TD align=left><B><I>Year Ended December 31, 2008</I></B> </TD>
    <TD align=center width="25%">&nbsp; </TD>
    <TD align=center width="25%">&nbsp; </TD></TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left>1<SUP>st </SUP>Quarter </TD>
      <TD align=center width="25%">$13.75 </TD>
      <TD align=center width="25%">$13.75 </TD>
    </TR>
  <TR vAlign=top>
    <TD align=left>2<SUP>nd </SUP>Quarter </TD>
    <TD align=center width="25%">$13.75 </TD>
    <TD align=center width="25%">$13.75 </TD></TR>
    <TR vAlign=top bgcolor="#E6EFFF">
      <TD align=left>3<SUP>rd </SUP>Quarter </TD>
      <TD align=center width="25%">$13.75 </TD>
      <TD align=center width="25%">$13.75 </TD>
    </TR>
  <TR vAlign=top>
    <TD align=left>4<SUP>th </SUP>Quarter </TD>
    <TD align=center width="25%">$28.65 </TD>
    <TD align=center width="25%">$13.75 </TD></TR>
    <TR bgcolor="#E6EFFF">
      <TD align=left>&nbsp;</TD>
      <TD align=center width="25%">&nbsp;</TD>
      <TD align=center width="25%">&nbsp;</TD>
    </TR></TABLE></center>
</div>
<p>_______________________________<BR><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(1) </TD>
    <TD>
      <P align=justify>The above table sets forth the range of high and low
      closing bid prices per share of our common stock as reported by
      <U>www.quotemedia.com </U>for the periods
indicated.</P></TD></TR></TABLE>
<P align=center>53</P>
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noShade SIZE=5>
<A name=page_58></A><BR>
<P align=justify><B><I>Holders</I></B></P>
<P align=justify>On August 9, 2010, there were approximately 68 stockholders of
record of our common stock. The number of record holders does not include
persons who held our common stock in nominee or &#147;street name&#148; accounts through
brokers.</P>
<P align=justify><B><I>Dividends</I></B></P>
<P align=justify>We have never declared or paid a cash dividend. Any future
decisions regarding dividends will be made by our board of directors. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has complete discretion on whether to
pay dividends, subject to the approval of our stockholders. Even if our board of
directors decides to pay dividends, the form, frequency and amount will depend
upon our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that the
board of directors may deem relevant. </P>
<P align=justify><B><I>Securities Authorized for Issuance Under Equity
Compensation Plans </I></B></P>
<P align=justify>On June 3, 2009, our Board of Directors authorized the
establishment of the Shuaiyi International New Resources Development Inc. 2009
Equity Incentive Plan, or the Plan, whereby we are authorized to issue shares of
our common stock to certain employees, consultants and directors. The maximum
aggregate number of shares of our common stock that may be issued under the Plan
is 1,000,000 shares. The Plan, was approved by our shareholders on June 3, 2009.
</P>
<P align=justify>On June 17, 2009, the Company granted to certain employees an
aggregate of 500,000 restricted shares pursuant to the Plan.</P>
<P align=justify>On January 1, 2010, as disclosed above, pursuant to the Plan,
the Company granted options to our former CFO, Mr. Daniel Lee to purchase an
aggregate 250,000 shares of common stock of the Company, among which, an option
to purchase 100,000 shares will be vested in 2011 with an exercise price of
$7.00 per share, an option to purchase 100,000 shares will be vested in 2012
with an exercise price of $10.00 per share and an option to purchase 50,000
shares will be vested in 2013 with an exercise price of $10.00 per share. Each
of the Options expires three years after its respective vesting date. </P>
<P align=justify>On January 1, 2010, pursuant to the Plan, the Company also
granted to Mr. Lee 140,000 restricted shares of the Company&#146;s common stock
subject to the vesting schedule therein.</P>
<P align=justify>As a result of the resignation of Mr. Lee, effective May 5,
2010, his employment agreement with the Company, dated November 16, 2009, the
stock option agreement with the Company, dated January 1, 2010, and the
restricted shares grant agreement with the Company, dated January 1, 2010 were
terminated, effective on May 5, 2010. In addition, upon his resignation, the
unvested 105,000 restricted shares and the unvested options to purchase 250,000
shares of the Company's common stock granted to Mr. Lee were cancelled. </P>
<P align=center>54</P>
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<A name=page_59></A>
<P align=justify>On July 16, 2010, we and Mr. Tick entered into a stock option
agreement under the Plan. Pursuant to the terms of the stock option agreement,
Mr. Tick was granted options to purchase an aggregate 150,000 shares of common
stock of the Company, among which, an option to purchase 75,000 shares will be
vested on December 31, 2011 with an exercise price of $5.00 per share, an option
to purchase 100,000 shares will be vested on December 31, 2012 with an exercise
price of $7.00 per share. Each of the options expires three years after its
respective vesting date.</P>
<P align=justify>On the same date, we also entered into a restricted shares
grant agreement under the Plan with Mr. Tick. Pursuant to the terms of the
restricted shares grant agreement, we granted to Mr. Tick 150,000 restricted
shares of the Company&#146;s common stock subject to the vesting schedule therein. If
Mr. Tick&#146;s service with the Company ceases for any reason other than Mr. Tick&#146;s
(a) death, (b) Disability, (c) Retirement, or (d) termination by the Company
without cause, any nonvested restricted shares will be automatically forfeited
to the Company. </P>
<P align=center><B>SHARES ELIGIBLE FOR FUTURE SALE</B></P>
<P align=justify>As of August 9, 2010, 14,332,731 shares of our common stock
were issued and outstanding.</P>
<P align=justify><B><I>Shares Covered by this Prospectus</I></B></P>
<P align=justify>All of the 2,965,561 shares being registered in this offering
may be sold without restriction under the Securities Act, so long as the
registration statement of which this prospectus is a part is, and remains,
effective. </P>
<P align=justify><B><I>Rule 144</I></B></P>
<P align=justify>The SEC has recently adopted amendments to Rule 144 which
became effective on February 15, 2008 and apply to securities acquired both
before and after that date. Under these amendments, a person who has
beneficially owned restricted shares of our common stock or warrants for at
least six months is entitled to sell its securities provided that (1) such
person is not deemed to have been one of our affiliates at the time of, or at
any time during the three months preceding, a sale, (2) we are subject to the
Exchange Act reporting requirements for at least 90 days before the sale and (3)
if the sale occurs prior to satisfaction of a one-year holding period, we
provide current information at the time of sale. </P>
<P align=justify>Persons who have beneficially owned restricted shares of our
common stock or warrants for at least six months but who are our affiliates at
the time of, or at any time during the three months preceding, a sale, would be
subject to additional restrictions, by which such person would be entitled to
sell within any three-month period only a number of securities that does not
exceed the greater of: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>1% of the total number of securities of the same class then outstanding,
  which will equal approximately 143,327 shares immediately after this offering;
  or </P>
  <LI>
  <P>the average weekly trading volume of such securities during the four
  calendar weeks preceding the filing of a notice on Form 144 with respect to
  such sale. </P></LI></UL>
<P align=justify><I>provided, </I>in each case, that we are subject to the
Exchange Act periodic reporting requirements for at least three months before
the sale. </P>
<P align=justify>However, since our shares are quoted on the OTCQB, which is not
an &#147;automated quotation system,&#148; our stockholders will not be able to rely on
the market-based volume limitation described in the second bullet above. If, in
the future, our securities are listed on an exchange or quoted on NASDAQ, then
our stockholders would be able to rely on the market-based volume limitation.
Unless and until our stock is so listed or quoted, our stockholders can only
rely on the percentage based volume limitation described in the first bullet
above. </P>
<P align=justify>Such sales by affiliates must also comply with the manner of
sale, current public information and notice provisions of Rule 144. The selling
stockholders will not be governed by the foregoing restrictions when selling
their shares pursuant to this prospectus. </P>
<P align=center>55</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_60></A>
<P align=justify>Historically, the SEC staff has taken the position that Rule
144 is not available for the resale of securities initially issued by companies
that are, or previously were, blank check companies, like us. The SEC has
codified and expanded this position in the amendments discussed above by
prohibiting the use of Rule 144 for resale of securities issued by any shell
companies (other than business combination related shell companies) or any
issuer that has been at any time previously a shell company. The SEC has
provided an important exception to this prohibition, however, if the following
conditions are met: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>the issuer of the securities that was formerly a shell company has ceased
  to be a shell company;
  <LI>the issuer of the securities is subject to the reporting requirements of
  Section 13 or 15(d) of the Exchange Act;
  <LI>the issuer of the securities has filed all Exchange Act reports and
  material required to be filed, as applicable, during the preceding 12 months
  (or such shorter period that the issuer was required to file such reports and
  materials), other than Current Reports on Form 8-K; and
  <LI>the least one year has elapsed from the time that the issuer filed current
  comprehensive disclosure with the SEC reflecting its status as an entity that
  is not a shell company. </LI></UL>
<P align=justify>As a result, it is likely that pursuant to Rule 144 our
stockholders, who were stockholders of ours prior to the reverse acquisition of
New Resources that concluded on December 23, 2008, were able to sell the their
shares of our common stock from and after December 31, 2009 (the one year
anniversary of our filing of the Current Report on Form 8-K reporting the
reverse acquisition of New Resources) without registration. </P>
<P align=center><B>PLAN OF DISTRIBUTION</B></P>
<P align=justify>The selling stockholders may, from time to time, sell, transfer
or otherwise dispose of any or all of their shares of common stock or interests
in shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices. </P>
<P align=justify>The selling stockholders may use any one or more of the
following methods when disposing of shares or interests therein: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>ordinary brokerage transactions and transactions in which the broker-dealer
  solicits purchasers; </P>
  <LI>
  <P>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; </P>
  <LI>
  <P>purchases by a broker-dealer as principal and resale by the broker-dealer
  for its account; </P>
  <LI>
  <P>an exchange distribution in accordance with the rules of the applicable
  exchange; </P>
  <LI>
  <P>privately negotiated transactions; </P>
  <LI>
  <P>short sales effected after the date the registration statement of which
  this Prospectus is a part is declared effective by the SEC; </P>
  <LI>
  <P>through the writing or settlement of options or other hedging transactions,
  whether through an options exchange or otherwise; </P>
  <LI>
  <P>broker-dealers may agree with the selling stockholders to sell a specified
  number of such shares at a stipulated price per share; and </P>
  <LI>
  <P>a combination of any such methods of sale. </P></LI></UL>
<P align=justify>The selling stockholders may, from time to time, pledge or
grant a security interest in some or all of the shares of common stock owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this Prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
</P>
<P align=center>56</P>
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noShade SIZE=5>
<A name=page_61></A>
<P align=justify>In connection with the sale of our common stock or interests
therein, the selling stockholders 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 stockholders may also sell shares of our 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 stockholders 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). </P>
<P align=justify>The aggregate proceeds to the selling stockholders from the
sale of the common stock offered by them will be the purchase price of the
common stock less discounts or commissions, if any. Each of the selling
stockholders reserves the right to accept and, together with their agents from
time to time, to reject, in whole or in part, any proposed purchase of common
stock to be made directly or through agents. We will not receive any of the
proceeds from this offering. </P>
<P align=justify>Broker-dealers engaged by the selling stockholders may arrange
for other broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchase of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
</P>
<P align=justify>The selling stockholders also may resell all or a portion of
the shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided that they meet the criteria and conform to the
requirements of that rule. </P>
<P align=justify>The broker-dealers or agents that participate in the sale of
the common stock or interests therein and the selling stockholders who are
affiliates of broker-dealers may be &#147;underwriters&#148; within the meaning of Section
2(11) of the Securities Act. Any discounts, commissions, concessions or profit
they earn on any resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling stockholders who are
&#147;underwriters&#148; within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act. We know
of no existing arrangements between any of the selling stockholders and any
other stockholder, broker, dealer, underwriter, or agent relating to the sale or
distribution of the shares, nor can we presently estimate the amount, if any, of
such compensation. See &#147;Selling Stockholders&#148; for description of any material
relationship that a stockholder has with us and the description of such
relationship. </P>
<P align=justify>To the extent required, the shares of our common stock to be
sold, the names of the selling stockholders, the respective purchase prices and
public offering prices, the names of any agents, dealer or underwriter, any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this
Prospectus. </P>
<P align=justify>In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states, the
common stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and
is complied with. </P>
<P align=justify>We have advised the selling stockholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this Prospectus (as it
may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
</P>
<P align=justify>We have agreed to pay certain fees and expenses incurred by us
incident to the registration of the shares. We have agreed to indemnify the
selling stockholders against liabilities, including liabilities under the
Securities Act and state securities laws, relating to the registration of the
shares offered by this Prospectus. </P>
<P align=center>57</P>
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<P align=center><B>LEGAL MATTERS</B></P>
<P align=justify>The validity of the common stock offered by this prospectus
will be passed upon for us by Holland &amp; Hart LLP, Reno, Nevada. </P>
<P align=center><B>EXPERTS</B></P>
<P align=justify>The audited consolidated financial statements of Nutrastar
International Inc. for the fiscal years ended December 31, 2009 and 2008
included in this prospectus and in the registration statement have been audited
by AGCA, Inc., independent registered public accounting firm, to the extent and
for the periods sent forth in their respective reports appearing elsewhere
herein and in the registration statement, and are included in reliance on such
reports, given the authority of said firms as experts in auditing and
accounting.</P>
<P align=center><B>WHERE YOU CAN FIND MORE INFORMATION</B></P>
<P align=justify>We have filed with the SEC a registration statement on Form S-1
  under the Securities Act with respect to the common stock offered in this offering.
  This prospectus does not contain all of the information set forth in the registration
  statement. For further information with respect to us and the common stock offered
  in this offering, we refer you to the registration statement and to the attached
  exhibits. With respect to each such document filed as an exhibit to the registration
  statement, we refer you to such exhibit for a more complete description of the
  matters involved. </P>
<P align=justify>You may inspect our registration statement and the attached
exhibits and schedules without charge at the public reference facilities
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may
obtain copies of all or any part of our registration statement from the SEC upon
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. </P>
<P align=justify>Our SEC filings, including the registration statement and the
exhibits filed with the registration statement, are also available from the
SEC&#146;s website at www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC. </P>
<P align=center>58</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_63></A>
<P align=center><B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%"><B>Page</B> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD align=center width="15%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES FINANCIAL
      STATEMENTS</B> <B>FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2010
      (UNAUDITED)</B> </TD>
    <TD align=center width="15%"></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Condensed Consolidated Balance Sheets as of
      March 31, 2010 (Unaudited) and December 31, 2009 (Audited) </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-2 </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Condensed Consolidated Statements of Income
      and Comprehensive Income (Unaudited) for the Three Months Ended March 31,
      2010 and 2009 </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-3 </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Condensed Consolidated Statement of
      Stockholders&#146; Equity (Unaudited) for the Three Months Ended March 31, 2010
    </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-4 </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Condensed Consolidated Statements of Cash
      Flows (Unaudited) for the Three Months Ended March 31, 2010 and 2009 </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-5 </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Notes to Condensed Consolidated Financial
      Statements </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-6</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD align=center width="15%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES FINANCIAL
      STATEMENTS</B> <B>FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</B> </TD>
    <TD align=center width="15%"></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD align=center width="15%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Reports of Independent Registered Public
      Accounting Firm </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-20</TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Consolidated Balance Sheets </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-21</TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Consolidated Statements of Income and
      Comprehensive Income </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-22</TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Consolidated Statements of Stockholders&#146;
      Equity </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-23</TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Consolidated Statements of Cash Flows </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-24</TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Notes to Consolidated Financial Statements
    </TD>
    <TD align=center width="15%" bgColor=#eeeeee>F-25</TD></TR></TABLE>
<P align=center>F-1 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_2></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>CONDENSED CONSOLIDATED BALANCE SHEETS </B><BR>(AMOUNTS EXPRESSED IN
US DOLLAR)<B> </B><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%" valign="bottom"><FONT size=2><B>March 31</B>
</FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%" valign="bottom"><FONT size=2><B>December 31</B>
    </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2010</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%" valign="bottom"><FONT size=2>(<B>Unaudited</B>)
    </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%" valign="bottom"><FONT size=2>(<B>Audited</B>)
    </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD align=center colSpan=6><FONT size=2><B><U>ASSETS</U></B>&nbsp;&nbsp;
      </FONT></TD>
    <TD align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>CURRENT ASSETS
    </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Cash and cash equivalents
    </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&nbsp;23,289,425
</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&nbsp;20,115,677
</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Accounts
      receivable, net </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>367,966
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>215,486
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Inventories </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>538,700 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>616,073 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Prepayments and
      other receivables </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>10,971 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>251,235 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Total current assets
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>24,207,062 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>21,198,471 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>OTHER ASSETS </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Intangible assets, net </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>2,638,241 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>2,747,402 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Property, plant
      and equipment, net </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>10,261,227 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>10,396,507 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 10"><FONT size=2>&nbsp; &nbsp;<B>Total assets</B>
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;37,106,530</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;34,342,380</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD align=center bgColor=#e6efff colSpan=6><FONT size=2><B><U>LIABILITIES
      AND SHAREHOLDERS' EQUITY</U></B>&nbsp; </FONT></TD>
    <TD align=center width="2%" bgColor=#e6efff><FONT
  size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>CURRENT LIABILITIES </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Accounts payable
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;55,599 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;863
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Other payables and accruals
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>430,056 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>453,504 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Payable for
      intangible asset </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>878,953
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>878,709
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Income tax payable </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>277,183 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>319,873 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Due to related
      parties </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>49,807
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>49,794
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Acquisition payable </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>8,736,833 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>8,736,833 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Total
      current liabilities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>10,428,431 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>10,439,576 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Total liabilities
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>10,428,431 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>10,439,576 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 10"><FONT size=2>COMMITMENTS AND
      CONTINGENCIES (Note 20) </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 10"><FONT size=2>SHAREHOLDERS' EQUITY </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -12; margin-left: 15"><FONT size=2>Preferred Stock, $0.001 par
      value, 1,000,000 shares authorized, none shares issued and outstanding
      </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>- </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>- </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -12; margin-left: 15"><FONT size=2>Common stock, $0.001 par value, 190,000,000
      shares authorized, 14,312,731 and 14,297,731 shares issued and outstanding
      </FONT></TD>
    <TD align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=right width="12%" valign="bottom"><FONT size=2>14,313 </FONT></TD>
    <TD align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=right width="12%" valign="bottom"><FONT size=2>14,298 </FONT></TD>
    <TD align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Additional
      paid-in capital </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>4,761,251
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>4,715,891
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Statutory reserves </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>1,344,401 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>1,341,687 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Retained earnings
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>19,576,360
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>16,858,012
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Accumulated other comprehensive
      income </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>981,774 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>972,916 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Total
      shareholders' equity </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>26,678,099 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>23,902,804 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 10"><FONT size=2>&nbsp; &nbsp;<B>Total liabilities and
      shareholders' equity</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;37,106,530</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;34,342,380</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT
size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=center>See accompanying notes to condensed consolidated financial
statements </P>
<P align=center>F-2 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_4></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME</B><BR><B>(UNAUDITED) </B><BR>(AMOUNTS EXPRESSED IN US DOLLAR) <BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2><B>For the
      Three Months Ended</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2><B>March
      31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2010</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2><B>NET REVENUE</B>
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>$</B></FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>&nbsp;4,768,395</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>$</B></FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>&nbsp;4,642,724</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>Cost of sales </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(1,056,515</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(1,755,704</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>GROSS PROFIT </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>3,711,880
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>2,887,020
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>Selling expenses </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(171,718</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(111,532</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>General and
      administrative expenses </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(429,786</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(303,525</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>Income from operations </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>3,110,376 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>2,471,963 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>Other income:
</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Interest income </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>33,077 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>12,746 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Exchange
      gain, net </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>429
    </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>1,600
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Other, net </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>152 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Total
      other income </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>33,506 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>14,498 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>Income before income taxes </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>3,143,882 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>2,486,461 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>Provision for income
      taxes </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(422,820</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(316,192</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2><B>NET INCOME</B> </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2><B>2,721,062</B>
</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2><B>2,170,269</B>
</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>OTHER COMPREHENSIVE
      INCOME (LOSS): </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Foreign currency translation
      adjustments </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>8,858 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(4,311</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2><B>COMPREHENSIVE
      INCOME</B> </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>$</B></FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>&nbsp;2,729,920</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>$</B></FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>&nbsp;2,165,958</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>Earnings per share </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Basic
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;0.19 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;0.17 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Diluted </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp;0.19 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp;0.17 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom" dir="ltr">
    <p style="margin-top: 10"><FONT size=2>Weighted average number
      of shares outstanding </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Basic </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>14,312,731 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>12,800,000 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Diluted
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>14,402,412 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>12,800,000 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=center>See accompanying notes to condensed consolidated financial
statements. </P>
<P align=center>F-3</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_5></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146; EQUITY <br>
(UNAUDITED)
</B><BR><B>FOR THE THREE MONTHS ENDED MARCH 31, 2010 </B><BR>(AMOUNTS EXPRESSED
IN US DOLLAR) <BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom"><B>Accumulated</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="17%"
    colSpan=4 valign="bottom"><B>Common Stock</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom"><B>Additional</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom"><B>Other</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom"><B>Number of</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom"><B>Paid-in</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom"><B>Statutory</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom"><B>Retained</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom"><B>Comprehensive</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%" valign="bottom"><B>shares</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%" valign="bottom"><B>Amount</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%" valign="bottom"><B>Capital</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%" valign="bottom"><B>Reserves</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%" valign="bottom"><B>Earnings</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%" valign="bottom"><B>Income</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%" valign="bottom"><B>Total</B> </TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">Balance at January 1, 2010
      (Audited) </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">14,297,731 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">&nbsp;14,298 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">4,715,891</TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">&nbsp;1,341,687 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">&nbsp;16,858,012 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">972,916</TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">$</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">&nbsp;23,902,804 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">Net income </TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="7%" valign="bottom">- </TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="7%" valign="bottom">- </TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="7%" valign="bottom">2,721,062</TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="7%" valign="bottom">&nbsp; </TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="7%" valign="bottom">2,721,062 </TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">Foreign currency translation
      adjustment </TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">- </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff valign="bottom"></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff valign="bottom"></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">- </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff valign="bottom"></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="7%" bgColor=#e6efff valign="bottom">
    <p align="right">8,858</TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff valign="bottom">8,858 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">Appropriation of statutory reserves </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="7%" valign="bottom">- </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="7%" valign="bottom"></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="7%" valign="bottom"></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="7%" valign="bottom">2,714 </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="7%" valign="bottom">(2,714</TD>
    <TD align=left width="2%" valign="bottom">) </TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=left width="7%" valign="bottom"></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD align=right width="7%" valign="bottom">- </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">Share-based payment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff valign="bottom">15,000 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff valign="bottom">15 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff valign="bottom">45,360</TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff valign="bottom">- </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="7%"
    bgColor=#e6efff valign="bottom"></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="7%"
    bgColor=#e6efff valign="bottom"></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="7%"
    bgColor=#e6efff valign="bottom">45,375 </TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom"><B>Balance at</B> <B>March 31, 2010</B>
      <B>(Unaudited)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" valign="bottom"><B>14,312,731</B></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"><STRONG>$</STRONG></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" valign="bottom">&nbsp;<STRONG>14,313</STRONG></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"><STRONG>$</STRONG></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" valign="bottom">&nbsp;<STRONG>4,761,251</STRONG></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"><STRONG>$</STRONG></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" valign="bottom">&nbsp;<STRONG>1,344,401</STRONG> </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" valign="bottom">&nbsp;<B>19,576,360</B></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"><STRONG>$</STRONG></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" valign="bottom">
    <b>981,774</b></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" valign="bottom"><B>26,678,099</B> </TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR></TABLE>
<P align=center>See accompanying notes to condensed consolidated financial
statements. </P>
<P align=center>F-4</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_6></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS <br>
(UNAUDITED)
</B><BR>(AMOUNTS EXPRESSED IN US DOLLAR) <BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2><B>For the
      Three Months Ended</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2><B>March
      31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2010</B></FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>CASH FLOWS FROM
      OPERATING ACTIVITIES: </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Net income </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&nbsp;2,721,062 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&nbsp;2,170,269 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Adjustments to
      reconcile net income to cash provided by operating activities: </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Depreciation and amortization
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>252,892 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>252,527 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;
      &nbsp;Share-based compensation expense </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>45,375
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>-
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;(Increase) decrease in
      assets: </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Accounts receivable </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(152,407</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>) </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(142,354</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Prepayments and other receivables </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>240,313 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>3,862 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Inventories </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>77,538
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>597,554
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Increase (decrease) in
      liabilities: </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Accounts payable </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>54,730
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>9,745
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Other
      payables and accruals </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(23,572</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(140,586</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT size=2>)
</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Income tax payable </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(42,775</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>) </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>20,662
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Due
      to related parties </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>2,250 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp;Net cash provided by operating activities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>3,173,156 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>2,773,929 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 10"><FONT size=2>CASH FLOWS FROM INVESTING ACTIVITIES:
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Purchase of
      property, plant and equipment </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(4,816</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;Net cash
      used in investing activities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(4,816</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 10"><FONT size=2>CASH FLOWS FROM
      FINANCING ACTIVITIES: </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Repayment of acquisition payable
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(50,269</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT size=2>)
</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Advance from
      related party </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>-
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>61,588
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Repayment to related party
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(428</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp;Net cash provided by (used in) financing activities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(428</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>11,319 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 10"><FONT size=2>Foreign currency translation adjustment
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>5,836 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(3,424</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT size=2>)
</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 10"><FONT size=2><B>INCREASE IN CASH AND
      CASH EQUIVALENTS</B> </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>3,173,748</B> </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2><B>2,781,824</B> </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>CASH AND CASH EQUIVALENTS, at the
      beginning of the period </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>20,115,677 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>9,198,243 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 10"><FONT size=2><B>CASH AND CASH
      EQUIVALENTS, at the end of the period</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;23,289,425</B> </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;11,980,067</B> </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 10"><FONT size=2>NON-CASH TRANSACTIONS </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Share-based
      payments to officer under equity incentive plan </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;45,375 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;- </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 10"><FONT size=2>SUPPLEMENTAL DISCLOSURE INFORMATION
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Cash paid for
      income taxes </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;356,550 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;356,091 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Cash paid for interest </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp;- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp;- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" ><FONT
    size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=center>See accompanying notes to condensed consolidated financial
statements. </P>
<P align=center>F-5</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_7></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<p><B><font size="2">NOTE 1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DESCRIPTION OF BUSINESS AND
ORGANIZATION </font></B></p>
<P align=justify>Nutrastar International, Inc. (&#147;<U>Nutrastar</U>&#148; or the
&#147;<U>Company</U>&#148;) was incorporated in the State of Nevada on December 22, 2002.
On December 23, 2008, the Company completed a reverse acquisition with New
Zealand WAYNE&#146;S New Resources Development Co., Ltd. (&#147;<U>New Resources</U>&#148;). As
a result of the reverse acquisition with New Resources, the Company is no longer
a shell company and active business operations have been revived. Nutrastar
together with its subsidiaries are referred to as the &#147;<U>Company</U>&#148;. </P>
<P align=justify>On May 19, 2009, the Company filed Amended and Restated
Articles of Incorporation with the Nevada Secretary of State to amend the
Company&#146;s current Articles of Incorporation to, among other things, (1) change
the name of the Company from &#147;YzApp International Inc.&#148; to &#147;Shuaiyi
International New Resources Development Inc.,&#148; (2) increase the total number of
shares of common stock that the Company has the authority to issue from
50,000,000 to 190,000,000 shares and (3) effect a one for 114.59 reverse split
of the Company&#146;s outstanding common stock (the &#147;<U>Reverse Split</U>&#148;). The
detailed description of the Amendments is stated in the Company&#146;s Form 8-K dated
May 26, 2009.</P>
<P align=justify>On January 11, 2010, the Company, filed a Certificate of
Amendment to its Articles of Incorporation with the Secretary of State of the
State of Nevada, pursuant to which the Company further changed its name from
"Shuaiyi International New Resources Development Inc." to "Nutrastar
International Inc.". </P>
<P align=justify>As of March 31, 2010, details of the subsidiaries of the
Company are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2><B>Domicile and</B>
    </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2><B>Percentage</B>
</FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" style="border-bottom-style: none; border-bottom-width: medium" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2><B>date of</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2><B>of effective</B>
    </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" noWrap align=left><FONT
      size=2><B>Subsidiaries&#146; names</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
      width="17%"><FONT size=2><B>incorporation</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="17%"><FONT size=2><B>Paid-up capital</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="17%"><FONT size=2><B>ownership</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="17%"><FONT size=2><B>Principal activities</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>New Zealand WAYNE&#146;S </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" style="border-top-style: none; border-top-width: medium" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>British Virgin </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>50,000 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>100% </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Holding company of the
      </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>&nbsp; &nbsp;New Resources </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Islands </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>other subsidiaries
    </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>&nbsp; &nbsp;Development Co., Ltd
      </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>March 13, 2008 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>&nbsp; &nbsp;(&#147;New Resources&#148;)
    </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Heilongjiang Shuaiyi New </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>People&#146;s Republic
</FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>RMB60,000,000 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>100% </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>Principally engaged in
      </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; &nbsp;Energy Development
    </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>of China (&#147;PRC&#148;) </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>investment holding
    </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; &nbsp;Co., Ltd (&#147;Heilongjiang
      </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>July 11, 2006 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; &nbsp;Shuaiyi&#148;) </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>Daqing Shuaiyi Biomass </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>PRC </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>RMB10,000,000 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>100% </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Growing and sales of
    </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>&nbsp; &nbsp;Technology Co., Ltd.
      </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>August 8, 2005 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Chinese Golden Grass,
      </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>&nbsp; &nbsp;(&#147;Daqing Shuaiyi&#148;)
    </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>which is widely used for
      </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Chinese medicine </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Harbin Shuaiyi Green and </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>PRC </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>RMB1,500,000 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>100% </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>Sales of agricultural
      </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; &nbsp;Specialty Food Trading
      </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>May 18, 2001 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>products </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; &nbsp;LLP. (&#147;Harbin Shuaiyi&#148;)
      </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=center>F-6</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>


<!--$$/page=-->
<A name="page_8"></A>

<P align="center">
<B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES </B><BR>
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
<B>(Unaudited) </B><BR>
</P>
<p>
<B>NOTE 2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES</B></p>
<P align="justify">
<B><I>Basis of preparation</I></B><BR>
</P>
<P align="justify" style="text-indent: 53pt">
These interim condensed consolidated financial statements are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included.
The results reported in the condensed consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying condensed consolidated financial statements have
been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with accounting
principles generally accepted in the United States. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company&#146;s Annual
Report on Form 10-K for the year ended December 31, 2009. </P>
<P align="justify" style="text-indent: 53pt">
These condensed consolidated financial statements include the financial statements of Nutrastar and its subsidiaries. All significant inter-company balances or transactions have been eliminated on consolidation. </P>
<P align="justify">
<B><I>Reclassification</I></B><BR>
</P>
<P align="justify" style="text-indent: 53pt">
Certain prior period balances have been reclassified to conform to the current period's financial statement presentation. These reclassifications had no impact on previously reported financial position, results of operations or cash flows. </P>
<P align="justify">
<B><I>Research and development costs</I></B><BR>
</P>
<P align="justify" style="text-indent: 53pt">
Research and development costs are expensed as incurred. For the three months ended March 31, 2010 and 2009, research and development costs were &#36;8,789 and &#36;8,777, respectively. </P>
<P align="justify">
<B><I>Advertising costs</I></B><BR>
</P>
<P align="justify" style="text-indent: 53pt">
The Company expenses all advertising costs as incurred. The total amount of advertising costs charged to selling, general and administrative expense were &#36;21,692 and &#36;1,097 for the three months ended March 31, 2010 and 2009, respectively.
</P>
<P align="justify">
<B><I>Shipping and handling costs</I></B><BR>
</P>
<P align="justify" style="text-indent: 53pt">
Costs of shipping and handling of products to customers are included in selling, general and administrative expense. Shipping and handling costs for the three months ended March 31, 2010 and 2009 were insignificant. </P>
<P align="center">
F-7</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">

<!--$$/page=--><A name=page_9></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<p><B>NOTE 2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></p>
<P align=justify><B><I>Foreign currency</I></B><BR></P>
<P align=justify>The Company uses the United States dollars (&#147;U.S. Dollar&#148; or
&#147;US$&#148; or &#147;$&#148;) for financial reporting purposes. The PRC subsidiaries within the
Company maintain their books and records in their functional currency, Chinese
Renminbi (&#147;RMB&#148;), being the lawful currency in the PRC. Assets and liabilities
of the PRC subsidiaries are translated from RMB into US Dollars using the
applicable exchange rates prevailing at the balance sheet date. Items on the
statement of operations are translated at average exchange rates during the
reporting period. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the Company&#146;s financial statements
are recorded as accumulated other comprehensive income.</P>
<P align=justify>The exchange rates used to translate amounts in RMB into U.S.
Dollars for the purposes of preparing the consolidated financial statements are
based on the rates as published on the website of People&#146;s Bank of China and are
as follows:- </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      >&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="20%"
    ><B>March 31, 2010</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%"><B>December 31, 2009</B> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: medium none #000000; " noWrap align=left bgcolor="#E6EFFF"
      >Balance sheet items, except for equity accounts </TD>
    <TD style="BORDER-BOTTOM: medium none #000000; " noWrap align=center width="20%" bgcolor="#E6EFFF"
    >US$1=RMB 6.8263 </TD>
    <TD style="BORDER-BOTTOM: medium none #000000; " noWrap align=center
      width="20%" bgcolor="#E6EFFF">US$1=RMB6.8282 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-top-style: none; border-top-width: medium" >&nbsp;</TD>
    <TD noWrap align=center width="20%" colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=center width="20%" colSpan=2><B>Three months ended March 31,</B> </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      >&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="20%"
    ><B>2010</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="20%"><B>2009</B> </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF" >Items in the statements of income and
      cash flows </TD>
    <TD noWrap align=center width="20%" bgcolor="#E6EFFF" >US$1=RMB 6.8269 </TD>
    <TD noWrap align=center width="20%" bgcolor="#E6EFFF">US$1=RMB6.8357 </TD></TR></TABLE>
<P align=justify>No representation is made that the RMB amounts could have been,
or could be, converted into U.S. dollars at the above rates. The value of RMB
against U.S. dollars and other currencies may fluctuate and is affected by,
among other things, changes in China&#146;s political and economic conditions. Any
significant revaluation of RMB may materially affect the Company&#146;s results and
financial position in terms of U.S. dollar reporting.</P>
<P align=center>F-8</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_10></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<p><B>NOTE 3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RECENT ACCOUNTING PRONOUNCEMENTS </B>
</p>
<P align=justify style="text-indent: 53pt">Effective January 1, 2010, the Company adopted the provisions
in ASU 2009-17, &#147;Consolidation (ASC Topic 810): Improvements to Financial
Reporting by Enterprises Involved with Variable Interest Entities&#148;, which
changes how a company determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. The adoption of the provisions in ASU 2009-17 did not have an
impact on the Company&#146;s consolidated financial statements.</P>
<P align=justify style="text-indent: 53pt">Effective January 1, 2010, the Company adopted ASU 2010-01,
&#147;Equity (ASC Topic 505): Accounting for Distributions to Shareholders with
Components of Stock and Cash&#148;, which clarifies that the stock portion of a
distribution to shareholders that allow them to elect to receive cash or stock
with a potential limitation on the total amount of cash that all shareholders
can elect to receive in the aggregate is considered a share issuance that is
reflected prospectively in earnings per share and is not considered a stock
dividend for purposes of ASC Topic 505 and ASC Topic 260. The adoption of the
provisions in ASU 2010-01 did not have an impact on the Company&#146;s consolidated
financial statements. </P>
<P align=justify style="text-indent: 53pt">Effective January 1, 2010, the Company adopted the provisions
in ASU 2010-06, &#147;Fair Value Measurements and Disclosures (ASC Topic 820):
Improving Disclosures about Fair Value Measurements, which requires new
disclosures related to transfers in and out of levels 1 and 2 and activity in
level 3 fair value measurements, as well as amends existing disclosure
requirements on level of disaggregation and inputs and valuation techniques. The
adoption of the provisions in ASU 2010-06 did not have an impact on the
Company&#146;s consolidated financial statements. </P>
<P align=justify style="text-indent: 53pt">Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company&#146;s
Consolidated Financial Statements upon adoption. </P>
<p><B>NOTE 4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FAIR VALUE MEASUREMENTS AND FINANCIAL
INSTRUMENTS </B></p>
<P align=justify style="text-indent: 53pt">ASC Topic 820, <I>Fair Value Measurement and Disclosures</I>,
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair
value hierarchy which requires classification based on observable and
unobservable inputs when measuring fair value. The fair value hierarchy
distinguishes between assumptions based on market data (observable inputs) and
an entity&#146;s own assumptions (unobservable inputs). The hierarchy consists of
three levels: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left >
    <p style="margin-right: 5">Level one &#151; </TD>
    <TD noWrap align=left width="95%">Quoted market prices in active markets
      for identical assets or liabilities; </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >
    <p style="margin-right: 5">Level two &#151; </TD>
    <TD noWrap align=left width="95%">Inputs other than level one inputs that
      are either directly or indirectly observable; and </TD></TR>
  <TR vAlign=top>
    <TD align=left noWrap >
    <p style="margin-right: 5">Level three &#151; </TD>
    <TD align=left width="95%">Unobservable inputs developed using estimates
      and assumptions, which are developed by the reporting entity and reflect
      those assumptions that a market participant would use.
</TD></TR></TABLE>
<P align=justify style="text-indent: 53pt">Determining which category an asset or liability falls within
the hierarchy requires significant judgment. The Company evaluates its hierarchy
disclosures each quarter. </P>
<P align=justify style="text-indent: 53pt">There were no assets or liabilities measured at fair value on a
non-recurring basis as of March 31, 2010 or December 31, 2009. </P>
<P align=justify style="text-indent: 53pt">The carrying values of cash and cash equivalents, trade and
other receivables and payables approximate their fair values due to the short
maturities of these instruments. </P>
<P align=center>F-9</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_11></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B></P>
<p><B>NOTE 5</B> <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ACCOUNTS RECEIVABLE,
      NET</B> </p>
<p>Accounts receivable
      consisted of the following: </p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>March 31</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>December 31</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>(Audited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF" >Accounts receivable </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF">&nbsp;367,966 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF">&nbsp;215,486 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >Less: Allowance for doubtful
      accounts </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF" ><B>Accounts receivable,
      net</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" bgcolor="#E6EFFF"><B>&nbsp;367,966</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" bgcolor="#E6EFFF"><B>&nbsp;215,486</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  </TABLE>
<p><B>NOTE 6</B> <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INVENTORIES</B>
</p>
<p>Inventories by major
      categories are summarized as follows: </p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>March 31</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>December 31</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>(Audited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF" >Raw materials </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF">&nbsp;161,660 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF">&nbsp;183,934 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >Work in progress </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">195,701 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">294,983 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF" >Finished goods </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%" bgcolor="#E6EFFF">181,339 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%" bgcolor="#E6EFFF">137,156 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left ><B>Total</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%"><B>&nbsp;538,700</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%"><B>&nbsp;616,073</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  </TABLE>
<p><B>NOTE 7</B> <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PREPAYMENTS AND OTHER
      RECEIVABLES</B> </p>
<p>Prepayments and other
      receivables consist of the following: </p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>March 31</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>December 31</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>(Audited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF" >Prepayments </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF">&nbsp;2,035 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="10%" bgcolor="#E6EFFF">&nbsp;12,812 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left >Other receivables, net of
      $nil allowance </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">8,936 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">238,423 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF" >&nbsp; </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" bgcolor="#E6EFFF"><B>&nbsp;10,971</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" bgcolor="#E6EFFF"><B>&nbsp;251,235</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR></TABLE>
<P align=center>F-10</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_12></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<P align=justify><B>NOTE 8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INTANGIBLE ASSETS,
NET</B></P>
<P align=justify>Intangible assets, net consisted of the following:<BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>March 31</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>December 31</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Audited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Computer software, cost </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;1,455 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;1,454 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Exclusive right to use a secret process, cost </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">4,396,533 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">4,395,309 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Less: Accumulated amortization </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>(1,759,747</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>(1,649,361</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><B>&nbsp;2,638,241</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><B>&nbsp;2,747,402</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>In April 2006, the Company purchased from a third party a
ten-year exclusive right to use a secret process and method in the cultivation
and growing of Chinese Golden Grass, which is widely used for Chinese medicine,
for a cash consideration of RMB30,000,000, payable over five years. The
exclusive right is amortized over its term of ten years using the straight-line
method.</P>
<P align=justify>Amortization expenses for the three months ended March 31, 2010
and 2009 were $109,915 and $109,774, respectively. </P>
<p><B>NOTE 9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PROPERTY, PLANT AND EQUIPMENT, NET</B>
</p>
<p>Property, plant and equipment, net
      consisted of the following: </p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>March 31</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>December 31</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Audited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Cost: </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp;Buildings </TD>
    <TD noWrap align=left width="1%" >$</TD>
    <TD noWrap align=right width="12%">&nbsp;11,675,653 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >$</TD>
    <TD noWrap align=right width="12%">&nbsp;11,672,404 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp;Office equipment </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>20,085 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>15,264 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp;Machinery </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">128,321 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">128,286 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>&nbsp;Motor vehicles </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>54,857 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>54,842 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Total cost </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">11,878,916 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">11,870,796 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Less: Accumulated depreciation </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>(1,617,689</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>(1,474,289</TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Net book value</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><B>&nbsp;10,261,227</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><B>&nbsp;10,396,507</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>Depreciation expenses for the three months ended March 31, 2010
and 2009 were $142,977 and $142,753, respectively </P>
<P align=center>F-11</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_13></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B></P>
<p><FONT size=2><B>NOTE 10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; OTHER PAYABLES AND
      ACCRUALS</B> </FONT></p>
<p><FONT size=2>Other payables and accruals consisted
      of the following: </FONT></p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%"><FONT size=2><B>March 31</B>
</FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%"><FONT size=2><B>December 31</B>
    </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2010</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%"><FONT size=2><B>(Audited)</B>
    </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Accrued staff costs
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT
      size=2>&nbsp;418,952 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT
      size=2>&nbsp;370,395 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Advance from customer </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%"><FONT size=2>3,983 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Other taxes payable
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>1,962
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>25,030
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Other payables </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><FONT size=2>5,159 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><FONT size=2>58,079 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2><B>&nbsp;430,056</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2><B>&nbsp;453,504</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=justify><STRONG>NOTE 11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PAYABLE FOR INTANGIBLES</STRONG> </P>
<P align=justify>As described in Note 8, the Company purchased an exclusive
right from an independent party for a secret process and method for a stated
value of RMB30,000,000 payable over 5 years from the date of purchase. The
agreement provides that all payments by the Company for the secret process and
method will be refundable if the secret process and method proves ineffective.
Under ASC Subtopic 835-30, &#147;Imputation of Interest&#148; (formerly APB 21, &#147;Interest
on Receivables and Payables&#148;), the payable for intangibles are stated without
imputed interest as the noninterest factor fairly represents the warranty for
performance. </P>
<P align=justify>The following table presents the amounts payable for the next
five years and thereafter: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%">
    <p align="center"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Reminder of year ending
      December 31, 2010 </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT
      size=2>&nbsp;878,953 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>2011 and thereafter </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Total </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>878,953
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2><B>Current portion</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><FONT size=2><B>878,953</B> </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2><B>Non-current
      portion</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2><B>&nbsp;-</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff><FONT
    size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=justify><STRONG>NOTE 12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ACQUISITION PAYABLE</STRONG></P>
<P align=justify>The acquisition payable represents the transfer price of
RMB60,000,000, equivalent to USD 8,736,833, payable by New Resources for the
acquisition of 100% equity interest in Heilongjiang Shuaiyi, as further
discussed in Note 20, the acquisition payable is due for payment in full on or
before June 30, 2010 by New Resources to the Shuaiyi Founders who are also
shareholders of the Company. See Note 18(b). </P>
<P align=center>F-12</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_14></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<P align=justify><B>NOTE 13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; STATUTORY RESERVES</B><BR></P>
<P align=justify>In accordance with the PRC Companies Law, the Company&#146;s PRC
subsidiaries were required to transfer 10% of their profits after tax, as
determined in accordance with accounting standards and regulations of the PRC,
to the statutory surplus reserve and a percentage of not less than 5%, as
determined by management, of the profits after tax to the public welfare fund.
However, the Company&#146;s PRC subsidiaries were not required to transfer any profit
after tax to the statutory surplus reserve only after the accumulated statutory
surplus reserves reached 50% of registered capital of the Company&#146;s PRC
subsidiaries. With the amendment of the PRC Companies Law which was effective
from January 1, 2006, enterprises in the PRC were no longer required to transfer
any profit to the public welfare fund. Any balance of public welfare fund
brought forward from December 31, 2005 should be transferred to the statutory
surplus reserve. The statutory surplus reserve is non-distributable. </P>
<P align=justify><B>NOTE 14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; COMMON STOCK PURCHASE
WARRANTS </B></P>
<P align=justify>Warrants issued and outstanding at March 31, 2010, and changes
during the three months then ended, are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%">&nbsp; </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Weighted</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Average</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Number of</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Average</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Remaining</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>underlying</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Exercise</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="10%"><B>Contractual Life</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>shares</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>Price</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><B>(years)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Outstanding at December 31, 2009 </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>500,000 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>&nbsp;3.63 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>2.96 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Granted </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Forfeited </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff>- </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>
      <P>&nbsp; </P></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Exercised </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Outstanding at March 31, 2010
      (Unaudited)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff><B>500,000</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff><B>$</B></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>&nbsp;3.63</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><B>2.71</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Exercisable at March 31, 2010 (Unaudited)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%"><B>500,000</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" ><B>$</B></TD>
    <TD noWrap align=right width="10%"><B>&nbsp;3.63</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="10%"><B>2.71</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify><B>NOTE 15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SHARE-BASED COMPENSATION</B></P>
<P align=justify>On January 1, 2010, the Company entered into a stock option
agreement with Mr. Daniel K. Lee (&#147;Mr. Lee&#148;), the Chief Financial Officer of the
Company, under the Company&#146;s 2009 Equity Incentive Plan. Pursuant to the terms
of the Stock Option Agreement, Mr. Lee was granted options (the "Options") to
purchase an aggregate 250,000 shares of common stock of the Company, among
which, an option to purchase 100,000 shares will be vested in 2011 with an
exercise price of $7.00 per share, an option to purchase 100,000 shares will be
vested in 2012 with an exercise price of $10.00 per share and an option to
purchase 50,000 shares will be vested in 2013 with an exercise price of $10.00
per share. Each of the Options expires three years after its respective vesting
date.</P>
<P align=center>F-13</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_15></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<P align=justify><B>NOTE 15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SHARE-BASED COMPENSATION (continued) </B></P>
<P align=justify>According to the Stock Option Agreement, in the event Mr. Lee&#146;s
employment with the Company is terminated for any reason except for death or
disability, he may exercise the Options only to the extent that the Options
would have been exercisable on the termination date and no later than three
months after the termination date. If Mr. Lee&#146;s employment is terminated because
of his death or disability, the Options may be exercised only to the extent that
such Options would have been exercisable by Mr. Lee on the termination date and
must be exercised by Mr. Lee no later than twelve months after the termination
date. If Mr. Lee is terminated for cause, the Options will terminate
immediately. In no event will the Options be exercised later than December 31,
2015.</P>
<P align=justify>On May 5, 2010, Mr. Lee resigned as the Chief Financial Officer
and Treasurer of the Company, effectively immediately.</P>
<P align=justify>No expense has been recognized related to the Options which
were forfeited because the requisite service for the Options has not been
rendered. </P>
<P align=justify>On January 1, 2010, the Company also entered into a restricted
shares grant agreement (the "Restricted Shares Grant Agreement") under the
Company&#146;s 2009 Equity Incentive Plan with Mr. Lee. Pursuant to the terms of the
Restricted Shares Grant Agreement, the Company granted to Mr. Lee 140,000
restricted shares of the Company&#146;s common stock subject to the vesting schedule
therein. If Mr. Lee&#146;s service with the Company ceases for any reason other than
Mr. Lee&#146;s (a) death, (b) Disability, (c) Retirement, or (d) termination by the
Company without cause, any nonvested restricted shares will be automatically
forfeited to the Company.</P>
<P align=justify>The Restricted Share vests under the following schedule: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=center><U><B>Number of Shares</B> </U></TD>
    <TD noWrap align=right width="50%"><U><B>Vesting Date</B> </U></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=center bgColor=#e6efff>15,000 </TD>
    <TD noWrap align=right width="50%" bgColor=#e6efff>January 1, 2010 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=center>20,000 </TD>
    <TD noWrap align=right width="50%">April 1, 2010 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=center bgColor=#e6efff>35,000 </TD>
    <TD noWrap align=right width="50%" bgColor=#e6efff>July 1, 2010 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=center>35,000 </TD>
    <TD noWrap align=right width="50%">January 1, 2011 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=center bgColor=#e6efff>35,000 </TD>
    <TD noWrap align=right width="50%" bgColor=#e6efff>July 1, 2011
  </TD></TR></TABLE>
<P align=justify>As a result of the resignation of Mr. Lee, his employment
agreement with the Company, dated November 16, 2009, the stock option agreement
with the Company, dated January 1, 2010, and the restricted shares grant
agreement with the Company, dated January 1, 2010 were terminated, effective on
May 5, 2010. In addition, upon his resignation, the unvested 105,000 restricted
shares and the unvested options to purchase 250,000 shares of the Company's
common stock granted to Mr. Lee were cancelled. </P>
<P align=justify>The Company recognizes compensation cost for an award with only
service conditions that has a graded vesting schedule on a straight-line basis
over the requisite service period for the entire award, provided that the
compensation cost recognized at any date must at least equal the portion of the
grant-date value of the award that is vested at that date. No compensation cost
is recognized for instruments that employees forfeit because a service condition
or a performance condition is not satisfied.</P>
<P align=justify>Accordingly, the Company recognized a compensation expense of
$45,375, related to the restricted shares granted to Mr. Lee, which vested
before his resignation, for the three months ended March 31, 2010, based on the
estimated grant-date fair value of $3.025 of the Company&#146;s common stock.</P>
<P align=justify>Before January 1, 2010, the Company&#146;s common stock had scarcely
been traded. The Company has determined the fair value of its common stock as of
January 1, 2010 based on the volume weighted average of the fair value of the
Company&#146;s common stock issued in the private placement of shares and warrants to
unaffiliated investors on December 17, 2009 and the closing prices of Company&#146;s
common stock traded during January 2010. </P>
<P align=center>F-14</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_16></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<P align=justify><B>NOTE 16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; EARNINGS PER SHARE</B><BR></P>
<P align=justify>The following table is a reconciliation of the net income and
the weighted average shares used in the computation of basic and diluted
earnings per share for the periods presented: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><B>For the Three months
      ended</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><B>March 31,</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Income available to common
      stockholders:</B> </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>- Basic </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">&nbsp;2,721,062 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">&nbsp;2,170,269 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>- Diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;2,721,062 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;2,170,269 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Weighted average number of shares:</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>- Basic </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>14,312,731 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>12,800,000 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>- Effect of dilutive warrants and options </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">89,681 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>- Diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>14,402,412 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>12,800,000 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Net income per share</B> </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>- Basic </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;0.19 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;0.17 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>- Diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%">&nbsp;0.19 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%">&nbsp;0.17 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>As discussed in Note 1, the Company effected a 1-for-114.59
Reverse Split of its common stock. The weighted average number of shares for the
purposes of calculating the earnings per share has been retroactively adjusted
as if the Reverse Split took effect as of the beginning of the earliest period
presented. </P>
<P align=justify><B>NOTE 17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; INCOME TAXES</B></P>
<P align=justify>The Company&#146;s income tax expense consisted of: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="26%" colSpan=5><B>For the Three Months
      Ended</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="26%" colSpan=5><B>March 31,</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="11%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="11%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="11%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="11%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF">Current income tax &#150; PRC </TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="11%" bgcolor="#E6EFFF">&nbsp;422,820 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=right width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="11%" bgcolor="#E6EFFF">&nbsp;316,192 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Deferred </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
    width="11%">-</TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="11%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><B>Income tax expenses</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="11%" bgcolor="#E6EFFF"><B>&nbsp;422,820</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=right width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="11%" bgcolor="#E6EFFF"><B>&nbsp;316,192</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>The Company had deferred tax assets as follows: </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="11%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="11%"><B>March 31,</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="11%"><B>December 31,</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="11%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="11%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="11%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="11%"><B>(Audited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF">Net operating losses carried forward </TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=right width="11%" bgcolor="#E6EFFF">&nbsp;370,639 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD noWrap align=right width="11%" bgcolor="#E6EFFF">355,212 </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Less: Valuation allowance </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="11%">(370,639</TD>
    <TD noWrap align=left width="2%" >) </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="11%">(355,212</TD>
    <TD noWrap align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><B>Net deferred tax assets</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="11%" bgcolor="#E6EFFF"><B>&nbsp;-</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="11%" bgcolor="#E6EFFF"><B>-</B> </TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR></TABLE>
<P align=justify>As of March 31, 2010 and December 31, 2009, the Company did not
have any other significant temporary differences and carry forwards that may
result in deferred tax.</P>
<P align=center>F-15</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_17></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<P align=justify><B>NOTE 18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RELATED PARTY TRANSACTIONS </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>(a)&nbsp;&nbsp;&nbsp;&nbsp; Due to related parties</B> </TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>March 31</B> </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>December 31</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Audited)</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Due to Ms. Lianyun Han, Chairperson, CEO
      and President of the Company </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;49,807 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;49,794 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>The amount due to Ms. Lianyun Han was non-interest bearing,
unsecured and without fixed repayment date.</P>
<P align=justify><B>(b)&nbsp;&nbsp;&nbsp;&nbsp; Acquisition payable</B><BR></P>
<P align=justify>The acquisition payable arose from the Equity Transfer
Agreement which formed part of the restructuring of Heilongjiang Shuaiyi in July
2008, pursuant to which New Resources acquired 100% equity interest in
Heilongjiang Shuaiyi from Ms. Lianyun Han, Chairperson, CEO and President of the
Company, and other individual shareholders (collectively the &#147;<U>Shuaiyi
Founders</U>&#148;). </P>
<P align=justify>As part of the restructuring plan, Heilongjiang Shuaiyi entered
into separate loan agreements dated December 8, 2008, as amended on February 12,
2009, and promissory notes with the Shuaiyi Founders, pursuant to which, the
Shuaiyi Founders have agreed to lend to Heilongjiang Shuaiyi a loan in the
aggregate amount of RMB60,000,000 (approximately $8.8 million, &#147;<U>Subordinated
Loan</U>&#148;). The amount of the Subordinated Loan exactly equals to the transfer
price payable to the Shuaiyi Founders by New Resources for the acquisition of
Heilongjiang Shuaiyi in compliance with regulatory requirements of the PRC. The
Subordinated Loan ranks behind all other debts of Heilongjiang Shuaiyi, bears no
interest and is only repayable after 10 years, in successive equal yearly
payments beginning on the tenth anniversary of the Notes, December 8, 2018, and
within the first month of each year thereafter. The final payment will be due on
January 1, 2028. </P>
<P align=justify>According to the PRC rules and regulations, New Resources is
required to settle the transfer price for acquisition of Heilongjiang Shuaiyi by
way of remittance of the RMB60,000,000 to Shuaiyi Founders within three months
from the issue of the new business license. However, New Resources has obtained
the approval of the relevant business bureau for the extension of the time to
one year until December 1, 2009. On January 4, 2010, the relevant PRC regulatory
agency further extended the payment due date to June 30, 2010. As of March 31,
2020, New Resources had only paid $50,269 of the transfer price and,
accordingly, the corresponding Subordinated Loan has not been drawn yet. </P>
<P align=justify>The acquisition payable due to the Shuaiyi Founders
comprised:<B> </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>March 31</B> </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>December 31</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2010</B> </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2009</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="12%"><B>(Audited)</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Ms. Lianyun Han, Chairperson, CEO
      and President of the Company </TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;5,951,326 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;5,951,326 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Ms. Nana Jiang, director of the Company </TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%">278,551 </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%">278,551 </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Mr. Chunming Zhang , director of the
      Company </TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>351,484 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>351,484 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Mr. Weihan Zhang, director of a subsidiary of the Company
      and the son of Ms. Lianyun Han </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">439,354 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">439,354 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Family members of Ms. Lianyun Han
</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>878,708 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>878,708 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Other Shuaiyi Founders </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">837,410 </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">837,410 </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Total </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;8,736,833 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff>&nbsp;8,736,833 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=center>F-16</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>


<!--$$/page=-->
<A name="page_18"></A>

<P align="center">
<B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES </B><BR>
<B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
<B>(Unaudited) </B><BR>
</P>
<P align="justify">
<B>NOTE 18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RELATED PARTY TRANSACTIONS (continued)</B></P>
<P align="justify">
<B>(c)&nbsp;&nbsp;&nbsp;&nbsp; Purchase of goods </B></P>
<P align="justify">
For the three months ended March 31, 2010 and 2009, the Company purchased rice amounting to &#36;nil and &#36;395,702, respectively, from Heilongjiang Shuaiyi Technology Development Co., Ltd. (&#147;Shuaiyi Technology&#148;). Shuaiyi Technology and
the Company are under common control and management. </P>
<P align="justify">
<B>(d)&nbsp;&nbsp;&nbsp;&nbsp; Lease of land</B><BR>
</P>
<P align="justify">
For the three months ended March 31, 2010 and 2009, the Company paid rental expense of &#36;2,252 and &#36;2,249 for land to Shuaiyi Technology. </P>
<P align="justify">
<B>NOTE 19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CONCENTRATION OF CREDIT RISK </B></P>
<P align="justify">
As of March 31, 2010 and December 31, 2009, 100% of the Company&#146;s cash included cash on hand and deposits in accounts maintained within the PRC where there is currently no rule or regulation in place for obligatory insurance to cover bank
deposits in the event of bank failure. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts </P>
<P align="justify">
For the three months ended March 31, 2010 and 2009, all of the Company&#146;s sales arose in the PRC. In addition, all accounts receivable as of March 31, 2010 and December 31, 2009 also arose in the PRC. </P>
<P align="justify">
Except for one customer who accounted for 41.4% of the Company&#146;s revenue for the three months ended March 31, 2010, there was no other single customer who accounted for more than 10% of the Company&#146;s revenue for the three months ended
March 31, 2010 or 2009. </P>
<P align="justify">
As of March 31, 2010, five customers accounted for 24%, 21%, 14%, 12% and 10% of total accounts receivable of the Company. As of December 31, 2009, five customers accounted for 18%, 13%, 12%, 12% and 12% of accounts receivable of the Company. Except
as disclosed, no other customer accounted for 10% or more of the Company&#146;s accounts receivable as of March 31, 2010 or December 31, 2009.<B> </B></P>
<P align="center">
F-17</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">

<!--$$/page=--><A name=page_19></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR><B>NOTE 20 COMMITMENTS
AND CONTINGENCIES </B><BR></P>
<P align=justify><B>(a)&nbsp;&nbsp;&nbsp;&nbsp; Operating leases</B><BR></P>
<P align=justify>The Company has entered into tenancy agreements for the leases
of exhibition hall and land with a third party and a related company, Shuaiyi
Technology (see Note 18(d)), respectively, for the purposes of the operation of
its subsidiaries. The Company&#146;s commitments for minimum lease payments under
these operating leases for the next five years and thereafter as of March 31,
2010 are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%"><B>(Unaudited)</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Remainder of fiscal year ending
      December 31, 2010 </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;26,824 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Fiscal year ending December 31, 2011 </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">9,008 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Fiscal year ending December 31, 2012
    </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>9,008 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Fiscal year ending December 31, 2013 </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">9,008 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Fiscal year ending December 31, 2014
    </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>9,008 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Thereafter </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">117,110 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Total</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><B>&nbsp;179,966</B> </TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify><B>(b)&nbsp;&nbsp;&nbsp;&nbsp; PRC employee costs </B></P>
<P align=justify>According to the prevailing laws and regulations of the PRC,
the Company&#146;s subsidiaries in the PRC are required to cover its employees with
medical, retirement and unemployment insurance programs. Management believes
that due to the transient nature of its employees, they do not need to provide
all employees with such social insurances, and have not paid the social
insurances for all employees. </P>
<P align=justify>In the event that any current or former employee files a
complaint with the PRC government, the Company's subsidiaries may be subject to
making up the social insurances as well as administrative fines. As the Company
believes that these fines would not be material, no provision has been made in
this regard. </P>
<P align=justify><B>(c)&nbsp;&nbsp;&nbsp;&nbsp; Transfer price for equity interest in Heilongjiang Shuaiyi </B></P>
<P align=justify>On July 28, 2008, the Company&#146;s subsidiary, New Resources
entered into an equity transfer agreement with the Shuaiyi Founders to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB60,000,000
(approximately $8.8 million). A new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008. According to PRC merger and acquisition rules, the
equity interest transfer price should be paid in full within three months
commencing from the issuance of the new business license to Heilongjiang
Shuaiyi. If the transfer price is not paid by this date, the Company may apply
to the relevant PRC business bureau for an extension of up to one year from the
date of the issuance of the license; provided, however, that 60% of the transfer
price will be required to be paid within six months from such date. However, if
the Company is unable to make the payment for the transfer price by the March 1,
2009 or extended deadline and the relevant PRC business bureau does not grant
the Company additional time to make the payment, the Company may be subject to
fines or penalties imposed by the PRC business bureau. In addition, the Company
may not be permitted to exercise any decision-making rights as a shareholder in
Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi's financial results
into the Company&#146;s financial statements.</P>
<P align=justify>On March 10, 2009, New Resources obtained the approval from the
relevant PRC business bureau for the extension of time allowed for the payment
of the transfer price to one year until December 1, 2009. On January 4, 2010,
the relevant PRC regulatory agency further extended the payment due date to June
30, 2010. The Company has engaged financial advisors with a view to raising
additional capital for the Company. The Company believes that it will be able to
make the payment for the transfer price within the time allowed by the relevant
PRC business bureau and therefore has not accrued any amount related to this
contingency. However, there can be no assurance that the Company will be
successful in raising sufficient capital for the purpose of the payment of the
transfer price to the Shuaiyi Founders.</P>
<P align=center>F-18</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_20></A>
<P align=center><B>NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
</B><BR><B>NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</B><BR><B>(Unaudited) </B><BR></P>
<P align=justify><B>NOTE 21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SEGMENT INFORMATION</B><BR></P>
<P align=justify>The Company operates in two business segments identified by
product, &#147;Chinese Golden Grass&#148; and &#147;other agricultural products&#148;. The Chinese
Caterpillar Fungus segment consists of the growing and sales of Chinese Golden
Grass, which business is conducted through the Company&#146;s subsidiary, Daqing
Shuaiyi. The other agricultural products segment consists of the sales of rice,
flour and silage corn etc, agricultural products which business is mainly
conducted through the Company&#146;s subsidiary, Harbin Shuaiyi.</P>
<P align=justify>Throughout the three months ended March 31, 2010 and 2009, all
of the Company&#146;s operations were carried out in one geographical segment -
China. </P>
<P align=justify>The Company&#146;s segment revenue and results for the three months
ended March 31, 2010 and 2009 are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Chinese</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Other</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Golden</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Agricultural</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Corporate</B>
</FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" noWrap align=left><FONT
      size=2><B>Three months ended March 31, 2010</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=center
      width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Grass</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Products</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>unallocated</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Consolidated</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF"><FONT size=2>Segment revenue from external customers
    </FONT></TD>
    <TD align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;4,265,043 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>503,352 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;- </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>4,768,395 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>Segment profit (loss) </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left
      width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
      width="1%"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%"><FONT size=2>&nbsp;3,300,048 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%"><FONT size=2>48,253 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%"><FONT size=2>&nbsp;(204,419</FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%"><FONT size=2>3,143,882 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF"><FONT size=2>Income before income taxes </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%" bgcolor="#E6EFFF"><FONT size=2>3,143,882 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>Other segment information: </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF"><FONT size=2>&nbsp; &nbsp;Depreciation and
      amortization </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;250,463 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>1,460 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;969 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>252,892 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>&nbsp; &nbsp;Expenditure for segment
      assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%"><FONT size=2>&nbsp;4,526 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%"><FONT size=2>&nbsp;290 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%"><FONT size=2>4,816 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-left-style: none; border-left-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="7%">&nbsp;</TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="7%">&nbsp;</TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="7%">&nbsp;</TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="7%">&nbsp;</TD>
    <TD noWrap align=center width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Chinese</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Other</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Golden</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Agricultural</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>Corporate</B>
</FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-right-style:none; border-right-width:medium" noWrap align=left><FONT
      size=2><B>Three months ended March 31, 2009</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=center
      width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 1px solid #000000; ; border-left-style:none; border-left-width:medium" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Grass</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Products</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>unallocated</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Consolidated</B> </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>(Unaudited)</B>
    </FONT></TD>
    <TD noWrap align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF"><FONT size=2>Segment revenue from external customers
    </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" align=left width="1%" bgcolor="#E6EFFF"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" bgcolor="#E6EFFF"><FONT
      size=2>&nbsp;2,900,846 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" bgcolor="#E6EFFF"><FONT
      size=2>1,741,878 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" bgcolor="#E6EFFF"><FONT
      size=2>&nbsp;- </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="7%" bgcolor="#E6EFFF"><FONT
      size=2>4,642,724 </FONT></TD>
    <TD align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>Segment profit (loss) </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left
      width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; ; border-left-style:none; border-left-width:medium" noWrap align=left
      width="1%"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%"><FONT size=2>&nbsp;2,080,125 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%"><FONT size=2>485,220 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%"><FONT size=2>&nbsp;(78,884</FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%"><FONT size=2>2,486,461 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF"><FONT size=2>Income before income taxes </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="7%" bgcolor="#E6EFFF"><FONT size=2>2,486,461 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>Other segment information: </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium" bgcolor="#E6EFFF"><FONT size=2>&nbsp; &nbsp;Depreciation and
      amortization </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;249,877&nbsp;
    </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>1,963 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;687 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%" bgcolor="#E6EFFF"><FONT size=2>252,527 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left style="border-right-style: none; border-right-width: medium"><FONT size=2>&nbsp; &nbsp;Expenditure for segment
      assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-style: none; border-width: medium">&nbsp;</TD>
    <TD noWrap align=left width="1%" style="border-left-style: none; border-left-width: medium"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%"><FONT size=2>&nbsp;- </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="7%"><FONT size=2>&nbsp;- </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>$</FONT></TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT
size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=center>F-19</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<p align="center"><A name=page_11></A>
<img border="0" src="mcnutr1.gif" width="723" height="125"> <BR>
</p>
<P align=center><B><U>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</U></B></P>
<P align=justify>To the Board of Directors and Stockholders of&nbsp; Nutrastar
International Inc.: </P>
<P align=justify>We have audited the accompanying consolidated balance sh<font face="Times New Roman">eets of
</font><font style="font-family: Times New Roman">Nutrastar International Inc.
(formerly known as </font><font face="Times New Roman">Shuaiyi International New Resources D</font>evelopment Inc., the &#147;Company&#148;) as of December 31, 2009 and 2008
and the related consolidated statements of income and comprehensive income,
stockholders&#146; equity, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company&#146;s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. </P>
<P align=justify>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 consolidated 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 purpose of
expressing an opinion on the effectiveness of the Company&#146;s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts 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. </P>
<p class="MsoNormal" style="text-align:justify;text-justify:inter-ideograph">In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Nutrastar International Inc. (formerly known as Shuaiyi International New
Resources Development Inc., the &#147;Company&#148;) as of December 31, 2009 and 2008, the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.</p>
<P align=justify>As discussed in Notes 1 and 18 (c), the consolidated financial
statements were prepared on the assumption that New Zealand WAYNE&#146;S New
Resources Development Co., Ltd. will be able to pay up the investment money
related to Heilongjiang Shuaiyi New Energy Development Co., Ltd. on or before
June 30, 2010. In case New Zealand WAYNE&#146;S New Resources Development Co., Ltd.
fails to pay the amount in full on time, the basis of consolidation may not be
appropriate. </P>
<P align=justify>/s/AGCA, Inc.</P>
<P align=justify>Arcadia, California<BR>March 25, 2010<BR></P>
<P align=center>F-20</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<p class="MsoNormal" align="center" style="text-align:center"><b>
<font style="text-transform: uppercase">NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES</font></b><BR><B>CONSOLIDATED BALANCE SHEETS </B><BR>(AMOUNTS EXPRESSED IN US
DOLLAR)<B> </B><BR></p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="27%" colSpan=4 valign="bottom">
    <p align="center"><FONT size=2><B>December
      31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD align=center bgColor=#e6efff colSpan=6><FONT
      size=2><B><U>ASSETS</U></B>&nbsp;&nbsp; </FONT></TD>
    <TD align=center width="2%" bgColor=#e6efff><FONT
  size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>CURRENT ASSETS </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Cash and cash
      equivalents </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;20,115,677 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;9,198,243 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Accounts receivable, net
    </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>215,486 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>283,822 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Inventories
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>616,073
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>1,168,079
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Prepayments and other receivables
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>251,235 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>14,105 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Total
      current assets </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>21,198,471
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>10,664,249
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>OTHER ASSETS </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Intangible
      assets, net </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>2,747,402
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>3,183,995
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Property, plant and equipment,
      net </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>10,396,507 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>10,902,976 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>&nbsp; &nbsp;<B>Total
      assets</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;34,342,380</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;24,751,220</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD align=center colSpan=6>
    <p style="margin-top: 12"><FONT size=2><B><U>LIABILITIES AND
      SHAREHOLDERS' EQUITY</U></B>&nbsp; </FONT></TD>
    <TD align=center width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>CURRENT LIABILITIES
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Accounts payable </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&nbsp;863 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&nbsp;3,206 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Other payables
      and accruals </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>453,504
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>472,959
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Payable for intangible asset &#150;
      Current portion </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>878,709 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>877,886 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Income tax
      payable </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>319,873
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom" style="border-bottom-style: none; border-bottom-width: medium"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>119,486
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Due to related parties </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom" style="border-right-style: none; border-right-width: medium"><FONT size=2>49,794 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" style="border-style: none; border-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" style="border-left-style: none; border-left-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>8,998 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Acquisition
      payable </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom" style="border-right-style: none; border-right-width: medium; border-bottom-style: solid; border-bottom-width: 1"><FONT size=2>8,736,833
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom" style="border-style: none; border-width: medium"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom" style="border-left-style: none; border-left-width: medium; border-bottom-style: solid; border-bottom-width: 1"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom" style="border-bottom-style: solid; border-bottom-width: 1"><FONT size=2>8,778,861
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Total current liabilities
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" style="border-top-style: solid; border-top-width: 1"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom" style="border-right-style: none; border-right-width: medium; border-top-style: solid; border-top-width: 1"><FONT size=2>10,439,576 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" style="border-style: none; border-width: medium"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" style="border-left-style: none; border-left-width: medium; border-top-style: solid; border-top-width: 1"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom" style="border-top-style: solid; border-top-width: 1"><FONT size=2>10,261,396 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>NON-CURRENT LIABILITIES
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom" style="border-top-style: none; border-top-width: medium"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Payable for intangible asset, net
      of current portion </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>877,886 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Total
      liabilities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>10,439,576 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>11,139,282 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>COMMITMENTS AND CONTINGENCIES (Note 18)
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>SHAREHOLDERS' EQUITY
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="text-indent: -17; margin-left: 20"><FONT size=2>Preferred Stock,
    $0.001 par value, 1,000,000 shares authorized, none and 727,520
      shares issued and outstanding </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>-
    </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>727
    </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#E6EFFF valign="bottom">
    <p style="text-indent: -17; margin-left: 20"><FONT size=2>Common stock,
    $0.001 par value, 190,000,000 shares authorized, 14,297,731 and 11,746,041 shares issued and
      outstanding </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#E6EFFF valign="bottom"><FONT size=2>14,298
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#E6EFFF valign="bottom"><FONT size=2>11,746
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Additional paid-in capital
    </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>4,715,891 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>2,192,716 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#E6EFFF valign="bottom"><FONT size=2>&nbsp;Statutory
      reserves </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#E6EFFF valign="bottom"><FONT size=2>1,341,687
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#E6EFFF valign="bottom"><FONT size=2>1,326,239
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Retained earnings </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>16,858,012 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>9,131,744 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#E6EFFF valign="bottom"><FONT size=2>&nbsp;Accumulated other
      comprehensive income </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#E6EFFF valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#E6EFFF valign="bottom"><FONT size=2>972,916 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#E6EFFF valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#E6EFFF valign="bottom"><FONT size=2>948,766 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Total shareholders' equity
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>23,902,804 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>13,611,938 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#E6EFFF valign="bottom">
    <p style="margin-top: 12"><FONT size=2>&nbsp; &nbsp;<B>Total
      liabilities and shareholders' equity</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#E6EFFF valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#E6EFFF valign="bottom"><FONT size=2><B>&nbsp;34,342,380</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#E6EFFF valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#E6EFFF valign="bottom"><FONT size=2><B>&nbsp;24,751,220</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#E6EFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=center>See accompanying notes to consolidated financial statements
</P>
<P align=center>F-21</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_13></A>
<p class="MsoNormal" align="center" style="text-align:center"><b>
<font style="text-transform: uppercase">NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES<br>
</font>CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME</b><BR>(AMOUNTS EXPRESSED IN US DOLLAR) <BR></p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2><B>Year Ended
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="12%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2><B>NET REVENUE</B>
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff style="border-top-style: solid; border-top-width: 1" valign="bottom"><FONT
      size=2><B>$</B></FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff style="border-top-style: solid; border-top-width: 1" valign="bottom"><FONT
      size=2><B>&nbsp;15,332,445</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff style="border-top-style: solid; border-top-width: 1" valign="bottom"><FONT
      size=2><B>$</B></FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff style="border-top-style: solid; border-top-width: 1" valign="bottom"><FONT
      size=2><B>&nbsp;12,989,760</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Cost of sales </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(4,563,965</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(4,604,948</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>GROSS PROFIT </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>10,768,480
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>8,384,812
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Selling expenses </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(507,587</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(196,313</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>General and
      administrative expenses </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(1,356,499</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(1,416,111</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Loss on disposal of fixed assets
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(31,247</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Income from operations
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>8,904,394 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>6,741,141 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Other income (expenses): </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Interest
      income </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>81,542
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>29,741
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Exchange loss </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(15,398</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(20,376</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Merger
      costs </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>-
    </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(2,068,326</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Other, net </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>6,388 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>11,522 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Total
      other income (expenses), net </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>72,532 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(2,047,439</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Income before income taxes </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>8,976,926 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>4,693,702 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Provision for income
      taxes </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(1,235,210</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(974,653</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2><B>NET INCOME</B> </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2><B>7,741,716</B>
</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2><B>3,719,049</B>
</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>OTHER COMPREHENSIVE
      INCOME: </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Foreign currency translation
      adjustments </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>24,150 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>23,741 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2><B>COMPREHENSIVE
      INCOME</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;7,765,866</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;3,742,790</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Earnings per share </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Basic
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;0.590 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;0.305 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Diluted </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp;0.580 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp;0.305 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Weighted average number
      of shares outstanding </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Basic </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>13,131,521 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>12,198,913 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Diluted
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>13,341,521 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>12,198,913 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=center>See accompanying notes to consolidated financial statements
</P>
<P align=center>F-22</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>


<!--$$/page=-->
<A name="page_14"></A>

<p class="MsoNormal" align="center" style="text-align:center"><b>
<font style="text-transform: uppercase">NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES<br>
</font>
<font style="font-size: 9pt">CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146; EQUITY<br>
</font></b>
<font style="font-size: 9pt">(AMOUNTS EXPRESSED IN US DOLLAR)</font></p>
<TABLE style="margin-left:0pt; border-collapse:collapse; font-size:9pt; font-family:Times New Roman" width="100%" cellpadding="0" cellspacing="0"><TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" colspan=3>&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" colspan=3>&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>Accumulated</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" colspan=3>
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-0.80pt; padding-bottom:0pt; color:#000000; " align=center><B>Preferred Stock</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" colspan=3>
  <P style="padding:0pt; color:#000000; " align=center><B>Common Stock</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>Additional</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>other</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>Number</B></P>
</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>Number</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; " align=center><B>paid-in</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>Statutory</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>Retained</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>comprehensive</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" align=right valign=bottom width="7%">&nbsp;</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>of shares</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-0.80pt; padding-bottom:0pt; color:#000000; " align=center><B>Amount</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>of shares</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>Amount</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>capital</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>reserves</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>earnings</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>income</B></P>
</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" align=right valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><B>Total</B></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=right valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" align=right valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.4pt; padding-bottom:0pt; color:#000000; ">Balance at </P>
<P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">January 1, 2008</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>689,390</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">$</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>689</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">$</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">$</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">86,174</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">$</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>693,028</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; ">$</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">6,045,906</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">$</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">925,025</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>$</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">7,750,822</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">&nbsp;</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Effect of reverse acquisition</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>11,746,041</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>11,746</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>
  (14,195</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <p style="text-align: left">)</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">
  (2,449</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">
  )</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify>Issue of shares</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>38,130</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>38</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>427,411</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">427,449</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Share-based payment by shareholders</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>1,693,326</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">1,693,326</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-39.90pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:-39.90pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-39.90pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; border-bottom:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">
  <P style="padding-left:11.3pt; padding-top:0pt; padding-right:-1.4pt; padding-bottom:0pt; color:#000000; ">Net income</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">3,719,049</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-39.90pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:-39.90pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; border-right:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-39.90pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="border-right:2px solid #000000; padding:0pt; border-left:1.5pt solid #000000; border-top:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; " valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">3,719,049</P>
</TD>
  <TD style="padding:0pt; border-right:medium none #000000; text-align:left; font-size:9pt; font-family:Times New Roman; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; border-right:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;
  </TD>
  <TD style="border-right:2px solid #000000; padding:0pt; border-left:1.5pt solid #000000; border-bottom:medium none #000000; text-align:right; font-size:9pt; font-family:Times New Roman; " valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; border-right:medium none #000000; text-align:left; font-size:9pt; font-family:Times New Roman; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:6.1pt; padding-top:0pt; padding-right:-1.4pt; padding-bottom:0pt; color:#000000; ">Foreign currency translation adjustment</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">23,741</P>
</TD>
  <TD style="padding:0pt; border-right:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="border-right:2px solid #000000; padding:0pt; border-left:1.5pt solid #000000; border-bottom:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-top-style:none; border-top-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">23,741</P>
</TD>
  <TD style="padding:0pt; border-right:medium none #000000; text-align:left; font-size:9pt; font-family:Times New Roman; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;
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  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Comprehensive income</P>
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  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; border-top:medium none #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:solid; border-right-width:1" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">3,742,790</P>
</TD>
  <TD style="padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Appropriation of statutory reserves</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>633,211</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">
  (633,211</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <p style="text-align: left">)</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.4pt; padding-bottom:0pt; color:#000000; ">Balance at December 31, 2008</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>727,520</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>727</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>11,746,041</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">11,746</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">2,192,716</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>1,326,239</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">9,131,744</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">948,766</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">13,611,938</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:13.4pt; padding-top:0pt; padding-right:-0.8pt; padding-bottom:0pt; color:#000000; ">Issue of shares</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>1,000,000</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">1,000</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">2,499,000</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">2,500,000</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Net income</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">7,741,716</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; border-right:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="border-right:2px solid #000000; padding:0pt; border-left:1.5pt solid #000000; border-top:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; " valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">7,741,716</P>
</TD>
  <TD style="padding:0pt; border-right:medium none #000000; text-align:left; font-size:9pt; font-family:Times New Roman; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium" valign=bottom width="1%">&nbsp;</TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; border-right:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;
  </TD>
  <TD style="border-right:2px solid #000000; padding:0pt; border-left:1.5pt solid #000000; border-bottom:medium none #000000; text-align:right; font-size:9pt; font-family:Times New Roman; " valign=bottom width="7%">&nbsp;
  </TD>
  <TD style="padding:0pt; border-right:medium none #000000; text-align:left; font-size:9pt; font-family:Times New Roman; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Foreign currency translation adjustment</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">24,150</P>
</TD>
  <TD style="padding:0pt; border-right:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="border-right:2px solid #000000; padding:0pt; border-left:1.5pt solid #000000; border-bottom:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-top-style:none; border-top-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">24,150</P>
</TD>
  <TD style="padding:0pt; border-right:medium none #000000; text-align:left; font-size:9pt; font-family:Times New Roman; border-top-style:none; border-top-width:medium; border-bottom-style:none; border-bottom-width:medium" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;
  </TD>
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  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;
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  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;
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  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  <TD style="padding:0pt; border-top:1.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium; border-bottom-style:none; border-bottom-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
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<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Comprehensive income</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; border-top:medium none #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">7,765,866</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Appropriation of statutory reserves</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>15,448</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">
  (15,448</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <p style="text-align: left">)</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Conversion of preferred stock into common stock</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
<P style="padding:0pt; color:#000000; " align=right>
(727,520</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <p style="text-align: left">)</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
<P style="padding:0pt; color:#000000; " align=right>
(727</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <p style="text-align: left">)</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
<P style="padding:0pt; color:#000000; " align=right>12,695,223</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">12,695</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
<P style="padding:0pt; color:#000000; ">
(11,968</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <p style="text-align: left">)</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">1-for-114.59 reverse split</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.3pt; padding-bottom:0pt; color:#000000; " align=right>
  (11,643,533</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <p style="text-align: left">)</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">
  (11,643</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <p style="text-align: left">)</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; ">11,643</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%" bgcolor="#E6EFFF">
  <P style="padding-left:5.2pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; ">Share-based payment</P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right>500,000</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">500</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; ">24,500</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right>-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; ">-</P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%" bgcolor="#E6EFFF">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%" bgcolor="#E6EFFF">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; ">25,000</P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%" bgcolor="#E6EFFF">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">&nbsp;</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:-1.7pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; " align=center><BR></P>
</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=justify><BR></P>
</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><BR></P>
</TD>
  <TD style="padding:0pt; border-top:0.5pt solid #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><BR></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
<TR>
  <TD style="padding:0pt; font-size:9pt; font-family:Times New Roman" align=left valign=bottom width="13%">
  <P style="padding-left:9pt; padding-top:0pt; padding-right:0pt; padding-bottom:0pt; color:#000000; "><B>Balance at December 31, 2009</B></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right><B>-</B></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; "><B>$</B></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right><B>-</B></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">&nbsp;</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; " align=right><B>14,297,731</B></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; "><B>$</B></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; "><B>14,298</B></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; "><B>$</B></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding:0pt; color:#000000; "><B>4,715,891</B></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; "><B>$</B></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.4pt; padding-bottom:0pt; color:#000000; " align=right><B>1,341,687</B></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-6.90pt; padding-bottom:0pt; color:#000000; "><B>$</B></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.00pt; padding-bottom:0pt; color:#000000; "><B>16,858,012</B></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; "><B>$</B></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:1.1pt; padding-bottom:0pt; color:#000000; "><B>972,916</B></P>
</TD>
  <TD style="padding:0pt; text-align:right; font-size:9pt; font-family:Times New Roman" valign=bottom width="3%">
  <P style="padding:0pt; color:#000000; " align=right><B>$</B></P>
</TD>
  <TD style="padding:0pt; border-bottom:0.5pt double #000000; text-align:right; font-size:9pt; font-family:Times New Roman; border-right-style:none; border-right-width:medium" valign=bottom width="7%">
  <P style="padding-left:0pt; padding-top:0pt; padding-right:-1.40pt; padding-bottom:0pt; color:#000000; "><B>23,902,804</B></P>
</TD>
  <TD style="border-style:none; border-width:medium; padding:0pt; text-align:left; font-size:9pt; font-family:Times New Roman" valign=bottom width="1%">&nbsp;
  </TD>
  </TR>
</TABLE>
<P style="margin-left:0pt; padding:0pt; text-indent:0pt; color:#000000">
<font style="font-size: 9pt"><BR></font></P>
<P style="margin-left:0pt; padding:0pt; text-indent:0pt; color:#000000" align=center dir="ltr">
<font style="font-size: 9pt">See accompanying notes to consolidated financial statements.</font></P>
<P align="center">
F-23</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">

<!--$$/page=--><A name=page_15></A>
<p class="MsoNormal" align="center" style="text-align:center"><b>
<font style="text-transform: uppercase">NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES<br>
</font>CONSOLIDATED STATEMENTS OF CASH FLOWS </b><BR>(AMOUNTS EXPRESSED IN
US DOLLAR) <BR></p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2><B>Years Ended
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>CASH FLOWS FROM
      OPERATING ACTIVITIES: </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Net income </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&nbsp;7,741,716 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&nbsp;3,719,049 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom"><FONT size=2>Adjustments to reconcile net
      income to cash provided by operating activities: </FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="12%" bgColor=#e6efff valign="bottom"></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="12%" bgColor=#e6efff valign="bottom"></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;Depreciation and
      amortization </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>1,004,386 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>1,123,447 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;
      &nbsp;Loss from disposition of property, plant and equipment </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>-
    </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>31,247
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;Merger costs
    </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>2,068,326 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;
      &nbsp;Share-based compensation expense </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>25,000
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>-
    </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;(Increase) decrease in
      assets: </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Accounts receivable </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>68,574
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(134,017</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Prepayments and other receivables </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(237,020</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>141,563 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Inventories </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>552,874
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(466,314</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Increase (decrease) in
      liabilities: </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Accounts payable </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(2,345</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(28,151</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Other
      payables and accruals </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(19,890</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(35,852</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Income tax payable </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>200,193
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>38,245
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Due
      to related parties </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(8,998</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>8,795 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp;Net cash provided by operating activities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>9,324,490 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>6,466,338 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>CASH FLOWS FROM INVESTING ACTIVITIES:
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Payment of merger
      costs related to reverse acquisition </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>-
    </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(375,000</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Purchase of property, plant and
      equipment </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(49,155</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(32,501</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Proceeds from
      sale of property, plant and equipment </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>1,151,411 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;Net cash
      (used in) provided by investing activities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(49,155</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>743,910 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>CASH FLOWS FROM
      FINANCING ACTIVITIES: </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Proceeds from issue of shares
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>2,500,000 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>427,449 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Advances from
      shareholders </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>49,773
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>-
    </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp;Repayment of acquisition payable
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(50,269</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Repayment of
      payables for intangible asset </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(878,349</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>) </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(865,292</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT size=2>)
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp;Net cash
      provided by (used in) financing activities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>1,621,155 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(437,843</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>) </FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Foreign currency
      translation adjustment </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>20,944 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>277,490 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2><B>INCREASE IN CASH AND CASH
      EQUIVALENTS</B> </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2><B>10,917,434</B>
    </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2><B>7,049,895</B>
</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>CASH AND CASH
      EQUIVALENTS, at the beginning of the year </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>9,198,243 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>2,148,348 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2><B>CASH AND CASH EQUIVALENTS, at the
      end of the year</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;20,115,677</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;9,198,243</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>NON-CASH TRANSACTIONS
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -17; margin-left: 20"><FONT size=2>Share-based payment awarded by shareholders to
      consultants for services related to the reverse acquisition </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%" valign="bottom"><FONT
      size=2>&nbsp;- </FONT></TD>
    <TD align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%" valign="bottom"><FONT
      size=2>&nbsp;1,693,326 </FONT></TD>
    <TD align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;Share-based
      payment to employees under equity incentive plan </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;25,000 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;- </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>SUPPLEMENTAL DISCLOSURE INFORMATION
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">&nbsp;Cash paid for
    interest</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom" dir="ltr" style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">
    $</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom" dir="ltr" style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">
    -</TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom" dir="ltr" style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">
    $</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom" dir="ltr" style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">
    -</TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#FFFFFF valign="bottom"><FONT size=2>&nbsp;Cash
    paid for income taxes </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#FFFFFF valign="bottom" dir="ltr" style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#FFFFFF valign="bottom" dir="ltr" style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000"><FONT
      size=2>&nbsp;907,835 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#FFFFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#FFFFFF valign="bottom" dir="ltr" style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#FFFFFF valign="bottom" dir="ltr" style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000"><FONT
      size=2>&nbsp;892,547 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#FFFFFF valign="bottom"><FONT
    size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=center>See accompanying notes to consolidated financial statements
</P>
<P align=center>F-24</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_16></A>
<p class="MsoNormal" align="center" style="text-align: center"><b>
<font style="text-transform: uppercase">NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  </TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 1</B> </TD>
    <TD noWrap align=left width="90%"><B>DESCRIPTION OF BUSINESS AND
    ORGANIZATION</B></TD></TR></TABLE>
<P align=justify><font style="font-family: Times New Roman">Nutrastar
International Inc. (&#147;</font><u><font style="font-family: Times New Roman">Nutrastar</font></u><font style="font-family: Times New Roman">&#148;)
</font><font face="Times New Roman">&nbsp;w</font>as incorporated in the State of Nevada on December 22, 2002. On
December 23, 2008, the Company completed a reverse acquisition of New Zealand
WAYNE&#146;S New Resources Development Co., Ltd. (&#147;New Resources&#148;). As a result of
the reverse acquisition of New Resources, the Company is no longer a shell
company and active business operations have been revived. Nutrastar
together with its subsidiaries are referred to as the &#147;Company&#148;. </P>
<P align=justify>On May 19, 2009, the Company filed Amended and Restated
Articles of Incorporation with the Nevada Secretary of State to amend the
Company&#146;s current Articles of Incorporation to, among other things, (1) change
the name of the Company from &#147;YzApp International Inc.&#148; to &#147;Shuaiyi
International New Resources Development Inc.,&#148; (2) increase the total number of
shares of common stock that the Company has the authority to issue from
50,000,000 to 190,000,000 shares and (3) effect a one for 114.59 reverse split
of the Company&#146;s outstanding common stock (the &#147;Reverse Split&#148;). The detailed
description of the Amendments is stated in the Company&#146;s Form 8-K dated May 26,
2009. </P>
<P align=justify>On January 11, 2010, the Company filed a Certificate of
Amendment to its Articles of Incorporation with the Secretary of State of the
State of Nevada, pursuant to which the Company further changed its name from
"Shuaiyi International New Resources Development Inc." to "Nutrastar
International Inc.". </P>
<P align=justify>As of December 31, 2009, details of the subsidiaries of the
Company are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>Domicile and</FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>Percentage </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>date of </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>of effective </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left><FONT
      size=2>Subsidiaries&#146; names </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="17%"><FONT size=2>incorporation </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="17%"><FONT size=2>Paid-up capital </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="17%"><FONT size=2>ownership </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="17%"><FONT size=2>Principal activities </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>New Zealand WAYNE&#146;S </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>British Virgin </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>$</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>50,000 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>100% </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Holding company of
    </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>New Resources </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Islands </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>the other subsidiaries
      </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>Development Co., Ltd </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>March 13, 2008 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>(&#147;New Resources&#148;) </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Heilongjiang Shuaiyi New </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>People&#146;s </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>RMB60,000,000 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>100% </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>Principally engaged in
      </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Energy Development Co., </FONT></TD>
    <TD align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD align=left width="17%"><FONT size=2>Republic of </FONT></TD>
    <TD align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>investment holding
    </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Ltd (&#147;Heilongjiang </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>China (&#147;PRC&#148;) </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Shuaiyi&#148;) </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>July 11, 2006 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>Daqing Shuaiyi Biomass </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>PRC </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>RMB10,000,000 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>100% </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Growing and sales of
    </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>Technology Co., Ltd. </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>August 8, 2005 </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>Chinese Golden Grass,
      </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>(&#147;Daqing Shuaiyi&#148;) </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>which is widely used
    </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%" bgcolor="#E6EFFF"><FONT size=2>for Chinese medicine
    </FONT></TD>
    <TD noWrap align=left width="2%" bgcolor="#E6EFFF"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Harbin Shuaiyi Green and </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>PRC </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>RMB1,500,000 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>100% </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>Sales of agricultural
      </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Specialty Food Trading </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>May 18, 2001 </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>products </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>LLP. (&#147;Harbin Shuaiyi&#148;) </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="17%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"><FONT
size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=justify><B>Reverse Acquisition </B></P>
<P align=justify>On December 23, 2008, the Company entered into a share exchange
agreement ("Share Exchange Agreement&#148;) under which the Company issued 689,390
shares of the Company&#146;s series A preferred stock, par value $0.001, to the sole
shareholder of New Zealand WAYNE&#146;S New Resources Development Co., Ltd (&#147;New
Resources&#148;) in exchange for all the issued and outstanding shares of New
Resources (the &#147;Share Exchange&#148;). Immediately following the Share Exchange, the
shareholder of New Resources owned approximately 94% of the Company&#146;s total
issued and outstanding share capital. </P>
<P align=center>F-25</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_17></A>
<p class="MsoNormal" align="center" style="text-align: center"><b>
<font style="text-transform: uppercase">NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 1</B> </TD>
    <TD noWrap align=left width="90%"><B>DESCRIPTION OF BUSINESS AND
      ORGANIZATION (CONTINUED)</B> </TD></TR></TABLE>
<P align=justify><B>Reverse Acquisition (continued) </B></P>
<P align=justify>As a result, the Share Exchange has been accounted for as a
reverse acquisition using the purchase method of accounting, whereby New
Resources is deemed to be the accounting acquirer and Nutrastar (formerly
YzAPP) to be the accounting acquiree. The financial statements before the date
of Share Exchange are those of New Resources with the results of Nutrastar being
consolidated from the date of Share Exchange. No goodwill has been recorded.
</P>
<P align=justify>New Resources was incorporated in the British Virgin Islands,
which owns 100% of the outstanding capital stock of Heilongjiang Shuaiyi.
Heilongjiang Shuaiyi owns 100% equity interests in Daqing Shuaiyi and Harbin
Shuaiyi.<B> </B></P>
<P align=justify><B>Recapitalization of Daqing Shuaiyi and Harbin Shuaiyi
</B></P>
<P align=justify>In September 2007, Heilongjiang Shuaiyi, Daqing Shuaiyi and
Harbin Shuaiyi underwent a restructuring exercise whereby Heilongjiang Shuaiyi
acquired 100% equity interests in Daqing Shuaiyi and Harbin Shuaiyi, and former
ultimate controlling shareholders of Daqing Shuaiyi and Harbin Shuaiyi have
become the controlling shareholders of New Energy. </P>
<P align=justify>Before and after the restructuring, all of the three entities,
Heilongjiang Shuaiyi, Daqing Shuaiyi and Harbin Shuaiyi are under the common
control. </P>
<P align=justify>This restructuring exercise has been accounted for as
combinations of entities under common control using the &#147;as if&#148; pooling method
of accounting, with no adjustment to the historical basis of the assets and
liabilities of Daqing Shuaiyi and Harbin Shuaiyi and the operations were
consolidated as though the restructuring occurred as of the beginning of the
first accounting period presented in these financial statements. </P>
<P align=justify>The shareholding percentages before and after this
restructuring exercise were as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="17%"
    colSpan=4><FONT size=2><B>Heilongjiang Shuaiyi</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="17%"
    colSpan=4><FONT size=2><B>Daqing Shuaiyi</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="17%"
    colSpan=4><FONT size=2><B>Harbin Shuaiyi</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Before</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>After</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Before</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>After</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>Before</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="7%"><FONT size=2><B>After</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2><B>Shareholder</B> </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>%</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>%</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>%</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>%</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>%</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD noWrap align=center width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="7%"><FONT size=2><B>%</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Heilongjiang Shuaiyi
      </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>100
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>100
    </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Daqing </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>47.1 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Lianyun Han, CEO of the
      Company </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>80.4
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="7%" bgColor=#e6efff><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>20
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Weihan Zhang* </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>5.9 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>20 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>51 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><FONT size=2>Heilongjiang Shuaiyi Science Development Co. Ltd.**
      </FONT></TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><FONT
      size=2>52.9 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><FONT
      size=2>- </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><FONT
      size=2>60 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><FONT
      size=2>- </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><FONT
      size=2>- </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="7%" bgColor=#e6efff><FONT
      size=2>- </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Lianju Han </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>5.9 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>10 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Xinjun Li </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>5
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>29
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Nana Jiang </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>5 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Lianxue Han </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>5.9
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="7%" bgColor=#e6efff><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="7%" bgColor=#e6efff><FONT size=2>-
</FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Fengxi Lang </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="7%"><FONT size=2>1.9 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
      width="7%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="7%"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=right width="7%"
    bgColor=#e6efff><FONT size=2>100 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=right width="7%"
    bgColor=#e6efff><FONT size=2>100 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=right width="7%"
    bgColor=#e6efff><FONT size=2>100 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=right width="7%"
    bgColor=#e6efff><FONT size=2>100 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=right width="7%"
    bgColor=#e6efff><FONT size=2>100 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: 3px double #000000; " noWrap align=right width="7%"
    bgColor=#e6efff><FONT size=2>100 </FONT></TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<p><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">* </TD>
    <TD colSpan=2>
      <P align=justify>Mr. Weihan Zhang is the son of Ms. Lianyun Han. Mr.
      Weihan Zhang and Ms. Lianyun Han are acting in concert and considered
      parties to the same control group.</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">** </TD>
    <TD colSpan=2>
      <P align=justify>Equity interests in Heilongjiang Shuaiyi Science
      Development Co. Ltd. are held as follows:</P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(i) </TD>
    <TD>
      <P align=justify>44.47% by Ms. Lianyun Han;</P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(ii) </TD>
    <TD>
      <P align=justify>40.86% by Mr. Weihan Zhang; and</P></TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(iii) </TD>
    <TD>
      <P align=justify>14.67% by 9 other minority
shareholders.</P></TD></TR></TABLE>
<P align=center>F-26</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_18></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>NOTE 1</B> </TD>
    <TD noWrap align=left width="90%"><B>DESCRIPTION OF BUSINESS AND
      ORGANIZATION (CONTINUED)</B> </TD></TR></TABLE>
<P align=justify><B>Recapitalization of Daqing Shuaiyi and Harbin Shuaiyi
(continued) </B></P>
<P align=justify>Before the restructuring exercise, Ms. Lianyun Han together
with her son, Mr. Weihan Zhang had an effective interest of 78.7% in
Heilongjiang Shuaiyi, 71.2% in Daqing Shuaiyi, and 71% in Harbin Shuaiyi,
respectively. Immediately after the restructuring exercise, Ms. Lianyun Han
together with her son, Mr. Weihan Zhang, had an aggregate interest of 86.3% in
Heilongjiang Shuaiyi, which holds a 100% interest in each of Daqing Shuaiyi and
Harbin Shuaiyi. In addition, Ms. Lianyun Han has been the managing director of
all the entities before and after, and throughout, this restructuring exercise.
As a result, there was no change in control of the entities due to this
restructuring exercise. </P>
<P align=justify>The considerations for the equity transfers in this
restructuring exercise were based on the face value of the paid-up capital of
Daqing Shuaiyi and Harbin Shuaiyi and satisfied in cash in compliance with the
regulatory requirements in the PRC. The acquisitions of Daqing Shuaiyi and
Harbin Shuaiyi were funded by the capital of Heilongjiang Shuaiyi, in which the
former controlling shareholders of Daqing Shuaiyi and Harbin Shuaiyi had already
established a majority ownership by way of cash contributions to Heilongjiang
Shuaiyi&#146;s paid-up capital. </P>
<P align=justify><B>Restructuring of Heilongjiang Shuaiyi </B></P>
<P align=justify>Pursuant to a restructuring plan intended to ensure compliance
with regulatory requirements of the PRC, in July 2008, New Resources entered
into a equity transfer agreement (&#147;<U>Equity Transfer Agreement</U>&#148;) to acquire
100% equity interest in Heilongjiang Shuaiyi from Ms. Lianyun Han, the then
controlling shareholder and chairman of board of directors of Heilongjiang
Shuaiyi, and Heilongjiang Shuaiyi&#146;s other individual shareholders (collectively
&#147;<U>Shuaiyi Founders</U>&#148;). The Equity Transfer Agreement was approved by the
relevant PRC government authority on October 23, 2008. On November 24, 2008,
Heilongjiang Shuaiyi obtained the Certificate of Approval for Establishment of
Enterprises of Foreign Investment issued by Heilongjiang Provincial Government
and a new business license was issued to Heilongjiang Shuaiyi on December 1,
2008. </P>
<P align=justify>As part of the restructuring plan, each of Shuaiyi Founders
respectively entered into an earn-in agreement (&#147;<U>Earn-in Agreement</U>&#148;),
dated September 12, 2008 (as amended on February 12, 2009) with New Zealand
WAYNE&#146;s Investment Holdings Co., Ltd., Heilongjiang Shuaiyi&#146;s sole shareholder
(&#147;<U>New Zealand</U>&#148;). Pursuant to the Earn-in Agreements, Shuaiyi Founders
obtained the right and option to acquire controlling shares (&#147;<U>Option
Shares</U>&#148;) in Shareholder at the par value of the Option Shares plus a nominal
amount of $1,000, upon the satisfaction of each of the following conditions: (1)
six months have expired since the date of the Share Exchange Agreement with
Nutrastar (formerly YzAPP), provided that on or before that date, Ms. Lianyun
Han and Heilongjiang Shuaiyi have entered into a binding employment agreement
and Ms. Lianyun Han is employed by Heilongjiang Shuaiyi pursuant to that
agreement on such date; (2) the U.S. Securities and Exchange Commission has
declared a registration statement filed by the Company under the Securities Act
effective, or investors who purchased common stock from the Company pursuant to
a securities purchase agreement being able to sell their common stock under Rule
144; (3) Heilongjiang Shuaiyi and its subsidiaries have achieved not less than
$1,560,000 in after-tax net income, as determined under US GAAP for the six
months ended June 30, 2009; and (4) Heilongjiang Shuaiyi and its subsidiaries
have achieved not less than $3,900,000 in pre-tax profits, as determined under
US GAAP for the fiscal year 2009. </P>
<P align=justify>On January 28, 2010, the Company filed a registration statement
on Form S-1, which was declared effective by SEC on February 4, 2010. As a
result, all of the conditions to the Earn-in Agreement have been met such that
Shuaiyi Founders are entitled to reacquire the ultimate legal ownership of
Heilongjiang Shuaiyi. </P>
<P align=center>F-27</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>


<!--$$/page=-->
<A name="page_19">
<p align="center"><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></p>
</A>

<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>NOTE 1</B> </TD>
    <TD noWrap align=left width="90%"><B>DESCRIPTION OF BUSINESS AND
      ORGANIZATION (CONTINUED)</B> </TD></TR></TABLE>
<P align="justify">
<B>Restructuring of Heilongjiang Shuaiyi (continued) </B></P>
<P align="justify">
Pursuant to the Earn-in Agreement, the New Zealand further agrees, among others, that throughout the exercise period of the Earn-in Agreement, without the prior written approval of Shuaiyi Founders: </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
(i) 	</TD>
	<TD>
<P align="justify">it will not increase the number of authorized shares of the New Zealand&#146;s common stock, or any increased authorized shares will be deemed as part of the Option Shares;</P>
	</TD>
</TR>
<TR>
	<TD width=5% valign=top>
(ii) 	</TD>
	<TD>
<P align="justify">keeps available the services of current officers and employees of New Resources and Heilongjiang Shuaiyi;</P>
	</TD>
</TR>
<TR>
	<TD width=5% valign=top>
(iii) 	</TD>
	<TD>
<P align="justify">New Resources and Heilongjiang Shuaiyi do not declare or pay any dividend or make any other distribution, nor do they repurchase, redeem or otherwise reacquire any equity of shares of capital stock or other securities.</P>
	</TD>
</TR>
</TABLE>
<P align="justify">
Also as part of the restructuring plan, Heilongjiang Shuaiyi entered into separate loan agreements dated December 8, 2008, as amended on February 12, 2009, and promissory notes with Shuaiyi Founders, pursuant to which, Shuaiyi Founders have agreed
to lend to Heilongjiang Shuaiyi a loan in the aggregate amount of RMB60,000,000 (approximately &#36;8.8 million, &#147;<U>Subordinated Loan</U>&#148;). The amount of the Subordinated Loan exactly equals to the transfer price payable to the Shuaiyi
Founders by New Resources for the acquisition of Heilongjiang Shuaiyi in compliance with regulatory requirements of the PRC. The Subordinated Loan ranks behind all other debts of Heilongjiang Shuaiyi, bears no interest and is only repayable after 10
years, in successive equal yearly payments beginning on the tenth anniversary of the Notes, December 8, 2018, and within the first month of each year thereafter.  The final payment will be due on January 1, 2028.  </P>
<P align="justify">
According to the PRC rules and regulations, New Resources is required to settle the transfer price for acquisition of Heilongjiang Shuaiyi by way of remittance of the RMB60,000,000 to Shuaiyi Founders within three months from the issue of the new
business license. However, New Resources has obtained the approval of the relevant business bureau for the extension of the time to one year until December 1, 2009.  On January 4, 2010, the relevant PRC regulatory agency further extended the payment
due date to June 30, 2010. As of December 31, 2009, New Resources has only paid &#36;50,269 of the transfer price and, accordingly, the corresponding Subordinated Loan has not been drawn yet. </P>
<P align="justify">
During and after this restructuring plan, there has been no change to the composition of the board of directors of Heilongjiang Shuaiyi. The board of directors of Heilongjiang Shuaiyi, chaired by Ms. Lianyun Han, has continued to comprise
representatives of Shuaiyi Founders. Therefore, Heilongjiang Shuaiyi is still under the same operating and management control of Shuaiyi Founders. In addition, due to the Subordinated Loan, Shuaiyi Founders will not receive any cash amount, nor will
there be any cash flow out of the combined entity during the whole period from the date of the Equity Transfer Agreement though the expiry of the Earn-in Agreement, at which time it is expected Shuaiyi Founders will have reacquired the ultimate
legal controlling ownership of Heilongjiang Shuaiyi. Furthermore, by providing the Subordinated Loan to Heilongjiang Shuaiyi and obtaining the agreement of the New Zealand on not declaring any dividend throughout the exercise period of the Earn-in
Agreement without the prior written approval of Shuaiyi Founders, Shuaiyi Founders continue to bear the residual risks and rewards relating to Heilongjiang Shuaiyi. As a result, this restructuring has been accounted for as a recapitalization of
Heilongjiang Shuaiyi with no adjustment to the historical basis of the assets and liabilities of Heilongjiang Shuaiyi. Results of Heilongjiang Shuaiyi have been consolidated as though the restructuring occurred as of the beginning of the first
accounting period presented in these financial statements.  </P>
<P align="center">
F-28</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">

<!--$$/page=--><A name=page_20></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES</B> </TD></TR></TABLE>
<P align=justify><B><I>Principle of consolidation </I></B></P>
<P align=justify>These consolidated financial statements include the financial
statements of Nutrastar and its subsidiaries. All significant inter-company
balances or transactions have been eliminated on consolidation. </P>
<P align=justify><B><I>Basis of preparation </I></B></P>
<P align=justify>These consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. </P>
<P align=justify><B><I>Use of estimates </I></B></P>
<P align=justify>The preparation of these consolidated financial statements in
conformity with generally accepted accounting principles requires the Company to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the related disclosure of contingent assets and liabilities at
the date of these consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. The Company bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. Accordingly, actual results
may differ from these estimates under different assumptions or conditions. </P>
<P align=justify><B><I>Reclassification</I></B> </P>
<P align=justify>Certain prior year balances have been reclassified to conform
to the current year&#146;s financial statement presentation. These reclassifications
had no impact on previously reported financial position, results of operations,
or cash flows. </P>
<P align=justify><B><I>Cash and cash equivalents </I></B></P>
<P align=justify>Cash and cash equivalents consist of all cash balances and
highly liquid investments with an original maturity of three months or less.
Because of the short maturity of these investments, the carrying amounts
approximate their fair value. Restricted cash is excluded from cash and cash
equivalents. </P>
<P align=justify><B><I>Accounts receivable </I></B></P>
<P align=justify>Accounts receivable is stated at cost, net of allowance for
doubtful accounts. The Company maintains allowances for doubtful accounts for
estimated losses resulting from the failure of customers to make required
payments. The Company reviews the accounts receivable on a periodic basis and
makes allowances where there is doubt as to the collectability of individual
balances. In evaluating the collectability of individual receivable balances,
the Company considers many factors, including the age of the balance, the
customer&#146;s payment history, its current credit-worthiness and current economic
trends. </P>
<P align=justify><B><I>Inventories </I></B></P>
<P align=justify>Inventories are stated at the lower of cost, determined on a
weighted average basis, or market. Costs of inventories include purchase and
related costs incurred in bringing the products to their present location and
condition. Market value is determined by reference to selling prices after the
balance sheet date or to management&#146;s estimates based on prevailing market
conditions. The management will write down the inventories to market value if it
is below cost. The management also regularly evaluates the composition of its
inventories to identify slow-moving and obsolete inventories to determine if
valuation allowance is required. </P>
<P align=center>F-29</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_21></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>
<P align=justify><B><I>Financial instruments </I></B></P>
<P align=justify>The Company values its financial instruments as required by
FASB ASC 320-12-65 (formerly SFAS No. 107, &#147;Disclosures about Fair Value of
Financial Instruments&#148;). The estimated fair value amounts have been determined
by the Company, using available market information or other appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data to develop estimates of fair value. Consequently, the
estimates are not necessarily indicative of the amounts that could be realized
or would be paid in a current market exchange. </P>
<P align=justify>The Company&#146;s financial instruments primarily consist of cash
and cash equivalents, trade accounts receivable, other current assets; trade
accounts payable, accrued expenses, other current liabilities, and due to
related parties. </P>
<P align=justify>As of the balance sheet dates, the estimated fair values of the
financial instruments were not materially different from their carrying values
as presented due to the short maturities of these instruments and that the
interest rates on the borrowings approximate those that would have been
available for loans of similar remaining maturity and risk profile at respective
year ends. </P>
<P align=justify><B><I>Fair value measurements </I></B></P>
<P align=justify>ASC Topic 820, <I>Fair Value Measurement and Disclosures</I>,
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair
value hierarchy which requires classification based on observable and
unobservable inputs when measuring fair value. There are three levels of inputs
that may be used to measure fair value: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><I>Level</I> <EM>1</EM></TD>
    <TD noWrap align=left width="5%" >- </TD>
    <TD noWrap align=left width="87%">
      <P align=justify>Quoted prices in active markets for identical assets or
      liabilities. </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ><I>Level</I> <EM>2</EM> </TD>
    <TD align=left width="5%" >- </TD>
    <TD align=left width="87%">
      <P align=justify>Observable inputs other than Level 1 prices such as
      quoted prices for similar assets or liabilities; quoted prices in markets
      that are not active; or other inputs that are observable or can be
      corroborated by observable market data for substantially the full term of
      the assets or liabilities. </P></TD></TR>
  <TR vAlign=top>
    <TD align=left ><I>Level</I> <EM>3</EM> </TD>
    <TD align=left width="5%" >- </TD>
    <TD align=left width="87%">
      <P align=justify>Unobservable inputs that are supported by little or no
      market activity and that are significant to the fair value of the assets
      or liabilities. </P></TD></TR></TABLE>
<P align=justify>The carrying values of cash and cash equivalents, trade
receivables and payables, and short-term debts approximate their fair values due
to their short maturities. </P>
<P align=justify>There were no assets and liabilities measured at fair value on
a nonrecurring basis as of December 31, 2009 and 2008. </P>
<P align=center>F-30</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_22></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>
<P align=justify><B><I>Property, plant and equipment </I></B></P>
<P align=justify>Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses, if any. Gains or
losses on disposals are reflected as gain or loss in the year of disposal. The
cost of improvements that extend the life of property, plant and equipment are
capitalized. These capitalized costs may include structural improvements,
equipment and fixtures. All ordinary repair and maintenance costs are expensed
as incurred. </P>
<P align=justify>Depreciation for financial reporting purposes is provided using
the straight-line method over the estimated useful lives of the assets as
follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="15%">Useful Life </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="15%">(In years) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Buildings </TD>
    <TD noWrap align=center width="15%" bgColor=#e6efff>20-40 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Machinery and motor vehicles </TD>
    <TD noWrap align=center width="15%">5-10 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Office equipment </TD>
    <TD noWrap align=center width="15%" bgColor=#e6efff>5 </TD></TR></TABLE>
<P align=justify>The carrying value of property, plant and equipment is assessed
annually and when factors indicating impairment is present, the carrying value
of the property, plant and equipment is reduced by the amount of the impairment.
The Company determines the existence of such impairment by measuring the
expected future cash flows (undiscounted and without interest charges) and
comparing such amount to the net asset carrying value. An impairment loss, if
exists, is measured as the amount by which the carrying amount of the asset
exceeds the fair value of the asset.<I> </I></P>
<P align=justify><B><I>Intangible assets </I></B></P>
<P align=justify>The Company&#146;s intangible assets include a ten-year exclusive
right to use a secret process and computer software. The Company&#146;s amortization
policy on intangible assets is as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="15%">Useful Life </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="15%">(In years) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Exclusive right </TD>
    <TD noWrap align=center width="15%" bgColor=#e6efff>10 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Computer software </TD>
    <TD noWrap align=center width="15%">4 </TD></TR></TABLE>
<P align=justify>The Company accounts for its intangible assets pursuant to FASB
ASC Subtopic 350-30, &#147;General Intangibles Other Than Goodwill&#148;. Under ASC
350-30-35, intangibles with definite lives continue to be amortized on a
straight-line basis over the lesser of their estimated useful lives or
contractual terms. Intangibles with indefinite lives are evaluated at least
annually for impairment by comparing the asset&#146;s estimated fair value with its
carrying value, based on cash flow methodology. </P>
<P align=justify>Impairment of goodwill is tested at least annually at the
reporting unit. The test consists of two steps. Firstly, the Company identifies
potential impairment by comparing the fair value of the reporting unit to its
carrying amount, including goodwill. If the fair value of the reporting unit is
greater than its carrying amount, goodwill is not considered impaired. Secondly,
if there is impairment identified in the first step, an impairment loss is
recognized for any excess of the carrying amount of the reporting unit&#146;s
goodwill over the implied fair value of goodwill. The implied fair value of
goodwill is determined by allocating the fair value of the reporting unit in a
manner similar to a purchase price allocation, in accordance with FASB ASC
805-10, &#147;Business Combinations&#148;. If the carrying value of a reporting unit
exceeds its estimated fair value, the Company compares the implied fair value of
the reporting unit&#146;s goodwill to its carrying amount, and any excess of the
carrying value over the fair value is charged to earnings. The Company&#146;s fair
value estimates are based on numerous assumptions and it is possible that actual
fair value will be significantly different than the estimates. </P>
<P align=center>F-31</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>


<!--$$/page=-->
<A name="page_23"></A>

<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>

<P align="justify">
<B><I>Impairment of long-lived assets </I></B></P>
<P align="justify">
The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash
flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. In estimating future cash flows, assets are
grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups.  </P>
<P align="justify">
<B><I>Revenue recognition  </I></B></P>
<P align="justify">
Revenue is recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured.  </P>
<P align="justify">
Sales revenue is recognized net of value added and sales related taxes, sales discounts and returns at the time when the merchandise is delivered to the customer. Based on historical experience, management estimates that sales returns are immaterial
and has not made allowance for estimated sales returns.  </P>
<P align="justify">
<B><I>Research and development costs </I></B></P>
<P align="justify">
Research and development costs are expensed to operations as incurred.  Research and development costs were &#36;36,728 and &#36;32,815 for the years ended December 31, 2009 and 2008, respectively. </P>
<P align="justify">
<B><I>Advertising costs </I></B></P>
<P align="justify">
The Company expenses all advertising costs as incurred.  Advertising costs charged to selling expenses were &#36;1,915 and &#36;3,258 for the years ended December 31, 2009 and 2008, respectively. </P>
<P align="justify">
<B><I>Shipping and handling costs </I></B></P>
<P align="justify">
Substantially all costs of shipping and handling of products to customers are included in selling expense. Shipping and handling costs for the years ended December 31, 2009 and 2008 were nil and &#36;298, respectively. </P>
<P align="justify">
<B><I>Share-Based Payments </I></B></P>
<P align="justify">
The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, &#147;Compensation &#150; Stock Compensation&#148;, which requires that share-based payment transactions with employees be measured based on
the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. </P>
<P align="justify">
The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, &#147;Equity-Based Payments to Non-employees&#148;. Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50,
stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as expenses as the goods or services
are received. </P>
<P align="center">
F-32</P>

<HR noshade align="center" width="100%" size=5 color="black" style="page-break-after:always;">

<!--$$/page=--><A name=page_24></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>
<P align=justify><B><I>Income taxes </I></B></P>
<P align=justify>The Company is subject to income taxes in the United States and
other foreign jurisdictions where it operates. The Company accounts for income
taxes in accordance with FASB ASC Topic 740, &#147;Income Taxes&#148;. FASB ASC Topic 740
requires an asset and liability approach for financial accounting and reporting
for income taxes and allows recognition and measurement of deferred tax assets
based upon the likelihood of realization of tax benefits in future years. Under
the asset and liability approach, deferred taxes are provided for 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. A valuation allowance is provided for deferred tax assets if it is
more likely than not these items will either expire before the Company is able
to realize their benefits, or that future deductibility is uncertain. </P>
<P align=justify>The Company&#146;s income tax returns are subject to examination by
the Internal Revenue Service (&#147;IRS&#148;) and other tax authorities in the locations
where it operates. The Company assesses potentially unfavorable outcomes of such
examinations based on the criteria of FASB ASC 740-10-25-5 through 740-10-25-7
and 740-10-25-13 (formerly FASB Interpretation No. 48 (&#147;FIN 48&#148;) &#147;Accounting for
Uncertainty in Income Taxes&#148;) which the Company adopted on January 1, 2007. The
interpretation prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken (or expected to be
taken) in a tax return. This Interpretation also provides guidance on
derecognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, accounting for income taxes in interim
periods and income tax disclosures. </P>
<P align=justify><B><I>Comprehensive income </I></B></P>
<P align=justify>FASB ASC Topic 220, &#147;Comprehensive Income&#148;, establishes
standards for reporting and displaying comprehensive income and its components
in the consolidated financial statements. Accumulated other comprehensive income
includes foreign currency translation adjustments.<I> </I></P>
<P align=justify><B><I>Foreign currency </I></B></P>
<P align=justify>The Company uses the United States dollars (&#147;US Dollar&#148; or
&#147;US$&#148; or &#147;$&#148;) for financial reporting purposes. The PRC subsidiaries within the
Company maintains the books and records in their functional currency, Chinese
Renminbi (&#147;RMB&#148;), being the lawful currency in the PRC. Assets and liabilities
of the PRC subsidiaries are translated from RMB into US Dollars using the
applicable exchange rates prevailing at the balance sheet date. Items on the
statement of operations are translated at average exchange rates during the
reporting period. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the Company&#146;s financial statements
are recorded as accumulated other comprehensive income. </P>
<P align=justify>The exchange rates used to translate amounts in RMB into U.S.
Dollars for the purposes of preparing the consolidated financial statements are
based on the rates as published on the website of People&#146;s Bank of China and are
as follows:- </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=center width="15%"><U>December 31, 2009</U> </TD>
    <TD noWrap align=center width="15%"><U>December 31, 2008</U> </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Balance sheet items, except for
      equity accounts </TD>
    <TD noWrap align=center width="15%" bgColor=#e6efff>US$1=RMB6.8282 </TD>
    <TD noWrap align=center width="15%" bgColor=#e6efff>US$1=RMB6.8346 </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Items in the statements of income and cash flows </TD>
    <TD noWrap align=center width="15%">US$1=RMB6.8310 </TD>
    <TD noWrap align=center width="15%">US$1=RMB6.9480 </TD></TR></TABLE>
<P align=justify>No representation is made that the RMB amounts could have been,
or could be, converted into U.S. dollars at the above rates. </P>
<P align=justify>The value of RMB against U.S. dollars and other currencies may
fluctuate and is affected by, among other things, changes in China&#146;s political
and economic conditions. Any significant revaluation of RMB may materially
affect the Company&#146;s financial condition in terms of U.S. dollar reporting. </P>
<P align=center>F-33</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_25></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>
<P align=justify><B><I>Earnings per share </I></B></P>
<P align=justify>The Company reports earnings per share in accordance with the
provisions of FASB ASC Topic 260, "Earnings per Share." FASB ASC Topic 260
requires presentation of basic and diluted earnings per share in conjunction
with the disclosure of the methodology used in computing such earnings per
share. Basic earnings per share excludes dilution and is computed by dividing
income available to common stockholders by the weighted average common shares
outstanding during the period. Diluted earnings per share takes into account the
potential dilution (using the treasury stock method) that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock. </P>
<P align=justify>All per share data including earnings per share has been
retroactively restated to reflect the reverse acquisition on December 23, 2008
whereby the 689,390 shares of preferred stock issued by Nutrastar (the nominal
acquirer) to the shareholder of New Resources (the nominal acquiree) are deemed
to be the number of shares outstanding for the period prior to the reverse
acquisition. For the period after the reverse acquisition, the number of shares
considered to be outstanding is the actual number of shares outstanding during
that period. </P>
<P align=justify>As discussed in note 1, the Company effected a 1-for-114.59
Reverse Split of its common stock and all outstanding shares of Series A
Preferred Stock were automatically converted to common stock. The weighted
average number of shares for the purposes of calculating the earnings per share
has been retroactively adjusted as if the Reverse Split took effect as of the
beginning of the earliest period presented. As holders of Series A Preferred
Stock were entitled to vote with the holders of common stock on all matters on a
an as-converted to common stock basis, basic and diluted earnings per share have
been calculated and presented on the basis that all shares of the Company&#146;s
common stock and Series A Preferred Stock are considered a single class and on
an as-converted to common stock basis before the Reverse Split. </P>
<P align=justify>The following table is a reconciliation of the net income and
the weighted average shares used in the computation of basic and diluted
earnings per share for the periods presented: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><FONT size=2><B>Year ended
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Income for the purposes
      of basic and diluted EPS: </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" noWrap align=left width="1%"
     bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>&nbsp;7,741,716&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" noWrap align=left width="1%"
     bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>&nbsp;3,719,049 </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Weighted average number of shares:
      </FONT></TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>&nbsp; &nbsp;- Basic
      </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>13,131,521
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>12,198,913
      </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; &nbsp;- Effect of dilutive
      warrants </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><FONT size=2>210,000 </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><FONT size=2>&#150; </FONT></TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>&nbsp; &nbsp;- Diluted
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>13,341,521 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" noWrap align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 2px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>12,198,913 </FONT></TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify><B><I>Segment reporting </I></B></P>
<P align=justify>The Company follows FASB ASC Topic 280, &#147;Segment Reporting&#148;,
which requires that companies disclose segment data based on how management
makes decision about allocating resources to segments and evaluating their
performance.<B><I> </I></B></P>
<P align=justify>The Company believes that during the years ended December 31,
2009 and 2008, it operated in two business segments &#150; growing and sales of
Chinese Golden Grass, which is widely used for Chinese medicine, and sales of
agricultural products, respectively. Throughout the years ended December 31,
2009 and 2008, all of the Company&#146;s operations were carried out in one
geographical segment - China.<I> </I></P>
<P align=center>F-34</P>
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<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>

<P align="justify">
<B><I>Commitments and contingencies </I></B></P>
<P align="justify">
The Company follows FASB ASC Subtopic 450-20, &#147;Loss Contingencies&#148; in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when
information available prior to issuance of the financial statements indicates that it is probable that a liability could be been incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are
expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred. </P>
<P align="justify">
<B><I>Recent accounting pronouncements </I></B> </P>
<P align="justify">
In June 2009, the FASB established the FASB Accounting Standards Codification<SUP>TM</SUP> (ASC) as the single source of authoritative U.S generally accepted accounting principles (GAAP) recognized by the FASB to be applied to nongovernmental
entities. Rules and interpretive releases of the Securities and Exchange Commission (&#147;SEC&#148;) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The ASC superseded all previously existing
non-SEC accounting and reporting standards, and any prior sources of U.S. GAAP not included in the ASC or grandfathered are not authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through
Accounting Standards Updates (ASUs). The ASC did not change current U.S. GAAP but changes the approach by referencing authoritative literature by topic (each a &#147;Topic&#148;) rather than by type of standard. The ASC has been effective for the
Company effective July 1, 2009. Adoption of the ASC did not have a material impact on the Company&#146;s Consolidated Financial Statements, but references in the Company&#146;s Notes to Consolidated Financial Statements to former FASB positions,
statements, interpretations, opinions, bulletins or other pronouncements are now presented as references to the corresponding Topic in the ASC. </P>
<P align="justify">
Effective January 1, 2009, the Company adopted FASB ASC 350-30 and ASC 275-10-50 (formerly FSP FAS 142-3, <I>Determination of the Useful Life of Intangible Assets</I>), which amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, <I>Goodwill and Other Intangible Assets</I>. The Company will apply ASC 350-30 and ASC 275-10-50 prospectively to intangible assets acquired
subsequent to the adoption date. The adoption of these revised provisions had no impact on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
Effective January 1, 2009, the Company adopted FASB ASC 815-10-65 (formerly SFAS 161, <I>Disclosures about Derivative Instruments and Hedging Activities</I>), which amends and expands previously existing guidance on derivative instruments to require
tabular disclosure of the fair value of derivative instruments and their gains and losses., This ASC also requires disclosure regarding the credit-risk related contingent features in derivative agreements, counterparty credit risk, and strategies
and objectives for using derivative instruments. The adoption of this ASC did not have a material impact on the Company&#146;s Consolidated Financial Statements.</P>
<P align="justify">
During 2008, the Company adopted FASB ASC 820-10 (formerly FSP FAS 157-2, <I>Effective Date of FASB Statement 157</I>), which deferred the provisions of previously issued fair value guidance for nonfinancial assets and liabilities to the first
fiscal period beginning after November 15, 2008. Deferred nonfinancial assets and liabilities include items such as goodwill and other nonamortizable intangibles. Effective January 1, 2009, the Company adopted the fair value guidance for
nonfinancial assets and liabilities. The adoption of FASB ASC 820-10 did not have a material impact on the Company&#146;s Consolidated Financial Statements.  </P>
<P align="center">
F-35</P>

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<A name="page_27"></A>

<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>

<P align="justify">
<B><I>Recent accounting pronouncements (continued) </I></B> </P>
<P align="justify">
Effective January 1, 2009, the Company adopted FASB ASC 810-10-65 (formerly SFAS 160,</P>
<P align="justify">
<I>Noncontrolling Interests in Consolidated Financial Statements &#151; an amendment of ARB No. 51</I>), which amends previously issued guidance to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for
the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as equity. Among other
requirements, this Statement requires that the consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented on the face of the consolidated income statement.  The adoption of the provisions
in this ASC did not have a material impact on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
Effective January 1, 2009, the Company adopted FASB ASC 805-10, (formerly SFAS 141R, <I>Business Combinations</I>), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling interest in an acquiree and the goodwill acquired. In addition, the provisions in this ASC require that any additional reversal of deferred tax asset valuation allowance
established in connection with fresh start reporting on January 7, 1998 be recorded as a component of income tax expense rather than as a reduction to the goodwill established in connection with the fresh start reporting. The Company will apply ASC
805-10 to any business combinations subsequent to adoption. </P>
<P align="justify">
Effective January 1, 2009, the Company adopted FASB ASC 805-20 (formerly FSP FAS 141R-1,</P>
<P align="justify">
<I>Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies</I>), which amends ASC 805-10 to require that an acquirer recognize at fair value, at the acquisition date, an asset acquired or a
liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period. If the acquisition-date fair value of such an asset acquired or
liability assumed cannot be determined, the acquirer should apply the provisions of ASC Topic 450, <I>Contingences</I>, to determine whether the contingency should be recognized at the acquisition date or after such date. The adoption of ASC 805-20
did not have a material impact on the Company&#146;s Consolidated Financial Statements.  </P>
<P align="justify">
Effective July 1, 2009, the Company adopted FASB ASC 825-10-65 (formerly FASB Staff Position (&#147;FSP&#148;) No. FAS 107-1 and Accounting Principles Board 28-1,<I> Interim Disclosures about Fair Value of Financial Instruments</I>), which amends
previous guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The adoption of FASB ASC 825-10-65 did not have a material
impact on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
Effective July 1, 2009, the Company adopted FASB ASC 320-10-65 (formerly FSP FAS 115-2 and FAS 124-2, <I>Recognition and Presentation of Other-Than-Temporary Impairments</I>). Under ASC 320-10-65, an other-than-temporary impairment must be
recognized if the Company has the intent to sell the debt security or the Company is more likely than not will be required to sell the debt security before its anticipated recovery. In addition, ASC 320-10-65 requires impairments related to credit
loss, which is the difference between the present value of the cash flows expected to be collected and the amortized cost basis for each security, to be recognized in earnings while impairments related to all other factors to be recognized in other
comprehensive income. The adoption of ASC 320-10-65 did not have a material impact on the Company&#146;s Consolidated Financial Statements. </P>
<P align="center">
F-36</P>

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<A name="page_28"></A>

<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>

<P align="justify">
<B><I>Recent accounting pronouncements (continued) </I></B> </P>
<P align="justify">
Effective July 1, 2009, the Company adopted FASB ASC 820-10-65 (formerly FSP FAS 157-4, </P>
<P align="justify">
<I>Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly</I>), which provides guidance on how to determine the fair value of assets and
liabilities when the volume and level of activity for the asset or liability has significantly decreased when compared with normal market activity for the asset or liability as well as guidance on identifying circumstances that indicate a
transaction is not orderly. The adoption of ASC 820-10-65 did not have a material impact on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
Effective July 1, 2009, the Company adopted FASB ASC 855-10 (formerly SFAS 165, <I>Subsequent Events</I>), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial
statements are issued or are available to be issued. Adoption of ASC 855-10 did not have a material impact on the Company&#146;s Consolidated Financial Statements.  </P>
<P align="justify">
In the fourth quarter of fiscal 2009, the Company adopted ASC 715, <I>Compensation &#150; Retirement Benefits </I></P>
<P align="justify">
(formerly FASB FSP FAS 132(R)-1, <I>Employers&#146; Disclosures about Postretirement Benefit Plan Assets</I>), which expands the disclosure requirements about plan assets for defined benefit pension plans and postretirement plans. The adoption of
these disclosure requirements has had no material effect on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
In the quarter ended December 31, 2009, the Company adopted ASC Update No. 2009-05, which provides guidance on measuring the fair value of liabilities under FASB ASC 820 (formerly SFAS 157, <I>Fair Value Measurements</I>).  . The adoption of this
Update has had no material effect on the Company&#146;s Consolidated Financial Statements.  </P>
<p class="MsoNormal" style="text-align:justify;text-justify:inter-ideograph;
layout-grid-mode:char"><font face="Times New Roman">In January 2010, the FASB
issued ASU No. 2010-05&#151;<i>Compensation&#151;Stock Compensation (Topic 718): Escrowed
Share Arrangements and the Presumption of Compensation</i>. This Update simply
codifies EITF Topic No. D-110, &#147;Escrowed Share Arrangements and the Presumption
of Compensation&#148; dated June 18, 2009. ASU No. 2010-05 includes the SEC staff
announcement at the EITF meeting that clarified SEC staff views on overcoming
the presumption that for certain shareholders escrowed share arrangements
represent compensation. Historically, the SEC staff has expressed the view that
an escrowed share arrangement involving the release of shares to certain
shareholders based on performance-related criteria is presumed to be
compensatory. The SEC staff clarified that entities should consider the
substance of the transaction in evaluating whether the presumption of
compensation may be overcome, including whether the transaction was entered into
for a reason unrelated to employment, such as to facilitate a financing
transaction. In that situation, the staff generally believes that the escrowed
shares should be reflected as a discount in the allocation of proceeds. The
Company has applied the SEC staff announcement to any escrowed share arrangement
effective from June 18, 2009. </font></p>
<P align="center">
F-37</P>

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<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>

<P align="justify">
<B><I>New accounting pronouncement to be adopted </I></B></P>
<P align="justify">
In June 2009, the FASB issued SFAS No. 166, <I>Accounting for Transfers of Financial Assets &#150; an amendment of FASB Statement No. 140</I>, (codified by ASU No. 2009-16 issued in December 2009). SFAS No. 166 limits the circumstances in which a
financial asset should be derecognized when the transferor has not transferred the entire financial asset by taking into consideration the transferor&#146;s continuing involvement. The standard requires that a transferor recognize and initially
measure at fair value all assets obtained (including a transferor&#146;s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. The concept of a qualifying special-purpose entity is
removed from SFAS No. 140, &#147;Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,&#148; along with the exception from applying FIN 46(R), <I>Consolidation of Variable Interest Entities</I>. The standard
is effective for the first annual reporting period that begins after November 15, 2009 (i.e. the Company&#146;s fiscal 2010). Earlier application is prohibited. It is expected the adoption of this Statement will have no material effect on the
Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
In June 2009, the FASB issued SFAS No. 167, <I>Amendments to FASB Interpretation No. 46(R)</I>, (codified by ASU No. 2009-17 issued in December 2009). The standard amends FIN No. 46(R) to require a company to analyze whether its interest in a
variable interest entity (&#147;VIE&#148;) gives it a controlling financial interest. A company must assess whether it has an implicit financial responsibility to ensure that the VIE operates as designed when determining whether it has the power to
direct the activities of the VIE that significantly impact its economic performance. Ongoing reassessments of whether a company is the primary beneficiary are also required by the standard. SFAS No. 167 amends the criteria to qualify as a primary
beneficiary as well as how to determine the existence of a VIE. The standard also eliminates certain exceptions that were available under FIN No. 46(R). This Statement will be effective as of the beginning of each reporting entity&#146;s first
annual reporting period that begins after November 15, 2009 (i.e. the Company&#146;s fiscal 2010). Earlier application is prohibited. Comparative disclosures will be required for periods after the effective date. It is expected the adoption of this
Statement will have no material effect on the Company&#146;s Consolidated Financial Statements. </P>
<P align="justify">
In October 2009, the FASB concurrently issued the following ASC Updates (ASU):  </P>
<P align="justify">
&#149;&nbsp;&nbsp;&nbsp;&nbsp; ASU No. 2009-13&#151;<I>Revenue Recognition (ASC Topic 605): Multiple-Deliverable Revenue Arrangements </I>(formerly EITF Issue No. 08-1). ASU No. 2009-13 modifies the revenue recognition guidance for arrangements that involve the delivery of
multiple elements, such as product, software, services or support, to a customer at different times as part of a single revenue generating transaction. This standard provides principles and application guidance to determine whether multiple
deliverables exist, how the individual deliverables should be separated and how to allocate the revenue in the arrangement among those separate deliverables. The standard also expands the disclosure requirements for multiple deliverable revenue
arrangements.  </P>
<P align="justify">
&#149;&nbsp;&nbsp;&nbsp;&nbsp; ASU No. 2009-14&#151;<I>Software (ASC Topic 985): Certain Revenue Arrangements That Include Software Elements </I>(formerly EITF Issue No. 09-3)<I>. </I>ASU No. 2009-14 removes tangible products from the scope of software revenue recognition
guidance and also provides guidance on determining whether software deliverables in an arrangement that includes a tangible product, such as embedded software, are within the scope of the software revenue guidance. </P>
<P align="justify">
 &nbsp;&nbsp;&nbsp;&nbsp;</P>
<P align="center">
F-38</P>

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<!--$$/page=--><A name=page_30></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 2</B> </TD>
    <TD noWrap align=left width="90%"><B>SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)</B> </TD></TR></TABLE>
<P align=justify><B><I>New accounting pronouncement to be adopted (continued)
</I></B></P>
<P align="justify">
 &#149;&nbsp;&nbsp;&nbsp;&nbsp; ASU No. 2009-13 and ASU No. 2009-14 should be applied
 on a prospective basis for revenue arrangements entered into or materially
 modified in fiscal years beginning on or after June 15, 2010, with earlier
 application permitted. Alternatively, an entity can elect to adopt these
 standards on a retrospective basis, but both these standards must be adopted in
 the same period using the same transition method. The Company expects to apply
 these ASU Updates on a prospective basis for revenue arrangements entered into
 or materially modified beginning April 1, 2011. The Company is currently
 evaluating the potential impact these ASC Updates may have on its financial position and results of operations.  </P>
<P align="justify">
In October 2009, the FASB also issued ASU No. 2009-15&#151;<I>Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing.</I> ASU 2009-15 amends ASC 470-20, <I>Debt with Conversion and Other
Options</I>, to provide accounting and reporting guidance for own-share lending arrangements issued in contemplation of convertible debt issuance. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009 (i.e. the
Company&#146;s fiscal 2010) with retrospective application required. The Company is currently evaluating the potential impact this ASC Updates may have on its financial position and results of operations. </P>
<P align=justify>In January 2010, the FASB issued the following ASC Updates:
</P>
<P align=justify>&#149;&nbsp;&nbsp;&nbsp;&nbsp; ASU No. 2010-01&#151;<I>Equity (Topic 505): Accounting for
Distributions to Shareholders with Components of Stock and Cash</I>. This Update
clarifies that the stock portion of a distribution to shareholders that allows
them to elect to receive cash or stock with a potential limitation on the total
amount of cash that all shareholders can elect to receive in the aggregate is
considered a share issuance that is reflected in EPS prospectively and is not a
stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings
Per Share). The amendments in this Update are effective for interim and annual
periods ending on or after December 15, 2009 with retrospective application.
</P>
<P align=justify>&#149;&nbsp;&nbsp;&nbsp;&nbsp; ASU No. 2010-02&#151;<I>Consolidation (Topic 810): Accounting and
Reporting for Decreases in Ownership of a Subsidiary</I>. This Update amends
Subtopic 810-10 and related guidance to clarify that the scope of the decrease
in ownership provisions of the Subtopic and related guidance applies to (i) a
subsidiary or group of assets that is a business or nonprofit activity; (ii) a
subsidiary that is a business or nonprofit activity that is transferred to an
equity method investee or joint venture; and (iii) an exchange of a group of
assets that constitutes a business or nonprofit activity for a noncontrolling
interest in an entity, but does not apply to: (i) sales of in substance real
estate; and (ii) conveyances of oil and gas mineral rights. The amendments in
this Update are effective beginning in the period that an entity adopts FAS 160
(now included in Subtopic 810-10). </P>
<P align=justify>&#149;&nbsp;&nbsp;&nbsp;&nbsp; ASU No. 2010-06&#151;<I>Fair Value Measurements and Disclosures
(Topic 820): Improving Disclosures about Fair Value Measurements</I>. This
Update amends Subtopic 820-10 that require new disclosures about transfers in
and out of Levels 1 and 2 and activity in Level 3 fair value measurements. This
Update also amends Subtopic 820-10 to clarify certain existing disclosures. The
new disclosures and clarifications of existing disclosures are effective for
interim and annual reporting periods beginning after December 15, 2009, except
for the disclosures about purchases, sales, issuances, and settlements in the
roll forward of activity in Level 3 fair value measurements, which are effective
for fiscal years beginning after December 15, 2010. </P>
<P align=justify>The Company expects that the adoption of the above Updates
issued in January 2010 will not have any significant impact on its financial
position and results of operations. </P>
<P align=justify>Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company&#146;s
Consolidated Financial Statements upon adoption. </P>
<P align=center><br>
F-39</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_31></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR><B>&nbsp;</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 3</B> </TD>
    <TD noWrap align=left width="90%"><B>ACCOUNTS RECEIVABLE, NET</B>
  </TD></TR></TABLE>
<P align=justify>Accounts receivable consisted of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><B>As of December 31,</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2009</B> </TD>
    <TD noWrap align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><B>2008</B> </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Accounts receivable </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;215,486 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;283,822 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Less: Allowance for doubtful debts </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">- </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Accounts receivable, net</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><B>&nbsp;215,486</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><B>&nbsp;283,822</B> </TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=center><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>NOTE 4</B> </TD>
    <TD noWrap align=left width="90%"><B>INVENTORIES</B> </TD></TR></TABLE>
<P align=justify>Inventories by major categories are summarized as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><FONT size=2>&nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B>As of December 31,</B>
      </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;<B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Raw materials
</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT
      size=2>&nbsp;183,934 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT
      size=2>&nbsp;147,824 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Work in progress </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;294,983 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%"><FONT size=2>832,680 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Finished goods
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;137,156 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>187,575 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2><B>Total</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><FONT size=2><B>&nbsp;616,073</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><FONT size=2><B>&nbsp;1,168,079</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR></TABLE>
<p><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>NOTE 5</B> </TD>
    <TD noWrap align=left width="90%"><B>PREPAYMENTS AND OTHER RECEIVABLES</B>
    </TD></TR></TABLE>
<P align=justify>Prepayments and other receivables consist of the following:
</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><FONT size=2><B>As of
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Prepayments </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>12,812
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>&nbsp;-
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Other receivables, net of $nil
      allowance </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><FONT size=2>238,423 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><FONT size=2>14,105 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff><b>$</b></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2><B>251,235</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2><B>&nbsp;14,105</B> </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR></TABLE></DIV>
<P align=center dir="rtl"><br>
F-40</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_32></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>NOTE 6</B> </TD>
    <TD noWrap align=left width="90%"><B>INTANGIBLE ASSETS, NET</B>
  </TD></TR></TABLE>
<P align=justify>Intangible assets, net consisted of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><FONT size=2>&nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B>As of December 31,</B>
      </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Computer software, cost
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT
      size=2>&nbsp;1,454 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT
      size=2>&nbsp;1,453 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Exclusive right to use a secret
      process, cost </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%"><FONT size=2>4,395,309 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%"><FONT size=2>4,391,193 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Less: Accumulated
      amortization </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>(1,649,361</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>(1,208,651</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><FONT size=2><B>&nbsp;2,747,402</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><FONT size=2><B>&nbsp;3,183,995</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR></TABLE>
<P align=justify>In April 2006, the Company purchased from a third party a
ten-year exclusive right to use a secret process and method in the cultivation
and growing of Chinese Golden Grass, which is widely used for Chinese medicine,
for a cash consideration of RMB30,000,000, payable over five years. The
exclusive right is amortized over its term of ten years using the straight-line
method. </P>
<P align=justify>Amortization expenses for the years ended December 31, 2009 and
2008 were $439,398 and $432,597, respectively. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 7</B> </TD>
    <TD noWrap align=left width="90%"><B>PROPERTY, PLANT AND EQUIPMENT,
      NET</B> </TD></TR></TABLE>
<P align=justify>Property, plant and equipment, net consisted of the following:
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><FONT size=2><B>As of
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Cost: </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp;Buildings </FONT></TD>
    <TD noWrap align=left width="1%"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%"><FONT size=2>&nbsp;11,672,404
</FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="1%"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%"><FONT size=2>&nbsp;11,647,541
</FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>&nbsp;Office equipment
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>15,264
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff><FONT size=2>9,317
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp;Machinery </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%"><FONT size=2>128,286 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%"><FONT size=2>98,903 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>&nbsp;Motor vehicles
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>54,842 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>54,790 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Total cost </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%"><FONT size=2>11,870,796 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%"><FONT size=2>11,810,551 </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Less: Accumulated
      depreciation </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>(1,474,289</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff><FONT size=2>(907,575</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2><B>Net book value</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><FONT size=2><B>&nbsp;10,396,507</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><FONT size=2><B>&nbsp;10,902,976</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR></TABLE>
<P align=justify>Depreciation expenses for the years ended December 31, 2009 and
2008 were $564,988 and $690,850, respectively. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 8</B> </TD>
    <TD noWrap align=left width="90%"><B>OTHER PAYABLES AND ACCRUALS</B>
  </TD></TR></TABLE>
<P align=justify>Other payables and accruals consisted of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <tr>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4><FONT size=2><B>As of
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
  </tr>
  <tr>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
  </tr>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Accrued staff costs </TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;370,395 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;235,421 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Other taxes payable </TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%">25,030 </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="12%">232,481 </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Other payables </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>58,079 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff>5,057 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><B>&nbsp;453,504</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%"><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%"><B>&nbsp;472,959</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR></TABLE>
<P align=center dir="rtl"><br>
F-41</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_33></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 9</B> </TD>
    <TD noWrap align=left width="90%"><B>PAYABLE FOR INTANGIBLES</B>
  </TD></TR></TABLE>
<P align=justify>As described in Note 6, the Company purchased an exclusive
right from an independent party for a secret process and method for a stated
value of RMB30,000,000 payable over 5 years from the date of purchase. The
agreement provides that all payments by the Company for the secret process and
method will be refundable if the secret process and method proves ineffective.
Under ASC Subtopic 835-30, &#147;Imputation of Interest&#148; (formerly APB 21, &#147;Interest
on Receivables and Payables&#148;), the payable for intangibles are stated without
imputed interest as the noninterest factor fairly represents the warranty for
performance. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>The following table presents the amounts payable for
      the next five years and thereafter: </TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left>&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp;</TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Year ending December 31, 2010 </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;878,709 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>2011 and thereafter </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">- </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>Total </TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>878,709 </TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><B>Current portion</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%"><B>878,709</B> </TD>
    <TD noWrap align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Non-current portion</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><B>&nbsp;-</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<p>&nbsp;</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 10</B> </TD>
    <TD noWrap align=left width="90%"><B>ACQUISITION PAYABLE</B>
</TD></TR></TABLE>
<P align=justify>The acquisition payable represents the transfer price of
RMB60,000,000 payable by New Resources for the acquisition of 100% equity
interest in Heilongjiang Shuaiyi, as further discussed in Note 18, the
acquisition payable is due for payment in full on or before June 30, 2010 by New
Resources to Shuaiyi Founders who are also shareholders of the Company. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 11</B> </TD>
    <TD noWrap align=left width="90%"><B>SHAREHOLDERS&#146; EQUITY</B>
  </TD></TR></TABLE>
<P align=justify><B><I>Series A Voting Convertible Preferred
Stock</I></B><BR></P>
<P align=justify>In accordance with the Company&#146;s Articles of Incorporation, the
Company&#146;s Board of Directors unanimously approved the filing of a Certificate of
Designation designating and authorizing the issuance of up to 800,000 shares of
our Series A Voting Preferred Stock. The Certificate of Designation was filed on
December 22, 2008. The holders of the Company&#146;s Series A Preferred Stock are
entitled to vote on all matters together with all other classes of stock on an
as-converted to common stock basis. Holders of Series A Preferred Stock have
protective class voting veto rights on matters, such as business combination
transactions, payment of dividends, the issuance of other classes of stock with
senior rights, changes to our charter documents and stock redemptions. Shares of
Series A Preferred Stock have a senior liquidation payment preference in the
event of a liquidation or sale of the Company. </P>
<P align=justify>On December 23, 2008, which was the date of the Share Exchange
as set out in Note 1, the Company entered into an amendment, (the &#147; Amendment
&#148;), of a stock purchase agreement, (the &#147;SPA)&#148;, dated August 6, 2008, by and
among ACI (formerly BMC Acquisitions Corp., LLC), Belmont Partners LLC, or
Belmont, and the Company. ACI was the Company&#146;s majority shareholder prior to
the Company&#146;s reverse acquisition of New Resources. Pursuant to the SPA, the
Company was required to issue to Belmont a number of shares of its common stock
sufficient for Belmont to retain 1.1% ownership interest in the Company.
Pursuant to the Amendment, ACI assumed the foregoing obligation of the Company
and agreed to transfer its shares of the Company&#146;s common stock in order to
satisfy such obligation. On the same day, the Company entered into a
subscription agreement with ACI, pursuant to which the Company issued and sold
to ACI 17,962 shares of Series A Preferred Stock for $52,530.50, or $2.92 per
share. </P>
<P align=justify>On December 23, 2008, the Company also entered into a
subscription agreement with Tan Zhen Investment Limited, (the &#147; Investor &#148;),
pursuant to which the Company issued and sold to the Investor 20,168 shares of
the Company&#146;s Series A Preferred Stock for $375,000, or $18.59 per share. </P>
<P align=justify>On May 29, 2009, all issued and outstanding shares of the
Series A Preferred Stock were automatically converted into 12,695,223 shares of
common stock on the basis of one share of Series A Preferred Stock for 2,000
shares of common stock, which was adjusted to a conversion ratio of one share of
Series A Preferred Stock for 17.45 shares of common stock upon the effectiveness
of the 1-for-114.59 reverse split of the Company&#146;s outstanding common stock.
</P>
<P align=justify>As of December 31, 2009 and 2008, the Company had none and
727,520 shares of Series A Preferred Stock issued and outstanding, respectively.
</P>
<P align=center>F-42</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_34></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 11</B> </TD>
    <TD noWrap align=left width="90%"><B>SHAREHOLDERS&#146; EQUITY (CONTINUED)</B>
    </TD></TR></TABLE>
<P align=justify><B><I>Private Placement Transaction </I></B></P>
<P align=justify>On December 17, 2009, the Company completed a private placement
transaction and sold 1,000,000 shares of its common stock to certain accredited
investors at $2.50 per share for a total of $2.5 million pursuant to a
securities purchase agreement, or the Securities Purchase Agreement. In
addition, the Company issued to each of the investors two warrants to purchase
in aggregate 500,000 shares of its common stock, including a Series A warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B warrant having a term of three years with an exercise price of $4.00
per share. These warrants contain standard anti-dilution provisions for stock
dividends, stock splits, stock combination, recapitalization and a change of
control transaction. Because these warrants do not contain any contingent
exercise provisions and their settlement amount will equal the difference
between the fair value of a fixed number of the Company&#146;s equity shares and a
fixed strike price, these warrants, which are freestanding instruments, qualify
for the scope exception under the guidance provided in ASC 815-40-15-5 through
815-40-15-8, and are considered indexed to the Company&#146;s own stock. Accordingly,
these warrants have been classified as equity. </P>
<P align=justify>Pursuant to the Securities Purchase Agreement, the Company
agreed to register the shares and the warrants within a pre-defined period. The
Company is subject to registration delay payments in cash in the amounts
prescribed by the Securities Purchase Agreement if it is unable to file the
registration statement, cause it to become effective or maintain its
effectiveness as required by the Securities Purchase Agreement. As discussed in
Note 20, on February 4, 2010, the SEC declared effective the registration
statement on Form S-1 filed by the Company on January 28, 2010. As a result, no
provision for any registration delay payment is required. </P>
<P align=justify>Warrants outstanding as of December 31, 2009 consist of the
following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="36%"
    colSpan=7><FONT size=2><B>Warrants Outstanding and Exercisable</B>
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    ><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2><B>Weighted</B> </FONT></TD>
    <TD noWrap align=center width="2%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2><B>Average</B> </FONT></TD>
    <TD noWrap align=left width="2%" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2><B>Number of</B>
</FONT></TD>
    <TD noWrap align=center width="2%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2><B>Average</B> </FONT></TD>
    <TD noWrap align=center width="2%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2><B>Remaining</B>
</FONT></TD>
    <TD noWrap align=left width="2%" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2><B>underlying</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2><B>Exercise</B> </FONT></TD>
    <TD noWrap align=center width="2%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=center width="10%"><FONT size=2><B>Contractual Life</B>
      </FONT></TD>
    <TD noWrap align=left width="2%" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><FONT size=2><B>shares</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="2%"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><FONT size=2><B>Price</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="2%"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%"><FONT size=2><B>(years)</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="2%"
    ><FONT size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2>Balance, December 31,
      2008 </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><FONT size=2>&#150;
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left><FONT size=2>Issued </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    ><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="10%"><FONT size=2>500,000 </FONT></TD>
    <TD noWrap align=left width="2%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%"><FONT size=2>&nbsp;3.625 </FONT></TD>
    <TD noWrap align=left width="2%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%" ><FONT
    size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="10%"><FONT size=2>3.00 </FONT></TD>
    <TD noWrap align=left width="2%" ><FONT
    size=2>&nbsp;</FONT></TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><FONT size=2><B>Balance, December
      31, 2009</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff><FONT size=2><B>500,000</B> </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff><FONT
      size=2><B>$</B></FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><FONT
      size=2><B>&nbsp;</B>3.625 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff><FONT
      size=2><B>2.96</B> </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff><FONT
      size=2>&nbsp;</FONT></TD></TR></TABLE>
<P align=center>F-43</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_35></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 11</B> </TD>
    <TD noWrap align=left width="90%"><B>SHAREHOLDERS&#146; EQUITY (CONTINUED)</B>
    </TD></TR></TABLE>
<P align=justify><B><I>Securities Escrow Arrangement</I></B><BR></P>
<P align=justify>In addition, pursuant to the Securities Purchase Agreement, the
major stockholder of the Company, New Zealand has agreed to place a total of
1,000,000 shares of the Company&#146;s common stock held by it into escrow to secure
the make good obligations described below on behalf of the investors. Under the
Securities Purchase Agreement, New Zealand has agreed that: (i) in the event
that the Company&#146;s consolidated financial statements reflect less than
$9,000,000 of after-tax income for the fiscal year ending December 31, 2010, it
will transfer to the investors, on a pro rata basis, for no additional
consideration, 500,000 shares of the Company common stock owned by it; and (ii)
in the event that the Company&#146;s consolidated financial statements reflect less
than $11,000,000 of after-tax net income for the fiscal year ending December 31,
2011, it will transfer to the investors, on a pro rata basis, for no additional
consideration, 500,000 shares of the Company&#146;s common stock owned by it. </P>
<P align=justify>Historically, SEC staff expressed the view that an escrow share
arrangement involving the release of shares to certain shareholders based on
performance-related criteria is presumed to be compensatory, equivalent to a
reverse stock split followed by the grant of a restricted stock award under a
performance-based plan. </P>
<P align=justify>However, in EITF No. D-110 (codified by FASB ASU No. 2010-05)
dated June 18, 2009, the SEC staff has announced that when evaluating
whether the presumption of compensation has been overcome, the substance of the
arrangement, including whether the arrangement was entered into for purposes
unrelated to, and not contingent upon, continued employment, should be
considered. </P>
<P align=justify>The Company has evaluated the terms of the Securities Purchase
Agreement based on the SEC staff&#146;s clarification in EITF No. D-110 (codified by
FASB ASU No. 2010-05) and concluded that because the escrow shares would be
released or distributed to the investor without regard to the continued
employment of any officer of the Company, the arrangement is in substance an
inducement to facilitate the Private Placement, rather than as compensatory.
Therefore, the Company will account for the securities escrow arrangement under
the Securities Purchase Agreement according to its nature and reflected as a
reduction of the proceeds allocated to the newly issued securities in the
Private Placement, following the guidance provided in FASB ASU No. 2010-05. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 12</B> </TD>
    <TD noWrap align=left width="90%"><B>STATUTORY RESERVES</B>
</TD></TR></TABLE>
<P align=justify>In accordance with the PRC Companies Law, the Company&#146;s PRC
subsidiaries were required to transfer 10% of their profits after tax, as
determined in accordance with accounting standards and regulations of the PRC,
to the statutory surplus reserve and a percentage of not less than 5%, as
determined by management, of the profits after tax to the public welfare fund.
However, the Company&#146;s PRC subsidiaries were not required to transfer any profit
after tax to the statutory surplus reserve only after the accumulated statutory
surplus reserves reached 50% of registered capital of the Company&#146;s PRC
subsidiaries. With the amendment of the PRC Companies Law which was effective
from January 1, 2006, enterprises in the PRC were no longer required to transfer
any profit to the public welfare fund. Any balance of public welfare fund
brought forward from December 31, 2005 should be transferred to the statutory
surplus reserve. The statutory surplus reserve is non-distributable. </P>
<P align=center>F-44</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_36></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 13</B> </TD>
    <TD noWrap align=left width="90%"><B>SHARE-BASED PAYMENT</B>
</TD></TR></TABLE>
<P align=justify>Immediately following closing of the Share Exchange as set out
in Note 1, the New Zealand transferred 91,088 shares out of the 689,390 shares
of Series A Preferred Stock issued to it under the Share Exchange Agreement to
ten individuals and entities for consulting services provided by them to New
Resources and its subsidiaries in assisting them to consummate the share
exchange transaction contemplated by the Share Exchange Agreement prior to
December 23, 2008. </P>
<P align=justify>In accordance with the requirements of and guidance in Staff
Accounting Bulletin No. 107 and ASC Topic 718, &#147;Compensation &#150; Stock
Compensation&#148;), the Company charged $1,693,326 to merger costs based on the
grant-date fair value of the 91,088 shares of Series A Preferred Stock
transferred by New Zealand to the Company&#146;s consultants. As the Company&#146;s shares
had scarcely been traded, the Company determined that the price of $18.59 at
which 20,168 shares of the Company&#146;s Series A Preferred Stock were issued to the
Investor, as discussed in Note 11, appropriately represented a fair value of the
Company&#146;s Series A Preferred Stock, because the Investor was an independent
third party before the transaction and the terms for the issuance of those
shares to the Investor were based on arm&#146;s length negotiation. Accordingly, this
being a current cash transaction between unrelated willing parties provides the
best evidence for the fair value of the Company&#146;s shares in accordance with
AICPA Practice Aid, &#147;Valuation of Privately-Held-Company Equity Securities
Issued as Compensation&#148;. </P>
<P align=justify>On June 3, 2009, the Company established the &#147;Shuaiyi
International New Resources Development Inc. 2009 Equity Incentive Plan&#148; (the
&#147;<U>Plan</U>&#148;). The purposes of the Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees, directors and consultants, and to promote the
long-term growth and profitability of the Company. The Plan permits the granting
of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units and
Performance Shares as the Company&#146;s board of director may determine. The maximum
number of shares that may be issued under the Plan was 1,000,000. On June 17,
2009, 500,000 restricted shares were issued under the Plan and accordingly,
remaining shares that can be issued under the Plan was 500,000 shares as of
December 31, 2009. </P>
<P align=justify>Under the Plan, on June 17, 2009, the directors granted 500,000
restricted shares to employees by entering into &#147;Restricted Shares Grant
Agreements&#148; (the &#147;<U>Agreements</U>&#148;) with the employees. Under the Agreements,
the shares were grant for no consideration and vested on the date of grant.
Accordingly, these shares vested immediately and all restrictions as to
transferability, sale, assignment or otherwise disposition of the shares have
been released on the date of grant. </P>
<P align=justify>Under ASC 718-10-30-2 (formerly SFAS 123R), the Company
recognized a compensation expense of $25,000 based on the fair value of $0.05
per share which is the last traded price of the shares at the grant date. This
expense is accounted under &#147;General and administrative expenses&#148;. </P>
<P align=justify>As the 500,000 shares do not impose any obligations that
require the Company to transfer assets, these have been classified as equity.
</P>
<P align=center>F-45</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_37></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>NOTE 14</B> </TD>
    <TD noWrap align=left width="90%"><B>OTHER INCOME (EXPENSES), NET</B>
  </TD></TR></TABLE>
<p><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2><B>Year ended
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Service income
    </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;7,078 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>11,623
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Other expenses </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;(690</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>(101</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;6,388 $</B> </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>11,522</B> </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR></TABLE>
<p><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 15</B> </TD>
    <TD noWrap align=left width="90%"><B>INCOME TAXES</B> </TD></TR></TABLE>
<P align=justify>The entities within the Company file separate tax returns in
the respective tax jurisdictions that they operate. </P>
<P align=justify>New Resources being incorporated in the British Virgin Islands
(&#147;BVI&#148;) is not subject to any income tax in the BVI. </P>
<P align=justify>The Company&#146;s PRC subsidiaries are subject to PRC enterprise
income tax (&#147;EIT&#148;). Before January 1, 2008, the PRC EIT rate was generally 33%.
In March 2007, the PRC government enacted a new PRC Enterprise Income Tax Law,
or the New EIT Law, and promulgated related regulation, Implementation
Regulations for the PRC Enterprise Income Tax Law. The New EIT Law and
Implementation Regulations became effective from January 1, 2008. The NEW EIT
Law, among other things, imposes a unified income tax rate of 25% for both
domestic and foreign invested enterprises registered in the PRC. </P>
<P align=justify>The New EIT Law provides a grandfathering on tax holidays which
were granted under the then effective tax laws and regulations. Therefore, one
of the Company's subsidiaries, Daqing Shuaiyi, being engaged in growing and
sales of agricultural products, has continued to be entitled to a preferential
tax treatment: an EIT holiday for the two years ended December 31, 2006 and 2007
and a 50% reduction on the EIT rate for the three years ended December 31, 2008,
2009 and 2010. </P>
<P align=justify>The Company&#146;s income tax expense consisted of:<BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2><B>Year ended
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Current income tax &#150;
      PRC </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;1,235,210 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;974,653 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Deferred&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>&nbsp;</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;1,235,210</B> </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;974,653</B> </FONT></TD>
    <TD align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR></TABLE>
<P align=justify>As of December 31, 2009 and 2008, the Company did not have any
significant temporary differences and carryforwards that may result in deferred
tax. </P>
<P align=center>F-46</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_38></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 15</B> </TD>
    <TD noWrap align=left width="90%"><B>INCOME TAXES (CONTINUED)</B>
  </TD></TR></TABLE>
<P align=justify>A reconciliation of the provision for income taxes determined
at the local income tax to the Company&#146;s effective income tax rate is as
follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2>&nbsp; &nbsp;
      &nbsp;<B>Year ended December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;<B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;<B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Pre-tax income
    </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;8,976,926 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;4,693,702 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>U.S. federal corporate income tax rate
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>34% </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>34% </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Income tax computed at
      U.S. federal corporate income tax rate </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(3,052,155</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">) </TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(1,595,859</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Reconciling items: </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp;Impact of
      tax holiday of Daqing Shuaiyi </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>1,149,845
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>868,500
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Rate differential for PRC
      earnings </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>816,304 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>610,355 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      &nbsp;Non-deductible expenses </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(149,204</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>(857,649</FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Effective tax expense </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp;(1,235,210</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left
      width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&nbsp;(974,653</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">) </TD></TR></TABLE>
<P align=justify>The Company has analyzed the tax positions taken or expected to
be taken in its tax filings and has concluded it has no material liability
related to uncertain tax positions or unrecognized tax benefits as of December
31, 2009 and 2008. The Company classifies interest and/or penalties related to
income tax matters in income tax expense. As of December 31, 2009 and 2008,
there was no interest and penalties related to uncertain tax positions. The
Company does not anticipate any significant increases or decreases to its
liability for unrecognized tax benefits within the next 12 months. </P>
<P align=justify>The New EIT Law also imposes a withholding tax of 10% unless
reduced by a tax treaty, for dividends distributed by a PRC-resident enterprise
to its immediate holding company outside the PRC for earnings accumulated
beginning on January 1, 2008 and undistributed earnings generated prior to
January 1, 2008 are exempt from such withholding tax. The Company has not
provided for income taxes on accumulated earnings of its PRC subsidiaries as of
December 31, 2009 or 2008 since these earnings are intended to be reinvested
indefinitely in the overseas jurisdictions. It is not practicable to estimate
the amount of additional taxes that might be payable on such undistributed
earnings. </P>
<p class="MsoNormal" style="text-align:justify;text-justify:inter-ideograph;
layout-grid-mode:char"><font style="color: black">According to the PRC Tax
Administration and Collection Law, the statute of limitations is three years if
the underpayment of taxes is due to computational or other errors made by the
taxpayer or the withholding agent.&nbsp;&nbsp;The statute of limitations extends to five
years under special circumstances. In the case of transfer pricing issues, the
statute of limitations is ten years. There is no statute of limitations in the
case of tax evasion. Accordingly, the income tax returns of the Company&#146;s PRC
operating subsidiaries for the years ended December 31, 2007 through 2009 are
open to examination by the PRC state and local tax authorities.</font></p>
<P align=center>F-47</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_39></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>NOTE 16</B> </TD>
    <TD noWrap align=left width="90%"><B>RELATED PARTY TRANSACTIONS</B> </TD></TR>
  </TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left colSpan=2>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left width="5%"><B>(a) </B>&nbsp;</TD>
    <TD noWrap align=left width="95%"><B>Due to related parties</B></TD></TR></TABLE>
<p><BR>
</p>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="23%" colSpan=4 valign="bottom"><FONT size=2><B>As of
      December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Due to: </FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom"><FONT size=2>- Heilonjiang Shuaiyi Technology Development
      Co., Ltd. (&#147;Shuaiyi Technology&#148;) </FONT></TD>
    <TD align=right width="10%" valign="bottom"><FONT size=2>(i) </FONT></TD>
    <TD align=left width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" valign="bottom"><FONT size=2>&nbsp;- </FONT></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD align=left width="1%" valign="bottom"><FONT size=2>$</FONT></TD>
    <TD align=right width="10%" valign="bottom"><FONT size=2>&nbsp;8,998 </FONT></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;-Ms. Lianyun Han,
      CEO and Chairman of the Company </FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>49,794 </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>- </FONT></TD>
    <TD noWrap align=left width="2%" bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="margin-top: 12">&nbsp;</TD>
    <TD align=left width="10%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"><FONT
      size=2><STRONG>$</STRONG></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;<STRONG>49,794</STRONG> </FONT></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" valign="bottom"><FONT
      size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%" valign="bottom"><FONT size=2><B>&nbsp;8,998</B> </FONT></TD>
    <TD align=left width="2%" valign="bottom">&nbsp;</TD></TR></TABLE>
<P align=justify>Note (i) Shuaiyi Technology and the Company are under common
control and management. Due to Shuaiyi Technology arose from the land rent
payable to Shuaiyi Technology. </P>
<P align=justify>The amounts due to related parties were non-interest bearing,
unsecured and had no fixed repayment date. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left width="5%"><B>(b) </B>
  </TD>
    <TD noWrap align=left width="95%"><B>Purchase of goods </B>
  </TD></TR></TABLE>
<P align=justify>For the years ended December 31, 2009 and 2008, the Company
purchased rice amounting to $790,133 and $1,579,315, respectively, from Shuaiyi
Technology. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left width="5%"><B>(c) </B>
  </TD>
    <TD noWrap align=left width="95%"><B>Lease of land </B>
  </TD></TR></TABLE>
<P align=justify>For the years ended December 31, 2009 and 2008, the Company
paid rental expense of $9,003 and $8,851 for land to Shuaiyi Technology. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left colSpan=2 ><B>NOTE 17</B> </TD>
    <TD noWrap align=left width="89%"><B>CONCENTRATION RISK</B> </TD></TR>
  <TR>
    <TD noWrap align=left  colSpan=2 >&nbsp;</TD>
    <TD noWrap align=left width="89%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left ><B>(a)</B> </TD>
    <TD noWrap align=left width="94%" colSpan=2><B>Concentration of credit
      risk</B> </TD></TR></TABLE>
<P align=justify>As of December 31, 2009 and 2008, 100% of the Company&#146;s cash
included cash on hand and deposits in accounts maintained within the PRC where
there is currently no rule or regulation in place for obligatory insurance to
cover bank deposits in the event of bank failure. However, the Company has not
experienced any losses in such accounts and believes it is not exposed to any
risks on its cash in bank accounts. </P>
<P align=justify>For the years ended December 31, 2009 and 2008, all of the
Company&#146;s sales arose in the PRC. In addition, all accounts receivable as of
December 31, 2009 and 2008 also arose in the PRC. </P>
<P align=justify>Except for one customer who accounted for 14.7% of the
Company&#146;s revenue for the year ended December 31, 2009, there was no other
single customer who accounted for more than 10% of the Company&#146;s revenue for
either the year ended December 31, 2009 or 2008. </P>
<P align=justify>As of December 31, 2009, five customers accounted for 18%, 13%,
12%, 12% and 12% of total accounts receivable of the Company. As of December 31,
2008, three customers accounted for 32%, 23% and 15% of accounts receivable of
the Company. Except as disclosed, no other customer accounted for 10% or more of
the Company&#146;s accounts receivable as of December 31, 2009 and 2008. <B>&nbsp;</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>(b)</B> </TD>
    <TD noWrap align=left width="94%"><B>Concentration of operating risk</B></TD></TR></TABLE>
<P align=justify>Substantially all of the Company&#146;s operations are conducted in
China. The Company&#146;s operations are subject to various political, economic, and
other risks and uncertainties inherent in China. Among other risks, the
Company&#146;s operations are subject to the risks of restrictions on transfer of
funds; export duties, quotas, and embargoes; domestic and international customs
and tariffs; changing taxation policies; foreign exchange restrictions; and
political conditions and governmental regulations. </P>
<P align=center>F-48</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_40></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left colSpan=2 ><B>NOTE 18</B> </TD>
    <TD noWrap align=left width="89%"><B>COMMITMENTS AND CONTINGENCIES</B>
  </TD></TR>
  <TR>
    <TD noWrap align=left  colSpan=2>&nbsp;</TD>
    <TD noWrap align=left width="89%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left ><B>(a)</B> </TD>
    <TD noWrap align=left width="94%" colSpan=2><B>Operating leases</B>
  </TD></TR></TABLE>
<P align=justify>The Company has entered into tenancy agreements for the lease
of exhibition hall and land with a third party and a related company (see Note
16), respectively, for the purposes of the operation of its subsidiaries. The
Company&#146;s commitments for minimum lease payments under these operating leases for
the next five years and thereafter as of December 31, 2009 are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left>Year ending December 31, </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="12%">&nbsp; </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>2010 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>&nbsp;35,881 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>2011 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">9,007 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>2012 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>9,007 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>2013 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=right width="12%">9,007 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff>2014 </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff>9,007 </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left>Thereafter </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%">117,091 </TD>
    <TD noWrap align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff><B>Total</B> </TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff><B>&nbsp;189,000</B> </TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff>&nbsp;</TD></TR>
  </TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left width="5%">&nbsp;</TD>
    <TD noWrap align=left width="95%" >&nbsp;</TD>
    </TR>

  <TR vAlign=top>
    <TD noWrap align=left width="5%"><B>(b)</B> </TD>
    <TD noWrap align=left width="95%" ><B>PRC employee costs</B> &nbsp; </TD>
    </TR></TABLE>
<P align=justify>According to the prevailing laws and regulations of the PRC,
the Company&#146;s subsidiaries in the PRC are required to cover its employees with
medical, retirement and unemployment insurance programs. Management believes
that due to the transient nature of its employees, they do not need to provide
all employees with such social insurances, and have not paid the social
insurances for all employees. </P>
<P align=justify>In the event that any current or former employee files a
complaint with the PRC government, the Company's subsidiaries may be subject to
making up the social insurances as well as administrative fines. As the Company
believes that these fines would not be material, no provision has been made in
this regard. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left width="5%"><B>(c)</B> </TD>
    <TD noWrap align=left width="95%" ><B>Transfer price for equity interest in
    Heilongjiang Shuaiyi </B></TD>
    </TR></TABLE>
<P align=justify>On July 28, 2008, the Company&#146;s subsidiary, New Resources
entered into an equity transfer agreement with the Shuaiyi Founders to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB60,000,000
(approximately $8.8 million). A new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008. According to PRC merger and acquisition rules, the
equity interest transfer price should be paid in full within three months
commencing from the issuance of the new business license to Heilongjiang
Shuaiyi. If the transfer price is not paid by this date, the Company may apply
to the relevant PRC business bureau for an extension of up to one year from the
date of the issuance of the license; provided, however, that 60% of the transfer
price will be required to be paid within six months from such date. However, if
the Company is unable to make the payment for the transfer price by the March 1,
2009 or extended deadline and the relevant PRC business bureau does not grant
the Company additional time to make the payment, the Company may be subject to
fines or penalties imposed by the PRC business bureau. In addition, the Company
may not be permitted to exercise any decision-making rights as a shareholder in
Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi's financial results
into the Company&#146;s financial statements. </P>
<P align=justify>On March 10, 2009, New Resources obtained the approval from the
relevant PRC business bureau for the extension of time allowed for the payment
of the transfer price to one year until December 1, 2009. On January 4, 2010,
the relevant PRC regulatory agency further extended the payment due date to June
30, 2010. The Company has engaged financial advisors with a view to raising
additional capital for the Company. The Company believes that it will be able to
make the payment for the transfer price within the time allowed by the relevant
PRC business bureau and therefore has not accrued any amount related to this
contingency. However, there can be no assurance that the Company will be
successful in raising sufficient capital for the purpose of the payment of the
transfer price to the Shuaiyi Founders. </P>
<P align=center>F-49</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_41></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 19</B> </TD>
    <TD noWrap align=left width="90%"><B>SEGMENT INFORMATION</B>
</TD></TR></TABLE>
<P align=justify>During the years ended December 31, 2009 and 2008, the Company
operated in two business segments identified by product, &#147;Chinese Golden Grass&#148;
and &#147;other agricultural products&#148;. The Chinese Golden Grass segment consists of
the growing and sales of Chinese Golden Grass<B> </B>(formally referred to as
&#147;Chinese Caterpillar Fungus&#148;), which was conducted through the Company&#146;s
subsidiary, Daqing Shuaiyi. The other agricultural products segment consists of
the sales of rice, flour and silage corn etc, which were mainly conducted
through the Company&#146;s subsidiary, Harbin Shuaiyi. </P>
<P align=justify>Throughout the years ended December 31, 2009 and 2008, all of
the Company&#146;s operations were carried out in one geographical segment &#150; China.
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="36%" colSpan=7 valign="bottom"><FONT size=2>&nbsp;<B>Year
      Ended December 31, 2009</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2><B>Chinese</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2><B>Other</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2><B>Golden</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2><B>Agricultural</B>
    </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2><B>Corporate</B>
</FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>Grass</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>Products</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>unallocated</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>Consolidated</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Segment revenue from external customers
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;12,073,855 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;3,258,590 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;- </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;15,332,445 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Segment profit </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;8,804,435 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;609,084 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;(436,593</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;8,976,926 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom"><FONT size=2>Income from operations before
      income taxes </FONT></TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;8,976,926 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Segment assets </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;27,528,235 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;1,171,648 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;5,642,497 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;34,342,380 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Total assets </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;34,342,380 </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Other segment information: </FONT></TD>
    <TD noWrap align=left width="1%" style="border-bottom-style: none; border-bottom-width: medium" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="10%" style="border-bottom-style: none; border-bottom-width: medium" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff style="border-right-style: none; border-right-width: medium" valign="bottom"><FONT size=2>&nbsp;
      &nbsp;Depreciation and amortization </FONT></TD>
    <TD style="BORDER-BOTTOM: medium none #000000; ; border-left-style:none; border-left-width:medium; border-right-style:none; border-right-width:medium; border-top-style:none; border-top-width:medium" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff style="border-style: none; border-width: medium" valign="bottom"><FONT
      size=2>&nbsp;994,056 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff style="border-left-style: none; border-left-width: medium" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;7,443 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;2,887 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;1,004,386 </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Expenditure for segment
      assets </FONT></TD>
    <TD noWrap align=left width="1%" style="border-top-style: none; border-top-width: medium" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" style="border-top-style: none; border-top-width: medium" valign="bottom"><FONT size=2>&nbsp;1,440 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" valign="bottom"><FONT size=2>&nbsp;43,219 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" valign="bottom"><FONT size=2>&nbsp;4,496 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" valign="bottom"><FONT size=2>&nbsp;49,155 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="36%" colSpan=7 valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="36%" colSpan=7 valign="bottom"><FONT
      size=2>&nbsp;<B>Year ended December 31, 2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2><B>Chinese</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2><B>Other</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT
      size=2><B>Golden</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT
      size=2><B>Agricultural</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT
      size=2><B>Corporate</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="10%" valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>Grass</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>Products</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>unallocated</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="10%" valign="bottom"><FONT size=2><B>Consolidated</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Segment revenue from external customers
      </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;8,892,894 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;4,096,866 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;- </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;12,989,760 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Segment profit </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;6,547,634 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;759,133 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;(2,613,065</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;4,693,702 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom"><FONT size=2>Income from operations before
      income taxes </FONT></TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;4,693,702 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Segment assets </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;21,282,501 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;956,782 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;2,511,937 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="10%" valign="bottom"><FONT size=2>&nbsp;24,751,220 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Total assets </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="10%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;24,751,220 </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom">
    <p style="margin-top: 12"><FONT size=2>Other segment information: </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="10%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      &nbsp;Depreciation and amortization </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;1,114,118 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;6,089 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;3,240 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;1,123,447 </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp;Expenditure for segment
      assets </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" valign="bottom">
    <p dir="ltr"><FONT size=2>&nbsp;27,005 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" valign="bottom"><FONT size=2>&nbsp;3,353 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" valign="bottom"><FONT size=2>&nbsp;2,143 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" ><FONT size=2>$</FONT></TD>
    <TD noWrap align=right width="10%" valign="bottom"><FONT size=2>&nbsp;32,501 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR></TABLE>
<P align=center>F-50</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_42></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 20</B> </TD>
    <TD noWrap align=left width="90%"><B>SUBSEQUENT EVENTS</B>
</TD></TR></TABLE>
<P align=justify>On January 28, 2010, the Company filed with the Securities and
Exchange Commission (SEC) a registration statement on Form S-1 (&#147;Form S-1&#148;) to
register 1,500,000 shares of the Company&#146;s common stock that may be sold from
time to time by the selling stockholders named in the Form S-1, which includes:
</P>
<UL style="TEXT-ALIGN: justify">
  <LI>1,000,000 shares of common stock;
  <LI>250,000 shares of common stock issuable upon the exercise of the Series A
  Warrants; and
  <LI>250,000 shares of common stock issuable upon the exercise of the Series B
  warrants. </LI></UL>
<P align=justify>On February 4, 2010, the Form S-1 was declared effective by the
SEC.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 21</B> </TD>
    <TD noWrap align=left width="90%"><B>RESTRICTED NET ASSETS</B>
  </TD></TR></TABLE>
<P align=justify>The Company&#146;s operations are primarily conducted through its
PRC subsidiaries Daqing Shuaiyi and Harbin Shuaiyi. Daqing Shuaiyi and Harbin
Shuaiyi may only pay dividend out of its retained earnings determined in
accordance with the accounting standards and regulations in the PRC and after it
has met the PRC requirements for appropriation to statutory reserves (see Note
12). </P>
<P align=justify>In addition, Daqing Shuaiyi and Harbin Shuaiyi&#146;s businesses and
assets are primarily denominated in RMB, which is not freely convertible into
foreign currencies. All foreign exchange transactions take place either through
the People&#146;s Bank of China or other banks authorized to buy and sell foreign
currencies at the exchange rates quoted by the People&#146;s Bank of China. Approval
of foreign currency payments by the People&#146;s Bank of China or other regulatory
institutions requires submitting a payment application form together with
suppliers&#146; invoices, shipping documents and signed contracts. These currency
exchange control procedures imposed by the PRC government authorities may
restrict the ability of Daqing Shuaiyi and Harbin Shuaiyi to transfer their net
assets to the Company through loans, advances or cash dividends, which consisted
of paid-up capital, retained earnings and statutory reserves and which aggregate
amount of approximately RMB206 million (or $30 million) exceeded 25% of the
Company&#146;s consolidated net assets. Accordingly, condensed parent company
financial statements have been prepared in accordance with Rule 5-04 and Rule
12-04 of SEC Regulation S-X as set out in Note 22.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left ><B>NOTE 22</B> </TD>
    <TD noWrap align=left width="90%"><b>SUPPLEMENTAL PARENT COMPANY FINANCIAL
    INFORMATION</b>
  </TD></TR></TABLE>
<P align=justify>The Company records its investment in subsidiaries under the
equity method of accounting as prescribed in ASC Topic 323, &#147;Investments &#150;
Equity Method and Joint Ventures&#148;. Such investment and long-term loans to
subsidiaries are presented on the balance sheet as &#147;Investments in subsidiaries&#148;
and the income of the subsidiaries is presented as &#147;Equity in income of
subsidiaries&#148; on the statement of income. </P>
<P align=justify>These supplemental condensed parent company financial
statements should be read in conjunction with the notes to the Company&#146;s
Consolidated Financial Statements. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with U.S. GAAP
have been condensed or omitted.</P>
<P align=justify>As of December 31, 2008 and 2009, there were no material
contingencies, significant provisions for long-term obligations, or guarantees
of the Company, except as separately disclosed in the Consolidated Financial
Statements, if any. </P>
<P align=center>F-51</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_43></A>
<P align=center><b><font style="text-transform: uppercase">NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES<br>
</font>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008</b><BR></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD noWrap align=left><B>NOTE 22</B> </TD>
    <TD noWrap align=left width="90%"><b>
    <font style="font-family: 'Times New Roman',serif">SUPPLEMENTAL PARENT
    COMPANY FINANCIAL INFORMATION</font></b></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD align=center colSpan=7>
    <p class="MsoNormal" align="center" style="text-align: center; layout-grid-mode: char; margin-top: 6.0pt">
    <b><br>
    Nutrastar International Inc.</b><FONT size=2><B><br>
    Condensed Balance
      Sheets</B>&nbsp;&nbsp; </FONT></TD>
    </TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT size=2>&nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;<B>As of December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2><B>ASSETS</B> </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Investments in
      subsidiaries </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;23,912,342 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;13,611,938 </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2><B>Total assets</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;23,912,342</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;13,611,938</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12"><FONT size=2><B>LIABILITIES</B>
      </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Current liabilities: </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="12%" valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;Due
      to a subsidiary </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;9,538 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2>$</FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;&#150; </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp;Total liabilities </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>9,538 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&#150; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom">
    <p style="margin-top: 12; text-indent:-10pt; margin-left:10pt"><FONT size=2>Shareholders&#146; equity
      </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;
      </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left valign="bottom">
    <p style="text-indent: -10pt; margin-left: 10pt"><FONT size=2>Preferred Stock, $0.001 par value, 1,000,000
      shares authorized, none and 727,520 shares issued and
      outstanding </FONT></TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="12%" valign="bottom"><FONT size=2>&#150; </FONT></TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD align=right width="12%" valign="bottom"><FONT size=2>727
</FONT></TD>
    <TD align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff valign="bottom">
    <p style="text-indent: -10pt; margin-left: 10pt"><FONT size=2>Common stock, $0.001 par
      value, 190,000,000 shares authorized, 14,297,731 and
      11,746,041 shares issued and outstanding </FONT></TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>14,298 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>11,746 </FONT></TD>
    <TD align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Additional paid-in
    capital </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>4,715,891 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>2,192,716 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Retained
    earnings </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>18,199,699
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>10,457,983
      </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Accumulated other
      comprehensive income </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>972,916 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>948,766 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp;Total shareholders&#146; equity </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>23,902,804 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>13,611,938 </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2><B>Total liabilities and shareholders&#146;
      equity</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;23,912,342</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;13,611,938</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center colSpan=6><FONT size=2><B>Condensed Statement of Income

      </B> </FONT></TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT
      size=2><B>Year ended December 31,</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2009</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>NET REVENUE </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;&#150;
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;&#150;
      </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Administrative expenses </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(34,538 </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >) </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&#150; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Merger expenses
    </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&#150;
    </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>(2,068,326</FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Income tax </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&#150; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>&#150; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Equity in income of
      subsidiaries </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>7,776,254 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2>5,787,375 </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2><B>Net income</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;7,741,716</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%" valign="bottom"
    ><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right
      width="12%" valign="bottom"><FONT size=2><B>&nbsp;3,719,049</B> </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center colSpan=6><FONT size=2><B>Condensed Statement of Cash
      Flows</B>&nbsp;&nbsp; </FONT></TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom">&nbsp;</TD>
    <TD noWrap align=center width="27%" colSpan=4 valign="bottom"><FONT
      size=2><B>Year ended December 31,</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>&nbsp; </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B>2009</B>
      </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="12%" valign="bottom"><FONT size=2><B>2008</B> </FONT></TD>
    <TD noWrap align=center width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Net cash used in
      operating activities </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT
      size=2>&nbsp;(34,538 </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">) </TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom"><FONT
      size=2>$</FONT></TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>&nbsp;&#150;
      </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Net cash used in investing activities
      </FONT></TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(2,465,462</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >) </TD>
    <TD noWrap align=left width="1%" valign="bottom" >&nbsp;</TD>
    <TD noWrap align=right width="12%" valign="bottom"><FONT size=2>(427,449</FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >) </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2>Net cash provided by
      financing activities </FONT></TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>2,500,000
      </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=left width="1%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD noWrap align=right width="12%" bgColor=#e6efff valign="bottom"><FONT size=2>427,449
      </FONT></TD>
    <TD noWrap align=left width="2%"
bgColor=#e6efff valign="bottom">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left valign="bottom"><FONT size=2>Cash, beginning of year </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&#150; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=left width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=right
      width="12%" valign="bottom"><FONT size=2>&#150; </FONT></TD>
    <TD noWrap align=left width="2%" valign="bottom" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD noWrap align=left bgColor=#e6efff valign="bottom"><FONT size=2><B>Cash, end of
      year</B> </FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;</B>&#150; </FONT></TD>
    <TD noWrap align=left width="2%"  bgColor=#e6efff valign="bottom">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=left width="1%"
     bgColor=#e6efff valign="bottom"><FONT size=2><B>$</B></FONT></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" noWrap align=right width="12%"
    bgColor=#e6efff valign="bottom"><FONT size=2><B>&nbsp;&#150;</B> </FONT></TD>
    <TD noWrap align=left width="2%"
  bgColor=#e6efff valign="bottom">&nbsp;</TD></TR></TABLE>
<P align=center>F-52</P>


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<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_64></A>
<P align=center><B><FONT size=4>2,965,561 Shares</FONT></B><BR></P>
<P align=center><IMG
src="logo.jpg" width="152" height="145"
border=0> </P>
<P align=center><B><FONT size=4>NUTRASTAR INTERNATIONAL INC. </FONT></B></P>
<P align=center><B><FONT size=4>Common Stock, $0.001 Par Value Per
Share</FONT></B></P>
<P align=justify>&nbsp;</P>
<P align=center><B>___________<BR>PROSPECTUS<BR>___________</B><BR></P>
<P align=center><B>, 2010</B><BR></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_65></A>
<P align=center><B>PART II <BR></B><B>INFORMATION NOT REQUIRED IN THE
PROSPECTUS</B></P>
<P align=justify><B><I>Item 13. Other Expenses of Issuance and Distributions</I></B></P>
<P align=justify>The following table sets forth the costs and expenses, other
than underwriting discounts and commissions, payable by us in connection with
the sale of common stock being registered. All amounts, other than the SEC
registration fee, are estimates. We will pay all these expenses. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="17%" ><B>Amount to be Paid</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>SEC Registration Fee </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="17%" bgColor=#e6efff >&nbsp;635 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Printing Fees and Expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="17%" >2,500 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Legal Fees and Expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff >25,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Accounting Fees and Expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="17%" >10,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Blue Sky Fees and Expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff >2,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Transfer Agent and Registrar Fees </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="17%" >1,500 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Miscellaneous </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="17%" bgColor=#e6efff >3,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="17%" >&nbsp;44,635 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify><B><I>Item 14. Indemnification of Directors and Officers
</I></B></P>
<P align=justify>Section 78.138 of the Nevada Revised Statutes, or NRS, provides
that a director or officer will not be individually liable unless it is proven
that (i) the director&#146;s or officer&#146;s acts or omissions constituted a breach of
his or her fiduciary duties, and (ii) such breach involved intentional
misconduct, fraud or a knowing violation of the law. </P>
<P align=justify>Section 78.7502 of NRS permits a company to indemnify its
directors and officers against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending or completed action, suit or proceeding if the officer or director (i)
is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner
the officer or director reasonably believed to be in or not opposed to the best
interests of the corporation and, if a criminal action or proceeding, had no
reasonable cause to believe the conduct of the officer or director was unlawful.
</P>
<P align=justify>Section 78.751 of NRS permits a Nevada company to indemnify its
officers and directors against expenses incurred by them in defending a civil or
criminal action, suit or proceeding as they are incurred and in advance of final
disposition thereof, upon receipt of an undertaking by or on behalf of the
officer or director to repay the amount if it is ultimately determined by a
court of competent jurisdiction that such officer or director is not entitled to
be indemnified by the company. Section 78.751 of NRS further permits the company
to grant its directors and officers additional rights of indemnification under
its articles of incorporation or bylaws or otherwise. </P>
<P align=justify>Section 78.752 of NRS provides that a Nevada company may
purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the
company, or is or was serving at the request of the company as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or
agent, or arising out of his status as such, whether or not the company has the
authority to indemnify him against such liability and expenses. </P>
<P align=justify>Our Amended and Restated Bylaws implement the indemnification
and insurance provisions permitted by Chapter 78 of the Nevada Revised Statutes
by providing that: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>The Company shall indemnify its legal representative, officers and
  directors to the fullest extent permitted by the Nevada Revised Statutes
  against liability, reasonable expense or other matter whatsoever; and </P>
  <LI>
  <P>The Company may at the discretion of the Board of Directors purchase and
  maintain insurance on behalf of any person who holds or who has held any
  position identified in the paragraph above against any and all liability
  incurred by such person in any such position or arising out of his status as
  such. </P></LI></UL>
<P align=center>II-1</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_66></A>
<P align=justify>Insofar as indemnification by us for liabilities arising under
the Securities Act may be permitted to our directors, officers or persons
controlling the company pursuant to provisions of our articles of incorporation
and bylaws, or otherwise, we have been advised that in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable. In the event that a claim for indemnification by
such director, officer or controlling person of us 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 offered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
</P>
<P align=justify>At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding, which may result in a claim for such
indemnification. </P>
<P align=justify><B><I>Item 15. Recent Sales of Unregistered Securities</I></B></P>
<P align=justify>On June 7, 2010, we completed the first closing of the private
placement transaction disclosed above and issued approximately 123,403 Units at
a purchase price of $28.56 per Unit for gross proceeds of $3,524,342. Each Unit
consists of (i) one share of Series A Preferred Stock, with an initial
one-to-ten conversion ratio into shares of the Company&#146;s Common Stock, and (ii)
Series C Warrants to purchase five shares of Common Stock at an exercise price
of $3.40 per share with a term of three years. As a result, we issued 123,403
shares of our Series A Preferred Stock, initially convertible into 1,234,030
shares of our common stock, and warrants to purchase an aggregate of 617,008
shares of our common stock. The Units were issued in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D or Regulation S
promulgated thereunder. </P>
<P align=justify>On June 28, 2010, we completed the second closing of the
private placement transaction and issued approximately 74,297 Units at a
purchase price of $28.56 per Unit for gross proceeds of $2,121,928. Each Unit
consists of (i) one share of Series A Preferred Stock, with an initial
one-to-ten conversion ratio into shares of the Company&#146;s Common Stock, and (ii)
Series C Warrants to purchase five shares of Common Stock at an exercise price
of $3.40 per share with a term of three years. As a result, we issued 74,303
shares of our Series A Preferred Stock, initially convertible into 743,030
shares of our common stock, and warrants to purchase an aggregate of 371,493
shares of our common stock. The Units were issued in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D or Regulation S
promulgated thereunder. </P>
<P align=justify>In addition, Gilford Securities Incorporated served as the
placement agent in connection with this private placement. As partial
compensation for its services, we issued to Gilford Securities Incorporated
Series C Warrants to purchase an aggregate of 39,539 shares of our common stock,
representing 2% of the aggregate number of shares of common stock issuable upon
conversion of the Series A Preferred Stock purchased by the investors in this
transaction. The foregoing issuance was made in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D promulgated
thereunder.</P>
<P align=justify>On July 1, 2010, as partial compensation for its services, we
issued to our IR firm, American Capital Adventures, Inc. and its designees, a
Series D Warrant to purchase 100,000 shares of our common stock, which has a
term of three years with an exercise price of $3.80 per share. The foregoing
issuance was made in reliance upon exemptions provided by Section 4(2) of the
Securities Act for the offer and sale of securities not involving a public
offering and Regulation D promulgated thereunder.</P>
<P align=justify>On December 17, 2009, we completed a private placement
transaction under which we sold 1,000,000 shares of our common stock to certain
investors at $2.5 per share for a total of $2.5 million. In addition, we granted
to each of the investors two warrants to purchase in aggregate 500,000 shares of
our common stock, including a Series A warrant having a term of three years with
an exercise price of $3.25 per share and a Series B warrant having a term of
three years with an exercise price of $4.00 per share. The issuance of these
shares of common stock and the warrants was made in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D promulgated
thereunder. </P>
<P align=justify>On December 23, 2008, we issued 689,390 shares of our Series A
Preferred Stock to the Shareholder of New Resources. The total consideration for
the 689,390 shares of our Series A Preferred Stock is 50,000 shares of New
Resources, which is all the issued and outstanding capital stock of New
Resources. Such amount of shares of Series A Preferred Stock were subsequently converted into 8,949,424
shares of our common stock on May 29, 2009. We did not receive any cash
consideration in connection with the share exchange. The number of our shares
issued to the Shareholder of New Resource was determined based on an arms-length
negotiation. The issuance of our shares to the Shareholder of New Resource was
made in reliance on the exemption provided by Section 4(2) of the Securities Act
for the offer and sale of securities not involving a public offering and
Regulation D promulgated thereunder. </P>
<P align=center>II-2<BR></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=justify>On December 23, 2008, we issued and sold to ACI 17,962 shares
of our Series A Preferred Stock for $52,530.50, or $2.92 per share. Such amount
of shares of Series A Preferred Stock were subsequently converted into 313,437
shares of our common stock on May 29, 2009. The issuance of our shares to ACI
was made in reliance on the exemption provided by Section 4(2) of the Securities
Act for the offer and sale of securities not involving a public offering and
Regulation D promulgated thereunder. </P>
<P align=justify>On December 23, 2008, we issued and sold to Tan Zhen Investment
Limited 20,168 shares of our Series A Preferred Stock for $375,000, or $18.59
per share. Such amount of shares of Series A Preferred Stock were subsequently
converted into 351,932 shares of our common stock on May 29, 2009. The issuance
of our shares to the Investor was made in reliance on the exemption provided by
Section 4(2) of the Securities Act for the offer and sale of securities not
involving a public offering and Regulation D promulgated thereunder. </P>
<P align=justify>In instances described above where we indicate that we relied
upon Section 4(2) of the Securities Act in issuing securities, our reliance was
based upon the following factors: (a) the issuance of the securities was an
isolated private transaction by us which did not involve a public offering; (b)
there were only a limited number of offerees; (c) there were no subsequent or
contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the negotiations for
the sale of the stock took place directly between the offeree and us. </P>
<P align=justify>In instances described above where we issued securities in
reliance upon Regulation D, we relied upon Rule 506 of Regulation D of the
Securities Act. These stockholders who received the securities in such instances
made representations that (a) the stockholder is acquiring the securities for
his, her or its own account for investment and not for the account of any other
person and not with a view to or for distribution, assignment or resale in
connection with any distribution within the meaning of the Securities Act, (b)
the stockholder agrees not to sell or otherwise transfer the purchased shares
unless they are registered under the Securities Act and any applicable state
securities laws, or an exemption or exemptions from such registration are
available, (c) the stockholder has knowledge and experience in financial and
business matters such that he, she or it is capable of evaluating the merits and
risks of an investment in us, (d) the stockholder had access to all of our
documents, records, and books pertaining to the investment and was provided the
opportunity ask questions and receive answers regarding the terms and conditions
of the offering and to obtain any additional information which we possessed or
were able to acquire without unreasonable effort and expense, and (e) the
stockholder has no need for the liquidity in its investment in us and could
afford the complete loss of such investment. Management made the determination
that the investors in instances where we relied on Regulation D are accredited
investors (as defined in Regulation D) based upon management's inquiry into
their sophistication and net worth. In addition, there was no general
solicitation or advertising for securities issued in reliance upon Regulation D.
</P>
<P align=justify>In instances described above where we indicate that we relied
upon Regulation S promulgated under the Securities Act in issuing securities,
our reliance was based upon the following factors (a) each subscriber was
neither a U.S. person nor acquiring the shares for the account or benefit of any
U.S. person, (b) each subscriber agreed not to offer or sell the shares
(including any pre-arrangement for a purchase by a U.S. person or other person
in the United States) directly or indirectly, in the United States or to any
natural person who is a resident of the United States or to any other U.S.
person as defined in Regulation S unless registered under the Securities Act and
all applicable state laws or an exemption from the registration requirements of
the Securities Act and similar state laws is available, (c) each subscriber made
his, her or its subscription from the subscriber&#146;s residence or offices at an
address outside of the United States and (d) each subscriber or the subscriber&#146;s
advisor has such knowledge and experience in financial and business matters that
the subscriber is capable of evaluating the merits and risks of, and protecting
his interests in connection with an investment in us. </P>
<P align=justify><B><I>Item 16. Exhibits and Financial Statement Schedules</I></B></P>
<P align=justify>The following exhibits are included as part of this Form
S-1.</P>
<P align=center>II-3</P>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B><U>Exhibit No.</U></B> </TD>
    <TD align=left width="85%"> <P align=justify><B>Description</B> </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>2.1 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Share Exchange
        Agreement, dated December 23, 2008, among the Company, New Zealand WAYNE&#146;s
        New Resources Development Co., Ltd., Heilongjiang Shuaiyi New Energy Development
        Co., Ltd., Daqing Shuaiyi Biotech Co., Ltd., Harbin Shuaiyi Green &amp;
        Specialty Food Trading LLC and New Zealand WAYNE&#146;s Investments Holdings
        Co., Ltd. [Incorporated by reference to Exhibit 2.1 to the Company&#146;s
        Current Report on Form 8-K filed on December 31, 2008]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>3.1 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Amended and Restated
        Articles of Incorporation filed with the Nevada Secretary of State on
        May 19, 2009 [Incorporated by reference to Exhibit 3.1 to the Company&#146;s
        Current Report on Form 8-K filed on May 26, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>3.2 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Certificate of
        Amendment filed with the Nevada Secretary of State on January 11, 2010
        [Incorporated by reference to Exhibit 3.1 to the Company&#146;s Current
        Report on Form 8-K filed on January 14, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>3.3 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Certificate of
        Designation of Series A Preferred Stock, as filed with the Secretary of
        State of the State of Nevada, May 27, 2010 [Incorporated by reference
        to Exhibit 3.1 to the Company&#146;s Current Report on Form 8-K filed
        on June 3, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>3.4 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Bylaws, adopted
        December 27, 2003 [Incorporated by reference to Exhibit 3.2 to the Company&#146;s
        Registration Statement on Form SB-2, filed on January 2, 2004]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>4.1 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Form of Series
        A Warrant [Incorporated by reference to Exhibit 4.1 to the Company&#146;s
        Current Report on Form 8-K filed on December 21, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>4.2 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Form of Series
        B Warrant [Incorporated by reference to Exhibit 4.2 to the Company&#146;s
        Current Report on Form 8-K filed on December 21, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>4.3 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Form of Series
        C Warrant [Incorporated by reference to Exhibit 10.2 to the Company&#146;s
        Current Report on Form 8-K filed on June 3, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit4-4.htm">4.4 </a></TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify><a href="exhibit4-4.htm">Form
        of Series D Warrant* </a></P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top bgcolor="#eeeeee">
    <TD align=left><a href="exhibit5.htm">5 </a></TD>
    <TD align=left width="85%"> <P align=justify><a href="exhibit5.htm">Opinion
        of Holland &amp; Hart LLP as to the legality of the shares.* </a></P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.1 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Form of Securities
        Purchase Agreement, dated December 17, 2009 [Incorporated by reference
        to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed
        on December 21, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.2 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Subscription
        Agreement, dated December 23, 2008, between the Company and Allied China
        Investments, LLC. [Incorporated by reference to Exhibit 10.1 to the Company&#146;s
        Current Report on Form 8-K filed on December 31, 2008]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.3 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Amendment No.
        1 to Stock Purchase Agreement, dated December 23, 3008, by and among the
        Company, Allied China Investments, LLC and Belmont Partners LLC. [Incorporated
        by reference to Exhibit 10.2 to the Company&#146;s Current Report on Form
        8-K filed on December 31, 2008]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.4 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Subscription
        Agreement, dated December 23, 2008, between the Company and Tan Zhen Investment
        Limited. [incorporated by reference to Exhibit 10.3 to the Company&#146;s
        Current Report on Form 8-K filed on December 31, 2008]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%"> <P align=justify></P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.5 </TD>
    <TD align=left width="85%" bgColor=#eeeeee> <P align=justify>Escrow Agreement,
        dated December 23, by and among the Company, Tan Zhen Investment Limited
        and Sichenzia Ross Friedman Ference LLP, as escrow agent. [incorporated
        by reference to Exhibit 10.4 to the Company&#146;s Current Report on Form
        8-K filed on December 31, 2008]. </P></TD>
  </TR>
</TABLE>
<P align=center>II-4 </P>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.6 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Real Property Purchase Agreement, dated October 22, 2007,
      between Daqing Shuaiyi Biotech Co., Ltd. and Heilongjiang Shuaiyi
      Technology Development Co., Ltd. (English Translation) [incorporated by
      reference to Exhibit 10.5 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.7 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Land Lease Agreement, dated January 10, 2008, between
      Heilongjiang Shuaiyi Technology Development Co., Ltd. and Daqing Shuaiyi
      Biotech Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.6 to the Company&#146;s Current Report on Form 8-K filed on December
      31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.8 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Lease Agreement, dated December 28, 2005, between Liye
      Qian and Harbin Shuaiyi Green &amp; Specialty Food Trading LLC. (English
      Translation) [incorporated by reference to Exhibit 10.7 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.9 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Lease Agreement, dated April 23, 2008, between Harbin
      Jinhua Keji Qiye Fuhuaqi Co., Ltd. and Harbin Shuaiyi Green &amp;
      Specialty Food Trading LLC. (English Translation) [incorporated by
      reference to Exhibit 10.8 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.10 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Exclusive Licensing Agreement, dated April 10, 2006,
      between Runjiao Wang and Daqing Shuaiyi Biotech Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.9 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.11 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Equity Transfer Agreement, dated July 28, 2008, by and
      among Heilongjiang Shuaiyi New Energy Development Co., Ltd., Lianyun Han,
      Lianxue Han, Lianju Han, Weihan Zhang, Yuehong Luan, Chunming Zhang,
      Xunjun Li, Nana Jiang, Fengxi Lang and New Zealand WAYNE&#146;S New Resources
      Development Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.10 to the Company&#146;s Current Report on Form 8-K filed on
      December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.12 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of Earn-In Agreement, dated September 12, 2008.
      [incorporated by reference to Exhibit 10.11 to the Company&#146;s Current
      Report on Form 8-K filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.13 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of First Amendment to Earn-In Agreement, dated
      February 12, 2009. [incorporated by reference to Exhibit 10.16 to the
      Company&#146;s Current Report on Form 8-K/A filed on February 23,
  2009].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.14 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Loan Agreement, dated October 15, 2007, between
      Heilongjiang Shuaiyi New Energy Development Co., Ltd. and Daqing Shuaiyi
      Biotech Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.12 to the Company&#146;s Current Report on Form 8-K filed on
      December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.15 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of Loan Agreement and Promissory Note, dated
      December 8, 2008. [incorporated by reference to Exhibit 10.13 to the
      Company&#146;s Current Report on Form 8-K filed on December 31,
2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.16 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of First Amendment to Loan Agreement and Promissory
      Note, dated February 12, 2009. [incorporated by reference to Exhibit 10.15
      to the Company&#146;s Current Report on Form 8-K/A filed on February 23,
      2009].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.17 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of Heilongjiang Shuaiyi New Energy Development Co.,
      Ltd. Employment Agreement. (English Translation) [incorporated by
      reference to Exhibit 10.14 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.18 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>English Translation of Employment Agreement, dated August
      18, 2009, between Heilongjiang Shuaiyi New Energy Development Co., Ltd.
      and Hongbing Hua [Incorporated by reference to Exhibit 10.1 to the
      Company&#146;s Current Report on Form 8-K filed on August 21,
  2009].</P></TD></TR></TABLE>
<P align=center>II-5</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.19 </TD>
    <TD bgColor=#eeeeee > <P align=justify>2009 Equity Incentive Plan [Incorporated
        by reference to Appendix A to the Company&#146;s Information Statement
        on Schedule 14C filed on July 2, 2009].</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.20 </TD>
    <TD bgColor=#eeeeee > <P align=justify>Stock Option Agreement, dated January
        1, 2010, by and between the Company and Daniel K. Lee [Incorporated by
        reference to Exhibit 10.1 to the Company&#146;s Current Report on Form
        8-K filed on January 7, 2010].</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.21 </TD>
    <TD bgColor=#eeeeee > <P align=justify>Restricted Shares Grant Agreement,
        dated January 1, 2010, by and between the Company and Daniel K. Lee [Incorporated
        by reference to Exhibit 10.2 to the Company&#146;s Current Report on Form
        8-K filed on January 7, 2010].</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.22 </TD>
    <TD bgColor=#eeeeee > <P align=justify>Employment Agreement, dated November
        16, 2009, by and among the Company, Heilongjiang Shuaiyi New Energy Development
        Co., Ltd. and Daniel K. Lee [Incorporated by reference to Exhibit 10.1
        to the Company&#146;s Current Report on Form 8-K filed on November 18,
        2009].</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.23 </TD>
    <TD bgColor=#eeeeee > <P align=justify>Form of Securities Purchase Agreement,
        dated May 27, 2010, by and among the Company and the investors named therein
        [Incorporated by reference to Exhibit 10.1 to the Company&#146;s Current
        Report on Form 8-K filed on June 3, 2010].</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.24 </TD>
    <TD bgColor=#eeeeee > <P align=justify>Escrow Agreement, by and among the
        Company, ARC China, Inc., Gilford Securities Incorporated, Corporate Stock
        Transfer, Inc. and United Western Bank, dated May 27, 2010 [Incorporated
        by reference to Exhibit 10.3 to the Company&#146;s Current Report on Form
        8-K filed on June 3, 2010].</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.25 </TD>
    <TD bgColor=#eeeeee > <P align=justify>Employment Agreement, by and between
        the Company and Robert Tick, dated July 16, 2010 [Incorporated by reference
        to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed
        on July 20, 2010]</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.26 </TD>
    <TD bgColor=#eeeeee > <P align=justify>Stock Option Agreement, by and between
        the Company and Robert Tick, dated July 16, 2010 [Incorporated by reference
        to Exhibit 10.2 to the Company&#146;s Current Report on Form 8-K filed
        on July 20, 2010]</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.27 </TD>
    <TD bgColor=#eeeeee > <P align=justify>Restricted Shares Grant Agreement,
        by and between the Company and Robert Tick, dated July 16, 2010 [Incorporated
        by reference to Exhibit 10.3 to the Company&#146;s Current Report on Form
        8-K filed on July 20, 2010]</P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee><a href="exhibit21.htm">21 </a></TD>
    <TD bgColor=#eeeeee > <P align=justify><a href="exhibit21.htm">Subsidiaries
        of the registrant*</a></P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee><a href="exhibit23-1.htm">23.1</a>
    </TD>
    <TD bgColor=#eeeeee > <P align=justify><a href="exhibit23-1.htm">Consent of
        AGCA, Inc.*</a></P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee><a href="exhibit5.htm">23.2</a>
    </TD>
    <TD bgColor=#eeeeee > <P align=justify><a href="exhibit5.htm">Consent of Holland
        &amp; Hart LLP (included in Exhibit 5)*</a></P></TD>
  </TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD>
  </TR>
  <TR bgcolor="#eeeeee">
    <TD width="15%" vAlign=top bgColor=#eeeeee><a href="#page_72">24 </a></TD>
    <TD bgColor=#eeeeee >
      <P align=justify><a href="#page_72">Power of Attorney (included on the signature
        page of this registration statement)</a></P></TD>
  </TR>
</TABLE>
<P align=justify>________________<BR>* Filed herewith.<BR><B><I>Item 17.
Undertakings</I></B><BR></P>
<P align=justify>(A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The undersigned
Registrant hereby undertakes: </P>
<P style="MARGIN-LEFT: 5%"
align=justify>(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement: </P>
<P style="MARGIN-LEFT: 10%"
align=justify>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To include any
prospectus required by Section 10(a)(3) of the Securities Act;</P>
<P align=center>II-6 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_71></A>
<P style="MARGIN-LEFT: 10%"
align=justify>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To reflect in the
prospectus any facts or events arising after the effective date of this
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in 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 and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering price
set forth in the &#147;Calculation of Registration Fee&#148; table in the effective
Registration Statement; and </P>
<P style="MARGIN-LEFT: 10%"
align=justify>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To include any
additional or changed material information with respect to the plan of
distribution not previously disclosed in this Registration Statement; </P>
<P style="MARGIN-LEFT: 5%"
align=justify>(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; That, for the
purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial <I>bona fide</I> offering
thereof. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If the registrant is
subject to Rule 430C (&#167;230.430C of this chapter), 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 (&#167;230.430A of this chapter), shall
be deemed to be part of and included in the registration statement as of the
date it is first used after effectiveness. <I>Provided, however, </I>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. </P>
<P align=justify>(B)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant 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 Registrant 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 and will be governed by the final adjudication of such issue.
</P>
<P align=center>II-7</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_72></A>
<P align=center><B>SIGNATURES</B></P>
<P align=justify>Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Harbin, China, on the 11<sup>th </sup>day of August,
2010. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD colspan="2" align=left ><STRONG>Nutrastar International Inc.</STRONG>
    </TD>
  </TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="45%" >&nbsp; </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >By </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="45%"
    >/s/ Lianyun Han </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%" >Lianyun Han, CEO and President </TD>
  </TR>
</TABLE>
<P align=center><B>POWER OF ATTORNEY </B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature to this
Registration Statement on Form S-1 appears below hereby constitutes and appoints
Lianyun Han and Robert Tick, and each or any of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to sign any registration statement for the
same offering covered by this Registration Statement that is to be effective on
filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and
all post-effective amendments thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or their
substitutes, may lawfully do or cause to be done by virtue hereof. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities indicated on August
11, 2010. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>SIGNATURE </TD>
    <TD align=left width="50%">TITLE </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Lianyun Han</U> </TD>
    <TD align=left width="50%">Chief Executive Officer, President and Chairman
    </TD></TR>
  <TR vAlign=top>
    <TD align=left>Lianyun Han </TD>
    <TD align=left width="50%">(Principal Executive Officer) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Robert Tick</U> </TD>
    <TD align=left width="50%">Chief Financial Officer and Treasurer </TD></TR>
  <TR vAlign=top>
    <TD align=left>Robert Tick </TD>
    <TD align=left width="50%">(Principal Financial Officer and Principal
      Accounting </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="50%">Officer) </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Hongbing Hua</U> </TD>
    <TD align=left width="50%">Chief Marketing Officer </TD></TR>
  <TR vAlign=top>
    <TD align=left>Hongbing Hua </TD>
    <TD align=left width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Nana Jiang</U> </TD>
    <TD align=left width="50%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left>Nana Jiang </TD>
    <TD align=left width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Chunming Zhang</U> </TD>
    <TD align=left width="50%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left>Chunming Zhang </TD>
    <TD align=left width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ John Jing Zhang</U> </TD>
    <TD align=left width="50%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left>John Jing Zhang </TD>
    <TD align=left width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left><U>/s/ Xi Zhu</U> </TD>
    <TD align=left width="50%">Director </TD></TR>
  <TR vAlign=top>
    <TD align=left>Xi Zhu </TD>
    <TD align=left width="50%">&nbsp; </TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_73></A>
<P align=center><B>EXHIBIT INDEX </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left><B><U>Exhibit No.</U></B> </TD>
    <TD align=left width="85%" ><B>Description</B> </TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" >&nbsp; </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>2.1 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Share Exchange
        Agreement, dated December 23, 2008, among the Company, New Zealand WAYNE&#146;s
        New Resources Development Co., Ltd., Heilongjiang Shuaiyi New Energy Development
        Co., Ltd., Daqing Shuaiyi Biotech Co., Ltd., Harbin Shuaiyi Green &amp;
        Specialty Food Trading LLC and New Zealand WAYNE&#146;s Investments Holdings
        Co., Ltd. [Incorporated by reference to Exhibit 2.1 to the Company&#146;s
        Current Report on Form 8-K filed on December 31, 2008]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>3.1 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Amended and
        Restated Articles of Incorporation filed with the Nevada Secretary of
        State on May 19, 2009 [Incorporated by reference to Exhibit 3.1 to the
        Company&#146;s Current Report on Form 8-K filed on May 26, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>3.2 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Certificate
        of Amendment filed with the Nevada Secretary of State on January 11, 2010
        [Incorporated by reference to Exhibit 3.1 to the Company&#146;s Current
        Report on Form 8-K filed on January 14, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>3.3 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Certificate
        of Designation of Series A Preferred Stock, as filed with the Secretary
        of State of the State of Nevada, May 27, 2010 [Incorporated by reference
        to Exhibit 3.1 to the Company&#146;s Current Report on Form 8-K filed
        on June 3, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>3.4 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Bylaws, adopted
        December 27, 2003 [Incorporated by reference to Exhibit 3.2 to the Company&#146;s
        Registration Statement on Form SB-2, filed on January 2, 2004]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>4.1 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Form of Series
        A Warrant [Incorporated by reference to Exhibit 4.1 to the Company&#146;s
        Current Report on Form 8-K filed on December 21, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>4.2 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Form of Series
        B Warrant [Incorporated by reference to Exhibit 4.2 to the Company&#146;s
        Current Report on Form 8-K filed on December 21, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>4.3 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Form of Series
        C Warrant [Incorporated by reference to Exhibit 10.2 to the Company&#146;s
        Current Report on Form 8-K filed on June 3, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top bgcolor="#eeeeee">
    <TD align=left><a href="exhibit4-4.htm">4.4 </a></TD>
    <TD align=left width="85%" > <P align=justify><a href="exhibit4-4.htm">Form
        of Series D Warrant* </a></P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit5.htm">5 </a></TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify><a href="exhibit5.htm">Opinion
        of Holland &amp; Hart LLP as to the legality of the shares.* </a></P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.1 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Form of Securities
        Purchase Agreement, dated December 17, 2009 [Incorporated by reference
        to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed
        on December 21, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.2 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Subscription
        Agreement, dated December 23, 2008, between the Company and Allied China
        Investments, LLC. [Incorporated by reference to Exhibit 10.1 to the Company&#146;s
        Current Report on Form 8-K filed on December 31, 2008]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.3 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Amendment No.
        1 to Stock Purchase Agreement, dated December 23, 3008, by and among the
        Company, Allied China Investments, LLC and Belmont Partners LLC. [Incorporated
        by reference to Exhibit 10.2 to the Company&#146;s Current Report on Form
        8-K filed on December 31, 2008]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.4 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Subscription
        Agreement, dated December 23, 2008, between the Company and Tan Zhen Investment
        Limited. [incorporated by reference to Exhibit 10.3 to the Company&#146;s
        Current Report on Form 8-K filed on December 31, 2008]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.5 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Escrow Agreement,
        dated December 23, by and among the Company, Tan Zhen Investment </P></TD>
  </TR>
</TABLE>
<BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_74></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="15%" bgColor=#eeeeee></TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Limited and Sichenzia Ross Friedman Ference LLP, as
      escrow agent. [incorporated by reference to Exhibit 10.4 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.6 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Real Property Purchase Agreement, dated October 22, 2007,
      between Daqing Shuaiyi Biotech Co., Ltd. and Heilongjiang Shuaiyi
      Technology Development Co., Ltd. (English Translation) [incorporated by
      reference to Exhibit 10.5 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.7 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Land Lease Agreement, dated January 10, 2008, between
      Heilongjiang Shuaiyi Technology Development Co., Ltd. and Daqing Shuaiyi
      Biotech Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.6 to the Company&#146;s Current Report on Form 8-K filed on December
      31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.8 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Lease Agreement, dated December 28, 2005, between Liye
      Qian and Harbin Shuaiyi Green &amp; Specialty Food Trading LLC. (English
      Translation) [incorporated by reference to Exhibit 10.7 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.9 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Lease Agreement, dated April 23, 2008, between Harbin
      Jinhua Keji Qiye Fuhuaqi Co., Ltd. and Harbin Shuaiyi Green &amp;
      Specialty Food Trading LLC. (English Translation) [incorporated by
      reference to Exhibit 10.8 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.10 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Exclusive Licensing Agreement, dated April 10, 2006,
      between Runjiao Wang and Daqing Shuaiyi Biotech Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.9 to the Company&#146;s
      Current Report on Form 8-K filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.11 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Equity Transfer Agreement, dated July 28, 2008, by and
      among Heilongjiang Shuaiyi New Energy Development Co., Ltd., Lianyun Han,
      Lianxue Han, Lianju Han, Weihan Zhang, Yuehong Luan, Chunming Zhang,
      Xunjun Li, Nana Jiang, Fengxi Lang and New Zealand WAYNE&#146;S New Resources
      Development Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.10 to the Company&#146;s Current Report on Form 8-K filed on
      December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.12 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of Earn-In Agreement, dated September 12, 2008.
      [incorporated by reference to Exhibit 10.11 to the Company&#146;s Current
      Report on Form 8-K filed on December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.13 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of First Amendment to Earn-In Agreement, dated
      February 12, 2009. [incorporated by reference to Exhibit 10.16 to the
      Company&#146;s Current Report on Form 8-K/A filed on February 23,
  2009].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.14 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Loan Agreement, dated October 15, 2007, between
      Heilongjiang Shuaiyi New Energy Development Co., Ltd. and Daqing Shuaiyi
      Biotech Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.12 to the Company&#146;s Current Report on Form 8-K filed on
      December 31, 2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.15 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of Loan Agreement and Promissory Note, dated
      December 8, 2008. [incorporated by reference to Exhibit 10.13 to the
      Company&#146;s Current Report on Form 8-K filed on December 31,
2008].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.16 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of First Amendment to Loan Agreement and Promissory
      Note, dated February 12, 2009. [incorporated by reference to Exhibit 10.15
      to the Company&#146;s Current Report on Form 8-K/A filed on February 23,
      2009].</P></TD></TR>
  <TR>
    <TD width="15%">&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top width="15%" bgColor=#eeeeee>10.17 </TD>
    <TD bgColor=#eeeeee >
      <P align=justify>Form of Heilongjiang Shuaiyi New Energy Development Co.,
      Ltd. Employment Agreement. (English Translation) [incorporated by
      reference to Exhibit 10.14 to the Company&#146;s Current Report on Form 8-K
      filed on December 31, 2008].</P></TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_75></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.18 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>English Translation
        of Employment Agreement, dated August 18, 2009, between Heilongjiang Shuaiyi
        New Energy Development Co., Ltd. and Hongbing Hua [Incorporated by reference
        to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed
        on August 21, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.19 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>2009 Equity
        Incentive Plan [Incorporated by reference to Appendix A to the Company&#146;s
        Information Statement on Schedule 14C filed on July 2, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.20 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Stock Option
        Agreement, dated January 1, 2010, by and between the Company and Daniel
        K. Lee [Incorporated by reference to Exhibit 10.1 to the Company&#146;s
        Current Report on Form 8-K filed on January 7, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.21 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Restricted Shares
        Grant Agreement, dated January 1, 2010, by and between the Company and
        Daniel K. Lee [Incorporated by reference to Exhibit 10.2 to the Company&#146;s
        Current Report on Form 8-K filed on January 7, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.22 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Employment Agreement,
        dated November 16, 2009, by and among the Company, Heilongjiang Shuaiyi
        New Energy Development Co., Ltd. and Daniel K. Lee [Incorporated by reference
        to Exhibit 10.1 to the Company&#146;s Current Report on Form 8-K filed
        on November 18, 2009]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.23 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Form of Securities
        Purchase Agreement, dated May 27, 2010, by and among the Company and the
        investors named therein [Incorporated by reference to Exhibit 10.1 to
        the Company&#146;s Current Report on Form 8-K filed on June 3, 2010].
      </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.24 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Escrow Agreement,
        by and among the Company, ARC China, Inc., Gilford Securities Incorporated,
        Corporate Stock Transfer, Inc. and United Western Bank, dated May 27,
        2010 [Incorporated by reference to Exhibit 10.3 to the Company&#146;s
        Current Report on Form 8-K filed on June 3, 2010]. </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.25 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Employment Agreement,
        by and between the Company and Robert Tick, dated July 16, 2010 [Incorporated
        by reference to Exhibit 10.1 to the Company&#146;s Current Report on Form
        8-K filed on July 20, 2010] </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.26 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Stock Option
        Agreement, by and between the Company and Robert Tick, dated July 16,
        2010 [Incorporated by reference to Exhibit 10.2 to the Company&#146;s
        Current Report on Form 8-K filed on July 20, 2010] </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>10.27 </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify>Restricted Shares
        Grant Agreement, by and between the Company and Robert Tick, dated July
        16, 2010 [Incorporated by reference to Exhibit 10.3 to the Company&#146;s
        Current Report on Form 8-K filed on July 20, 2010] </P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit21.htm">21</a> </TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify><a href="exhibit21.htm">Subsidiaries
        of the registrant* </a></P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit23-1.htm">23.1 </a></TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify><a href="exhibit23-1.htm">Consent
        of AGCA, Inc.* </a></P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit5.htm">23.2 </a></TD>
    <TD align=left width="85%" bgColor=#eeeeee > <P align=justify><a href="exhibit5.htm">Consent
        of Holland &amp; Hart LLP (included in Exhibit 5)* </a></P></TD>
  </TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="85%" > <P align=justify> </P></TD>
  </TR>
  <TR bgcolor="#eeeeee">
    <TD bgColor=#eeeeee><a href="#page_72">24 </a></TD>
    <TD width="85%" bgColor=#eeeeee >
      <P align=justify><a href="#page_72">Power of Attorney (included on the signature
        page of this registration statement) </a></P></TD>
  </TR>
</TABLE>
<P align=justify>_______________________<BR>* Filed herewith</P>
<HR align=center width="100%" color=black noShade SIZE=5>

</BODY>

</HTML>
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{"company-data": {"conformed-name": "Nutrastar International Inc.", "cik": "0001273385", "assigned-sic": "2000", "irs-number": "800264950", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-168773", "film-number": "101008815"}, "business-address": {"street1": "7/F JINHUA MANSION, 41 HANGUANG STREET", "street2": "NANGANG DISTRICT,", "city": "HARBIN", "state": "F4", "zip": "150080", "phone": "(86) 451-82287746"}, "mail-address": {"street1": "7/F JINHUA MANSION, 41 HANGUANG STREET", "street2": "NANGANG DISTRICT,", "city": "HARBIN", "state": "F4", "zip": "150080"}, "former-company": [{"former-conformed-name": "SHUAIYI INTERNATIONAL NEW RESOURCES DEVELOPMENT INC.", "date-changed": "20090527"}, {"former-conformed-name": "YZAPP INTERNATIONAL INC", "date-changed": "20031215"}]}
Nutrastar International Inc - Form S-1 - Filed by newsfilecorp.com
As filed with the Securities and Exchange Commission on August
11, 2010
Registration No. 333 -
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF
1933
NUTRASTAR INTERNATIONAL
INC.
(Exact name of registrant as specified in its charter)
Nevada
2000
80-0264950
(State or other jurisdiction of
(Primary Standard Industrial
(I.R.S. Employer
incorporation or organization)
Classification Code Number)
Identification No.)
7/F Jinhua Mansion
41 Hanguang
Street
Nangang District, Harbin, 150080
People's Republic of
China
(86) 451-82287746
(Address and telephone number
of principal executive offices)
____________________________
Copies to:
Scott C. Kline, Esq.
Qixiang Sun,
Esq.
Pillsbury Winthrop Shaw Pittman LLP
Suite 4201, Bund
Center222 Yan An Road
East, Huangpu District
Shanghai,
200002 China
+86-21-6137-7999
(Names, addresses and
telephone numbers of agents for service)
____________________________
Approximate date of commencement of proposed sale to
public
: From time to time after the effective date of this Registration
Statement, as determined by market conditions and other factors.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) 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(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 the same offering. [  ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [  ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of "large accelerated filer," "accelerated
filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer [   ]
Accelerated
      filer           
            [   ]
Non-accelerated filer   [   ]
Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Title of securities
to be registered
Amount to be registered
(1)
Proposed maximum offering
price per
      share
(2)
Proposed maximum aggregate
offering
      price
(2)
Amount of
registration fee
Common stock, $0.001 par value per share underlying Series
        A Preferred Stock, $0.001 par value per share
1,977,060
(4)
$2.80
$5,535,768
$395
Common stock underlying Series C Warrants exercisable at
        $3.40 per share
988,501
(5)
3.40
(3)
3,360,904
240
Total
2,965,561
$8,896,672
$635
(1) In accordance with Rule 416(a), the Registrant is also
registering hereunder an indeterminate number of shares that may be issued and
resold resulting from stock splits, stock dividends or similar transactions.
(2) Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely
for the purpose of computing the amount of the registration fee based on the
average of the bid and asked prices reported on the OTCQB on August 9, 2010.
(3) Calculated in accordance with Rule 457(g) based upon the exercise price
of the Series C Warrants held by selling stockholders named in this registration
statement.
(4) Represents shares of the Registrant's common stock underlying
shares of Series A Preferred Stock being registered for resale that have been
issued to the selling stockholders named in this registration statement.
(5)
Represents shares of common stock issuable upon exercise of three-year warrants
to purchase shares of common stock held by selling stockholders named in this
registration statement.
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 hereafter
      become effective in
accordance with Section 8(a) of the Securities
      Act of 1933 or until the registration statement shall become effective on
      such date as the
Commission, acting pursuant to such 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.
PROSPECTUS
Subject to completion,
      dated August 11, 2010
2,965,561 Shares
NUTRASTAR INTERNATIONAL INC.
Common Stock, par value $0.001 per share
____________________________
This prospectus relates to 2,965,561 shares of common stock of Nutrastar
        International Inc. that may be sold from time to time by the selling stockholders
        named in this prospectus, which includes:
•
1,977,060 shares of common stock underlying series
      A preferred stock, par value $0.001 per share, or the Series A Preferred
      Stock; and
•
988,501 shares of common stock issuable to the
      selling stockholders upon the exercise of Series C Warrants.
We
        will not receive any proceeds from the sales of outstanding shares of
        common stock by the selling stockholders, but we will receive funds from
        the exercise of Series C Warrants held by the selling stockholders, if
        exercised for cash.
Our
        common stock is quoted on the OTCQB under the symbol "NUIN."
        The closing price for our common stock on August 9, 2010 was $2.80 per
        share, as reported on the OTCQB. You are urged to obtain current market
        quotations of our common stock before purchasing any of the shares being
        offered for sale pursuant to this prospectus.
The
        shares of our common stock offered under this prospectus are being registered
        to permit the selling stockholders to sell the shares from time to time
        in the public market. The selling stockholders may sell the shares through
        ordinary brokerage transactions or through any other means described in
        the section titled "Plan of Distribution." We do not know when
        or in what amount the selling stockholders may offer the shares for sale.
        The selling stockholders may sell any, all or none of the shares offered
        by this prospectus.
Investing
        in the shares being offered pursuant to this prospectus involves a high
        degree of risk. You should carefully read and consider the information
        set forth in the section of this prospectus titled "Risk Factors,"
        beginning on page 7, when determining whether to purchase any of these
        shares.
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 , 2010.
TABLE OF CONTENTS
Page
PROSPECTUS
      SUMMARY
1
RISK
      FACTORS
7
SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS
18
USE
      OF PROCEEDS
18
BUSINESS
18
MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
25
HISTORY
      AND CORPORATE STRUCTURE
33
MANAGEMENT
37
EXECUTIVE
      COMPENSATION
41
TRANSACTIONS
      WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS;
CORPORATE GOVERNANCE
43
CHANGE IN ACCOUNTANTS
44
SELLING
      STOCKHOLDERS
44
SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
48
DESCRIPTION
      OF SECURITIES
51
MARKET
      FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
53
SHARES
      ELIGIBLE FOR FUTURE SALE
55
PLAN
      OF DISTRIBUTION
56
LEGAL
      MATTERS
58
EXPERTS
58
WHERE
      YOU CAN FIND MORE INFORMATION
58
INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
You should rely only on the information provided in this
prospectus. Neither we nor the selling stockholders have authorized anyone to
provide you with additional or different information. The selling stockholders
are not making an offer of these securities in any jurisdiction where the offer
is not permitted. You should assume that the information in this prospectus is
accurate only as of the date on the front of the document.
i
PROSPECTUS SUMMARY
The items in the following summary are described in more
detail later in this prospectus. You should read the following summary together
with the more detailed information regarding our company and the common stock
being sold in this offering, including "Risk Factors" and our consolidated
financial statements and related notes, included elsewhere in, or incorporated
by reference into, this prospectus.
In this prospectus, unless indicated otherwise,
"we," "us," "our company," "our" and "Nutrastar" refer to the combined
  business of Nutrastar International Inc. and/or its consolidated subsidiaries,
  as the case may be;
"New Resources" refers to New Zealand WAYNE's New Resources Development
  Co., Ltd., our direct, wholly-owned subsidiary, a BVI company;
"Heilongjiang Shuaiyi" refers to Heilongjiang Shuaiyi New Energy
  Development Co., Ltd. our indirect, wholly-owned subsidiary, a Chinese
  company;
"Daqing Shuaiyi" refers to Daqing Shuaiyi Biotech Co., Ltd., our indirect,
  wholly-owned subsidiary, a Chinese company;
"Harbin Shuaiyi" refers to Harbin Shuaiyi Green & Specialty Food
  Trading LLC, our indirect, wholly-owned subsidiary, a Chinese company;
"BVI" refers to the British Virgin Islands;
"China," "Chinese" and "PRC," refer to the People's Republic of China and
  for the purpose of this prospectus, do not include Taiwan and the special
  administrative regions of Hong Kong and Macau;
"Renminbi" and "RMB" refer to the legal currency of China;
"U.S. dollars," "dollars" and "$" refer to the legal currency of the United
  States;
"SEC" refers to the United States Securities and Exchange Commission;
"Securities Act" refers to the Securities Act of 1933, as amended; and
"Exchange Act" refers to the Securities Exchange Act of 1934, as amended.
Effective May 19, 2009, we implemented a 1-for-114.59 reverse
stock split of issued and outstanding shares of our common stock. Except where
specifically indicated, all common share information (including information
related to warrants to purchase common stock) has been restated to reflect the
1-for-114.59 reverse split.
The Company
Overview of Our Business
We are a holding company that operates through our indirectly
  owned subsidiary Heilongjiang Shuaiyi, a leading grower and producer of Cordyceps
  Militaris, or "Chinese Golden Grass" in China. We specialize in developing,
  processing, marketing and distributing a variety of agricultural and nutraceutical
  products consisting of Chinese Golden Grass, organic and specialty food products.
  In addition, we plan to produce and market other products developed from Cordyceps
  Militaris within the coming months and years, including specialty beverage products
  as indicated in more detail below.
Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in north-eastern mountainous China. It is a precious
ingredient in traditional Chinese medicine, as Cordyceps Militaris is widely
believed in China to offer high medical and health benefits by nourishing the
yin,
boosting the
yang,
and invigorating the meridians of the
lungs and kidneys.
1
We generated 89.44% and 78.70% of our revenues from Chinese
Golden Grass for the three months ended March 31, 2010 and the fiscal year of
2009, respectively. We believe that we own 19% of the world wide market share in
the cultivated Chinese Golden Grass industry. We plan to continue to focus on
Chinese Golden Grass, which is our fastest growing product line with the
greatest market demand and a significantly high profit margin. We also sell
organic and specialty food products through our subsidiary, Harbin Shuaiyi,
which was formed in 2001. After years of development, we believe that we have
become the largest wholesale distributor of organic and specialty food in
Heilongjiang Province, China.
Our Competitive Strengths
We believe that our success to date and potential for future
growth can be attributed to a combination of our strengths, including the
following:
High-end niche products.
We sell organic and specialty food
  products and Chinese Golden Grass products that the followers of traditional
  Chinese medicine believe have high nutrient concentration, potential health
  benefits and high value. Our products are positioned in the high-end market as
  premium healthy food and are distinguished from the common nutraceutical
  products in the market.
Leading market position and significantly high margin.
We
  believe we have established ourselves as a dominant player in China's Chinese
  Golden Grass industry. By successfully commercializing our Cordyceps Militaris
  planting technology, we believe that we have achieved economies of scale and
  accordingly significantly high margin that no other major competitor can match
  in the near future.
Leading-edge R&D team.
Our research and development team
  has a strong and extensive technology background and has been an early
  participant in the Chinese Golden Grass market. Currently we have 21
  technicians in our R&D department, led by Mr. Lichen Wang who is a lead
  expert in the field of edible fungus in China.
Experienced management team with a strong track record.
Our
  management team has extensive operating experience and industry knowledge. We
  believe that our management team's experience and capabilities have
  contributed greatly to our significant growth in the past three years.
Our Growth Strategy
As a leading nutraceutical producer in China, we believe we are
well positioned to capitalize on future industry growth in China. We are
dedicated to providing healthy and high nutritional products to our consumers.
We will implement the following strategic plans to take advantage of industry
opportunities and our competitive strengths:
Focus on brand development
.
With intense price
  competition among many similar or identical products in the industry, we
  believe that building brand awareness is the primary means to generate and
  sustain profitable growth in the future. We believe that developing close
  cooperative relationships with research centers of well-known universities in
  China and globally is key to building brand equity. We also market our
  products through an integrated marketing program that includes advertising in
  relevant media outlets, attending trade shows and offering seminars and
  lectures to local communities regarding the products and their heath benefits.
Introducing new products
.
We constantly evaluate our
  products and seek to adapt to changing market conditions by updating our
  products to reflect new trends in consumer preferences. We endeavor to expand
  our market presence by introducing additional competitive nutraceutical
  products to our product offerings. Our new products under development include
  specialty beverage products.
Increase production capacity.
Our existing production lines
  of Chinese Golden Grass have been running at close to full capacity while the
  market demand for our existing products continues to increase. In order to
  meet the raw material needs of our products and to expand sales of small
  packages of our Golden Grass products, we plan to add 10 plants to our
  production line, of which three plants are expected to begin
  operating during the second half of 2010. We anticipate that the entire project
  will be completed in 2012. Annual production capacity of Golden Grass is expected
  to increase to 72 tons in 2010, up from 55 tons in 2009. We will convert more
  buildings into biotechnologically controlled cultivation plants to grow and
  process Cordyceps Militaris in the future.
2
Further expand our distribution network to increase the prevalence
    of our products nationwide.
We plan to expand our distribution network
    by selling our small-pack products through drug stores, supermarkets and franchise
    stores. We have one-year contracts with our major distributors which normally
    extend for one more year by the end of the contracts. We maintain constant
    communications with these distributors to keep us informed regarding consumer
    preferences and market trends in order to develop new products. We also organize
    monthly product promotion meetings with the distributors to increase the sales
    of small package products.
Technology innovation.
We believe that the development of
    new technology is critical to our success. We will continuously improve the
    quality of our existing and future products through new technologies. We intend
    to maintain our long-term partnership with Chinese universities and research
    institutes in order to develop new technologies.
Our Background and History
We were originally incorporated in the State of Nevada on
December 22, 2002. Following incorporation, we engaged in the business of
developing software which allowed us to act as an application service provider
acting as a conduit between retailers and financial institutions. Because this
business was not successful, we were focused on the identification of suitable
businesses with which to enter into a business opportunity or business
combination until December 23, 2008, when we completed our reverse acquisition
of New Resources. As a result of our reverse acquisition of New Resources, we
are no longer a shell company and active business operations were revived.
On May 19, 2009, we filed amended and restated articles of
incorporation with the Nevada Secretary of State to amend our articles of
incorporation to, among other things, (1) change our name from "YzApp
International Inc." to "Shuaiyi International New Resources Development Inc.,"
(2) increase the total number of shares of common stock that we have the
authority to issue from 50,000,000 to 190,000,000 shares and (3) effect a
1-for-114.59 reverse split of our outstanding common stock.
On January 11, 2010, we changed our name to Nutrastar
International Inc. to more accurately reflect our marketing and branding
strategy and products.
On May 27, 2010, we entered into a securities purchase
agreement, or the 2010 Securities Purchase Agreement with certain investors,
pursuant to which, we agreed to issue and sell up to an aggregate of 250,000
Units at a purchase price of $28.56 per Unit, for an aggregate purchase price of
up to $7,140,000, or the Aggregate Purchase Price. Each Unit consists of (i) one
share of a newly designated series A preferred stock, par value $0.001 per
share, or the Series A Preferred Stock, with an initial one-to-ten conversion
ratio into shares of the Company's common stock, par value $0.001 per share, and
(ii) warrants to purchase five shares of common stock at an exercise price of
$3.40 per share, or the Series C Warrants. In addition, Gilford Securities
Incorporated, as the placement agent of this transaction, received from the
investors a fee equal to 2% of the Aggregate Purchase Price and Series C
Warrants to purchase 2% of the aggregate number of shares of common stock that
shares of Series A Preferred Stock to be issued under the 2010 Securities
Purchase Agreement are convertible into.
In connection with the 2010 Securities Purchase Agreement, we
filed a Certificate of Designation of Series A Preferred Stock with the
Secretary of State of the State of Nevada, or the 2010 Certificate, on May 27,
2010, which became effective upon filing. Pursuant to the 2010 Certificate,
there are 300,000 shares of Series A Preferred Stock authorized.
On June 7, 2010 and June 28, 2010, we consummated the first and
the second closing of the private placement transaction contemplated by the 2010
Securities Purchase Agreement, respectively, in which we issued in aggregate
approximately 197,700 Units to certain investors at a purchase price of $28.56
per unit for gross proceeds of approximately $5.65 million.
3
Corporate Information
The following chart reflects our organizational structure as of
the date of this prospectus.
Our corporate headquarters are located at 7/F Jinhua Mansion,
41 Hanguang Street, Nangang District, Harbin 150080, China. Our telephone number
is (86) 451-82287746. We maintain a website at
http://www.nutrastarintl.com
that contains information
about us, but that information is not a part of this prospectus.
4
The Offering
Common stock offered by selling stockholders
2,965,561 shares, consisting of 1,977,060 shares of
      common stock underlying Series A Preferred Stock owned by selling
      stockholders and 988,501 shares of common stock issuable upon the exercise
      of Series C Warrants held by the selling stockholders. This number
      represents 17.1% of our current outstanding common stock, on a fully
      diluted basis
(1)
.
Common stock outstanding before the offering
14,332,731 shares
Common stock outstanding after the offering, assuming all
      the shares of Series A Preferred Stock are converted into common stock and
      the Series C Warrants are exercised for cash.
17,298,292 shares
Proceeds to us
We will not receive any proceeds from the sale of common
      stock covered by this prospectus. We will, however, receive approximately
      $3.36 million from the exercise of the warrant held by the selling
      stockholder, if exercised for cash.
Trading Symbol
NUIN
(1) Based on 14,332,731 shares of our common stock issued and
outstanding as of August 9, 2010.
Risk Factors
In operating our business, we have faced and will continue to
face significant challenges. Our ability to successfully operate our business is
subject to numerous risks as discussed more fully in the section titled "Risk
Factors." For example:
Our current business is significantly based on a single product, Chinese
  Golden Grass;
Our inability to grow and harvest sufficient Cordyceps Militaris to
  satisfy our production requirements could reduce our sales and negatively
  affect our results of operations;
Evaluating our business and prospects based only on our past results may
  be difficult; and
We are subject to risks of conducting business in China.
Any of the above risks could materially and adversely affect
our business, financial position and results of operations. An investment in our
common stock involves risks. You should carefully read and consider the
information set forth in "Risk Factors" and all other information set forth in
this prospectus before investing in our common stock.
5
Summary Consolidated Financial Information
The following summary consolidated statement of income data for
the years ended December 31, 2009 and 2008 and the consolidated balance sheet
data as of December 31, 2009 and 2008 are derived from our audited consolidated
financial statements included in this prospectus. The summary consolidated
statement of income data for the periods ended March 31, 2010 and 2009 and the
consolidated balance sheet data as of March 31, 2010 are derived from our
unaudited consolidated financial statements included in this prospectus. Such
unaudited financial information includes all adjustments, consisting of only
normal recurring accruals, which our management considers necessary for the fair
presentation of our financial position and results of operations for such
interim periods. The data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and related notes
appearing elsewhere in this prospectus. Our historical results are not
necessarily indicative of our results for any future periods.
STATEMENT OF
INCOME
Three Months Ended
March 31,
Years Ended
December 31,
2010
(Unaudited)
2009
(Unaudited)
2009
2008
Revenues
$4,768,395
$4,642,724
$15,332,445
$12,989,760
Operating expenses
601,504
415,057
1,864,086
1,643,671
Operating income
3,110,376
2,471,963
8,904,394
6,741,141
Income taxes
422,820
316,192
1,235,210
974,653
Net income
$2,721,062
$2,170,269
$7,741,716
$3,719,049
Earnings Per Share
Basic
$0.19
$0.17
$0.59
$0.305
Diluted
$0.19
$0.17
$0.58
$0.305
BALANCE SHEET DATA
As of March 31,
As of December 31,
2010
(Unaudited)
2009
2008
Working capital
$13,778,631
$10,758,895
$402,853
Current assets
24,207,062
21,198,471
10,664,249
Total assets
37,106,530
34,342,380
24,751,220
Current liabilities
10,428,431
10,439,576
10,261,396
Total liabilities
10,428,431
10,439,576
11,139,282
Stockholders' equity
$26,678,099
$23,902,804
$13,611,938
6
RISK FACTORS
The shares of our common stock being offered for resale by
the selling stockholders are highly speculative in nature, involve a high degree
of risk and should be purchased only by persons who can afford to lose the
entire amount invested in the common stock. Before purchasing any of the shares
of common stock, you should carefully consider the following factors relating to
our business and prospects. You should pay particular attention to the fact that
we conduct all of our operations in China and are governed by a legal and
regulatory environment that in some respects differs significantly from the
environment that may prevail in the U.S. and other countries. If any of the
following risks actually occurs, our business, financial condition or operating
results will suffer, the trading price of our common stock could decline, and
you may lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
The global economic crisis could further impair our
business, limit demand for our products and affect the overall availability and
cost of external financing for our operations.
The continuation or intensification of the global economic
crisis and turmoil in the global financial markets may adversely impact our
business and our potential sources of capital financing. Our ability to access
the capital markets may be restricted at a time when we would like, or need, to
raise capital, which could have an impact on our flexibility to react to
changing economic and business conditions. In addition, these economic
conditions also impact levels of consumer spending, which have recently
deteriorated significantly and may remain depressed for the foreseeable future.
Consumer purchases of discretionary items, including our Chinese Golden Grass,
generally decline during recessionary periods and other periods where disposable
income is adversely affected. If demand for our products fluctuates as a result
of economic conditions or otherwise, our revenue and gross margin could be
harmed. Presently, it is unclear whether and to what extent the economic
stimulus measures and other actions taken or contemplated by the Chinese
government and other governments throughout the world will mitigate the effects
of the crisis on the agricultural and nutraceutical industries and other
industries that affect our business. Although these conditions have not
presently impaired our ability to access credit markets and finance our
operations, the impact of the current crisis on our ability to obtain capital
financing in the future, and the cost and terms of same, is unclear.
Our current business is significantly based on a single
product, Chinese Golden Grass, which currently accounts for approximately 90
percent of our revenues, and we may not be able to general significant revenue
if this product fails.
Approximately 89.44% of our sales for the three months ended
March 31, 2010 comes from a single product, Chinese Golden Grass, and our
business may suffer a material adverse impact if this product fails. If we
experience difficulties or obstacles in the manufacture and sale of Chinese
Golden Grass, we may not be able to generate significant revenues, our business
may fail and you would lose all or part of your investment in our company.
We may not be able to grow and harvest sufficient
Cordyceps Militaris to satisfy our production requirements and any decline in
the amount or quality of Cordyceps Militaris could reduce our sales and
negatively affect our results of operations, financial condition and business
prospects.
Our Chinese Golden Grass business and financial results
significantly depend on maintaining a consistent and cost-effective supply of
Cordyceps Militaris. The availability, size and quality of Cordyceps Militaris
for the production of our products are subject to risks inherent to growing,
such as size, quality, and yield fluctuation caused by technical problems of
growing, pest and disease problems, and other factors beyond our control.
Because all Cordyceps Militaris used to produce our Chinese Golden Grass
products are grown by us, we may not be able to locate in a timely manner any
third party suppliers who could provide us with sufficient materials to meet our
production needs when our self-supply faces significant fluctuations in the
availability of Cordyceps Militaris. Therefore, any interruptions to or decline
in the amount or quality of our Cordyceps Militaris supply could materially
disrupt our production and adversely affect our business and financial condition
and financial prospects.
Our sales and reputation may be affected by product
liability claims, litigation, product recalls, or adverse publicity in relation
to our products.
The sale of products for human consumption involves an inherent
risk of injury to consumers. We face risks associated with product liability
claims, litigation, or product recalls, if our products cause injury, or
become adulterated or misbranded. Our products are subject to product
tampering, and to contamination risks, such as mold, bacteria, insects, and
other pests, and off-flavor contamination during the various stages of the
procurement, production, transportation and storage processes. If any of our
products were to be tampered with, or become tainted in any of these respects
and we were unable to detect this, our products could be subject to product
liability claims or product recalls. We cannot predict what impact such product
liability claims or resulting negative publicity would have on our business or
on our brand image. The successful assertion of product liability claims against
us could result in potentially significant monetary damages, diversion of
management resources and require us to make significant payments and incur
substantial legal expenses. We do not have product liability insurance and have
not made provisions for potential product liability claims. Therefore, we may
not have adequate resources to satisfy a judgment if a successful claim is
brought against us. Even if a product liability claim is not successfully
pursued to judgment by a claimant, we may still incur substantial legal expenses
defending against such a claim. Finally, serious product quality concerns could
result in governmental action against us, which, among other things, could
result in the suspension of production or distribution of our products, loss of
certain licenses, or other governmental penalties. A widespread product recall
could result in significant loss due to the cost of conducting a product recall
including destruction of inventory and the loss of sales resulting from the
unavailability of the product for a period of time. In addition. product
liability claims and product recalls could have a material adverse effect on the
demand for our products and on our business goodwill and reputation. Adverse
publicity could result in a loss of consumer confidence in our products.
7
We compete in an industry that is brand-conscious, and
unless we are able to establish and maintain brand name recognition our sales
may be negatively impacted.
Our business is substantially dependent upon awareness and
market acceptance of our products and brand by our targeted consumers. In
addition, our business depends on acceptance by our suppliers and consumers of
our brand. Although we believe that we have made progress towards establishing
market recognition for our brand "
帅亿东方神
" in the Chinese Golden Grass
products industry, it is too early in the product life cycle of the brand to
determine whether our products and brand will achieve and maintain satisfactory
levels of acceptance by our customers.
We compete in an industry characterized by rapid changes
in consumer preferences, so our inability to continue developing new products to
satisfy our consumers' changing preferences would have a material adverse effect
on our sales volumes.
Our success depends on our ability to anticipate, gauge and
react in a timely and effective manner to changes in consumer spending patterns
and product preferences. We must continually work to develop, produce and market
new products, maintain and enhance the recognition of our brands, achieve a
favorable mix of products, and refine our approach as to how and where we market
and sell our products. While we plan to devote considerable effort and resources
to shape, analyze and respond to consumer preferences, consumer spending
patterns and preferences cannot be predicted with certainty and can change
rapidly. Our failure to adapt our product offering to respond to such changes
may result in reduced demand and lower prices for our products, resulting in a
material adverse effect on our sales volumes, sales and profits.
Our current market distribution and penetration is limited as
compared with the potential market and so our initial views as to customer
acceptance of a particular product can be erroneous, and there can be no
assurance that true market acceptance will ultimately be achieved. In addition,
customer preferences are also affected by factors other than taste. If we do not
adjust to respond to these and other changes in customer preferences, our sales
may be adversely affected.
Expansion of our business may put added pressure on our
management and operational infrastructure impeding our ability to meet any
potential increased demand for the products that we sell and possibly hurting
our future operating results.
Our business plan is to significantly grow our operations to
meet anticipated growth in demand for the products that we sell, and by the
introduction of new product offerings. Growth in our business may place a
significant strain on our personnel, management, financial systems and other
resources. The evolution of our business also presents numerous risks and
challenges, including:
8
our ability to successfully and rapidly expand sales to potential new
  distributors in response to potentially increasing demand;
the costs associated with such growth, which are difficult to quantify, but
  could be significant; and
rapid technological change.
To accommodate any such growth and compete effectively, we may
need to obtain additional funding to improve information systems, procedures and
controls and expand, train, motivate and manage our employees, and such funding
may not be available in sufficient quantities, if at all. If we are not able to
manage these activities and implement these strategies successfully to expand to
meet any increased demand, our operating results could suffer.
Due to our rapid growth in recent years, our past results
may not be indicative of our future performance and evaluating our business and
prospects may be difficult.
Our business has grown and evolved rapidly in recent years as
demonstrated by our growth in net income for the fiscal year ended December 31,
2009 to $7.7 million, from $3.7 million for the fiscal year ended December 31,
2008. We may not be able to achieve similar growth in future periods, and our
historical operating results may not provide a meaningful basis for evaluating
our business, financial performance and prospects. Moreover, our ability to
achieve satisfactory production results at higher volumes is unproven.
Therefore, you should not rely on our past results or our historical rate of
growth as an indication of our future performance.
We depend heavily on key personnel, and turnover of key
employees and senior management could harm our business.
Our future business and results of operations depend in
significant part upon the continued contributions of our key technical and
senior management personnel, including Lianyun Han, our chief executive officer
and chairperson, and Robert Tick, our chief financial officer. The expertise of
management and technical innovation of the company give it a strong competitive
advantage. We do not maintain key person insurance on these individuals. The
loss of any of these key employees' services or any of our other management
poses a risk to our business. We may not be able to attract or retain qualified
management on acceptable terms in the future due to the intense competition for
qualified personnel in our industry and as a result, our business could be
adversely affected.
We may have to pay liquidated damages to our investors in
the recent private placement if the registration statement of which this
prospectus is a part is not effective within the time periods specified.
In connection with the recent private placement described
above, on May 27, 2010, we entered into the 2010 Securities Purchase Agreement
with certain investors, pursuant to which, we granted registration rights to
holders of registrable securities, which include shares of common stock issuable
upon conversion of shares of the Series A Preferred Stock and shares of common
stock issuable upon exercise of the Series C Warrants. Under the terms of the
2010 Securities Purchase Agreement, if this registration statement is not
declared effective by the SEC within the time period specified in the 2010
Securities Purchase Agreement, then we are required to pay the investors, as
liquidated damages, 1.0% of the amount invested for each 30-day period during
which such failure continues, for up to a maximum of 8% of each investor's
investment pursuant to the 2010 Securities Purchase Agreement, except that we
will not be obligated to pay any such fee if we are unable to fulfill our
registration obligations as a result of rules, regulations, positions or
releases issued or actions taken by the SEC with respect to Rule 415 of the
Securities Act, so long as we register at such time the maximum number of
securities permissible by the SEC. There can be no assurance that the
registration statement of which this prospectus is a part will be declared
effective by the SEC for the time period necessary to avoid payment of
liquidated damages.
Our inability to protect our trademarks, patent and trade
secrets may prevent us from successfully marketing our products and competing
effectively.
Failure to protect our intellectual property could harm our
brands and our reputation, and adversely affect our ability to compete
effectively. Further, enforcing or defending our intellectual property rights,
including our trademarks, patents, copyrights, know how and trade secrets, could
result in the expenditure of significant financial and managerial resources. We
produce, market and sell our products using the brand "
帅亿东方神
" We regard
our intellectual property, particularly our trademark, know how and trade
secrets to be of considerable value and importance to our business and our
success. We rely on a combination of patent, trademark, trade secrecy laws, and
contractual provisions to protect our intellectual property rights. There can be
no assurance that the steps taken by us to protect these proprietary rights will be adequate or that third parties will not infringe or
misappropriate our patent, trademark, trade secrets or similar proprietary
rights. In addition, there can be no assurance that other parties will not
assert infringement claims against us, and we may have to pursue litigation
against other parties to assert our rights. Any such claim or litigation could
be costly and we may lack the resources required to defend against such claims.
In addition, any event that would jeopardize our proprietary rights or any
claims of infringement by third parties could have a material adverse affect on
our ability to market or sell our brands, and profitably exploit our products.
9
We may be exposed to potential risks relating to our
internal controls over financial reporting.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002,
the SEC 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-K. Under current law, we are subject to this
requirement beginning with our annual report for the fiscal year ended December
31, 2007. A report of our management is included under Item 9A(T) of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2009, or the Annual
Report, in which our management concluded that our internal controls over our
financial reporting were effective for the period covered by the Annual Report.
However, in the future, our management may conclude that our internal controls
over our financial reporting are not effective due to the identification of one
or more material weaknesses. In the event we identify significant deficiencies
or material weaknesses in our internal controls that we cannot remediate in a
timely manner, investors and others may lose confidence in the reliability of
our financial statements.
We do not carry any business interruption insurance,
third-party liability insurance for our production facilities or insurance that
covers the risk of loss of our products in shipment.
Operation of our facilities involves many risks, including
equipment failures, natural disasters, industrial accidents, power outages,
labor disturbances and other business interruptions. Furthermore, if any of our
products are faulty, then we may become subject to product liability claims or
we may have to engage in a product recall. We do not carry any business
interruption insurance, product recall or third-party liability insurance for
our production facilities or with respect to our products to cover claims
pertaining to personal injury or property or environmental damage arising from
defects in our products, product recalls, accidents on our property or damage
relating to our operations. As a result, we may be required to pay for financial
and other losses, damages and liabilities, including those caused by natural
disasters and other events beyond our control, out of our own funds, which could
have a material adverse effect on our business, financial condition and results
of operations.
We may be exposed to liabilities under the Foreign
Corrupt Practices Act, and any determination that we violated the Foreign
Corrupt Practices Act could have a material adverse effect on our
business.
We are subject to the Foreign Corrupt Practice Act, or the
FCPA, and other laws that prohibit improper payments or offers of payments to
foreign governments and their officials and political parties by U.S. persons
and issuers as defined by the statute for the purpose of obtaining or retaining
business. We have operations, agreements with third parties and make sales in
China, which may experience corruption. Our activities in China create the risk
of unauthorized payments or offers of payments by one of the employees,
consultants, sales agents or distributors of our company, because these parties
are not always subject to our control. It is our policy to implement safeguards
to discourage these practices by our employees. Also, our existing safeguards
and any future improvements may prove to be less than effective, and the
employees, consultants, sales agents or distributors of our Company may engage
in conduct for which we might be held responsible. Violations of the FCPA may
result in severe criminal or civil sanctions, and we may be subject to other
liabilities, which could negatively affect our business, operating results and
financial condition. In addition, the government may seek to hold our Company
liable for successor liability FCPA violations committed by companies in which
we invest or that we acquire.
We have not voluntarily implemented various corporate
governance measures, in the absence of which, shareholders may have limited
protections against related party transactions, conflicts of interest and
similar matters.
Since our common stock is not listed for trading on a national
securities exchange, we are not subject to certain of the corporate governance
requirements established by the national securities exchanges pursuant to the
Sarbanes-Oxley Act of 2002. These include rules relating to independent
directors, and independent director nominating, audit and compensation
committees. While we are currently seeking independent directors for our board
of directors, we do not presently have such directors. As a result, we have not
established independent audit, compensation, or nominating committees of our board of directors. In the absence of a
majority of independent directors, our officers and directors could establish
policies and enter into transactions without independent review and approval. In
certain circumstances, management may not have the same interests as the
shareholders and conflicts of interest may arise. Notwithstanding the exercise
of their fiduciary duties as directors and executive officers and any other
duties that they may have to us or our shareholders in general, these persons
may have interests different than yours which could adversely affect your
investment.
10
There are limitations on the liability of our directors,
and we may have to indemnify our officers and directors in certain instances.
Our bylaws provide that we will indemnify our officers and
directors and may indemnify our employees and other agents. The Company may also
have contractual indemnification obligations under its agreements with its
executive officers and directors. The foregoing indemnification obligations
could result in the Company incurring substantial expenditures to cover the cost
of settlement or damage awards against directors and officers, which the Company
may be unable to recoup. These provisions and resultant costs may also
discourage the Company from bringing a lawsuit against directors and officers
for breaches of their fiduciary duties and may similarly discourage the filing
of derivative litigation by the Company's stockholders against the Company's
directors and officers even though such actions, if successful, might otherwise
benefit the Company and its stockholders.
RISKS RELATED TO DOING BUSINESS IN CHINA
Adverse changes in political and economic policies of the
PRC government could impede the overall economic growth of China, which could
reduce the demand for our products and damage our business.
We conduct substantially all of our operations and generate all
of our revenue in China. Accordingly, our business, financial condition, results
of operations and prospects are affected significantly by economic, political
and legal developments in China. The PRC economy differs from the economies of
most developed countries in many respects, including:
a higher level of government involvement;
a early stage of development of the market-oriented sector of the economy;
a rapid growth rate;
a higher level of control over foreign exchange; and
the allocation of resources.
As the PRC economy has been transitioning from a planned
economy to a more market-oriented economy, the PRC government has implemented
various measures to encourage economic growth and guide the allocation of
resources. While these measures may benefit the overall PRC economy, they may
also have a negative effect on us.
Although the PRC government has in recent years implemented
measures emphasizing the utilization of market forces for economic reform, the
PRC government continues to exercise significant control over economic growth in
China through the allocation of resources, controlling the payment of foreign
currency-denominated obligations, setting monetary policy and imposing policies
that impact particular industries or companies in different ways.
Any adverse change in economic conditions or government
policies in China could have a material adverse effect on the overall economic
growth in China, which in turn could lead to a reduction in demand for our
services and consequently have a material adverse effect on our business and
prospects.
Uncertainties with respect to the PRC legal system could
limit the legal protections available to you and us.
We conduct substantially all of our business through our
operating subsidiaries in the PRC. Our operating subsidiaries are generally
subject to laws and regulations applicable to foreign investments in China and,
in particular, laws applicable to foreign-invested enterprises. The PRC legal
system is based on written statutes, and prior court decisions may be cited for
reference but have limited precedential value. Since 1979, a series of new PRC
laws and regulations have significantly enhanced the protections
afforded to various forms of foreign investments in China. However, since the
PRC legal system continues to rapidly evolve, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws,
regulations and rules involve uncertainties, which may limit legal protections
available to you and us. In addition, any litigation in China may be protracted
and result in substantial costs and diversion of resources and management
attention. In addition, all of our executive officers and all of our directors
are residents of China and not of the United States, and substantially all the
assets of these persons are located outside the United States. As a result, it
could be difficult for investors to affect service of process in the United
States or to enforce a judgment obtained in the United States against our
Chinese operations and subsidiaries.
11
If we are found to have failed to comply with applicable
laws, we may incur additional expenditures or be subject to significant fines
and penalties.
Our operations are subject to PRC laws and regulations
applicable to us. However, many PRC laws and regulations are uncertain in their
scope, and the implementation of such laws and regulations in different
localities could have significant differences. In certain instances, local
implementation rules and/or the actual implementation are not necessarily
consistent with the regulations at the national level. Although we strive to
comply with all the applicable PRC laws and regulations, we cannot assure you
that the relevant PRC government authorities will not later determine that we
have not been in compliance with certain laws or regulations. Our failure to
comply with applicable PRC laws and regulations could subject us to
administrative penalties and injunctive relief, as well as civil remedies,
including fines, injunctions and recalls of our products. It is possible that
changes to such laws or more rigorous enforcement of such laws or with respect
to our current or past practices could have a material adverse effect on our
business, operating results and financial condition.
The PRC government exerts substantial influence over the
manner in which we must conduct our business activities.
The PRC government has exercised and continues to exercise
substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by
changes in its laws and regulations, including those relating to taxation,
import and export tariffs, environmental regulations, land use rights, property
and other matters. We believe that our operations in China are in material
compliance with all applicable legal and regulatory requirements. However, the
central or local governments of the jurisdictions in which we operate may impose
new, stricter regulations or interpretations of existing regulations that would
require additional expenditures and efforts on our part to ensure our compliance
with such regulations or interpretations.
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 China or particular regions thereof and could require us to divest
ourselves of any interest we then hold in Chinese properties or joint ventures.
Restrictions on currency exchange may limit our ability
to receive and use our sales revenue effectively.
All our sales revenue and expenses are denominated in RMB.
Under PRC law, the RMB is currently convertible under the "current account,"
which includes dividends and trade and service-related foreign exchange
transactions, but not under the "capital account," which includes foreign direct
investment and loans. Currently, our PRC operating subsidiaries may purchase
foreign currencies for settlement of current account transactions, including
payments of dividends to us, without the approval of the State Administration of
Foreign Exchange, or SAFE, by complying with certain procedural requirements.
However, the relevant PRC government authorities may limit or eliminate our
ability to purchase foreign currencies in the future. Since a significant amount
of our future revenue will be denominated in RMB, any existing and future
restrictions on currency exchange may limit our ability to utilize revenue
generated in RMB to fund our business activities outside China that are
denominated in foreign currencies.
Foreign exchange transactions by our PRC operating subsidiaries
under the capital account continue to be subject to significant foreign exchange
controls and require the approval of or need to register with PRC government
authorities, including SAFE. In particular, if our PRC operating subsidiaries
borrow foreign currency through loans from us or other foreign lenders, these
loans must be registered with SAFE, and if we finance the subsidiaries by means
of additional capital contributions, these capital contributions must be
approved by certain government authorities, including the Ministry of Commerce, or MOFCOM, or their
respective local counterparts. These limitations could affect their ability to
obtain foreign exchange through debt or equity financing.
12
Fluctuations in exchange rates could adversely affect our
business and the value of our securities.
The value of our common stock will be indirectly affected by
the foreign exchange rate between U.S. dollars and RMB and between those
currencies and other currencies in which our sales may be denominated.
Appreciation or depreciation in the value of the RMB relative to the U.S. dollar
would affect our financial results reported in U.S. dollar terms without giving
effect to any underlying change in our business or results of operations.
Fluctuations in the exchange rate will also affect the relative value of any
dividend we issue in the future as well as earnings from, and the value of, any
U.S. dollar-denominated investments we make in the future.
Since July 2005, the RMB has no longer been pegged to the U.S.
dollar. Although the People's Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange
rate, the RMB may appreciate or depreciate significantly in value against the
U.S. dollar in the medium to long term. Moreover, it is possible that in the
future PRC authorities may lift restrictions on fluctuations in the RMB exchange
rate and lessen intervention in the foreign exchange market.
Very limited hedging transactions are available in China to
reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. While we may enter into hedging transactions in
the future, the availability and effectiveness of these transactions may be
limited, and we may not be able to successfully hedge our exposure at all. In
addition, our foreign currency exchange losses may be magnified by PRC exchange
control regulations that restrict our ability to convert RMB into foreign
currencies.
Restrictions under PRC law on our PRC subsidiaries'
ability to make dividends and other distributions could materially and adversely
affect our ability to grow, make investments or acquisitions that could benefit
our business, pay dividends to you, and otherwise fund and conduct our
businesses.
Substantially all of our revenues are earned by our PRC
subsidiaries. However, PRC regulations restrict the ability of our PRC
subsidiaries to make dividends and other payments to its offshore parent
company. PRC legal restrictions permit payments of dividend by our PRC
subsidiaries only out of their accumulated after-tax profits, if any, determined
in accordance with PRC accounting standards and regulations. Our PRC
subsidiaries are also required under PRC laws and regulations to allocate at
least 10% of our annual after-tax profits determined in accordance with PRC GAAP
to a statutory general reserve fund until the amounts in said fund reaches 50%
of our registered capital. Allocations to these statutory reserve funds can only
be used for specific purposes and are not transferable to us in the form of
loans, advances or cash dividends. Any limitations on the ability of our PRC
subsidiaries to transfer funds to us could materially and adversely limit our
ability to grow, make investments or acquisitions that could be beneficial to
our business, pay dividends and otherwise fund and conduct our business.
Under the New EIT Law, we may be classified as a
"resident enterprise" of China. Such classification will likely result in
unfavorable tax consequences to us and our non-PRC stockholders.
China passed a new Enterprise Income Tax Law, or the New EIT
Law, and its implementation regulations, both of which became effective on
January 1, 2008. Under the New EIT Law, an enterprise established outside of
China with "de facto management bodies" within China is considered a "resident
enterprise," meaning that it can be treated in a manner similar to a Chinese
domestic enterprise for enterprise income tax purposes. The implementing rules
of the New EIT Law define de facto management as "substantial and overall
management and control over the production and operations, personnel,
accounting, and properties" of the enterprise. On April 22, 2009, the State
Administration of Taxation issued the Notice Concerning Relevant Issues
Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated
Offshore as Resident Enterprises pursuant to Criteria of de facto Management
Bodies, or the Notice, further interpreting the application of the New EIT Law
and its implementation with respect to non-Chinese enterprises or group
controlled offshore entities. Pursuant to the Notice, an enterprise incorporated
in an offshore jurisdiction and controlled by a Chinese enterprise or group will
be classified as a "non-domestically incorporated resident enterprise" if (i)
its senior management in charge of daily operations reside or perform their
duties mainly in China; (ii) its financial or personnel decisions are made or
approved by bodies or persons in China; (iii) substantial assets and properties,
accounting books, corporate chops, board and shareholder minutes are kept in
China; and (iv) at least half of its directors with voting rights or senior
management often resident in China. A resident enterprise would be generally
subject to the uniform 25% enterprise income tax rate as to its worldwide
income. Substantially all of our management is currently based in China. Therefore, we may be
treated as a Chinese resident enterprise for enterprise income tax purposes. The
tax consequences of such treatment are currently unclear, as they will depend on
how local tax authorities apply or enforce the New EIT Law or the implementation
regulations.
13
In addition, under the New EIT Law and implementation
regulations, PRC income tax at the rate of 10% is applicable to dividends
payable to investors that are "non-resident enterprises" (and that do not have
an establishment or place of business in the PRC, or that have such
establishment or place of business but the relevant income is not effectively
connected with the establishment or place of business) to the extent that such
dividends have their source within the PRC unless there is an applicable tax
treaty between the PRC and the jurisdiction in which an overseas holder resides
which reduces or exempts the relevant tax. Similarly, any gain realized on the
transfer of shares by such investors is also subject to the 10% PRC income tax
if such gain is regarded as income derived from sources within the PRC. If we
are considered a PRC "resident enterprise", it is unclear whether the dividends
we pay with respect to our shares, or the gain you may realize from the transfer
of our shares, would be treated as income derived from sources within the PRC
and be subject to PRC tax. If we are required under the New EIT Law to withhold
PRC income tax on our dividends payable to our foreign shareholders, or if you
are required to pay PRC income tax on the transfer of your shares, the value of
your investment in our shares may be materially and adversely affected.
If the China Securities Regulatory Commission, or CSRC,
or another PRC regulatory agency determines that CSRC approval is required in
connection with the reverse acquisition of New Resources, the reverse
acquisition may be unwound, or we may become subject to penalties.
On August 8, 2006, six PRC regulatory agencies, including the
CSRC, promulgated the Provisions Regarding Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, or the M&A Rule, which became effective on
September 8, 2006. The M&A Rule, among other things, requires that an
offshore company controlled by PRC companies or individuals that have acquired a
PRC domestic company for the purpose of listing the PRC domestic company's
equity interest on an overseas stock exchange must obtain the approval of the
CSRC prior to the listing and trading of such offshore company's securities on
an overseas stock exchange. On September 21, 2006, the CSRC, pursuant to the
M&A Rule, published on its official web site procedures specifying documents
and materials required to be submitted to it by offshore companies seeking CSRC
approval of their overseas listings.
We do not believe that the M&A Rule concerning the CSRC
approval for acquisition of a PRC domestic company by an offshore company
controlled by PRC companies or individuals applies to our reverse acquisition of
New Resources because neither Nutrastar International Inc. nor New Resources was
a "Special Purpose Vehicle" or an "offshore company controlled by PRC companies
or individuals" as defined in the M&A Rule. If the CSRC or another PRC
governmental agency subsequently determines that we must obtain CSRC approval
prior to the completion of the reverse acquisition, the reverse acquisition may
be unwound and we may face regulatory actions or other sanctions from the CSRC
or other PRC regulatory agencies. These regulatory agencies may impose fines and
penalties on our operations in China and limit our operating privileges in
China, or take other actions that could have a material adverse effect on our
business, financial condition, results of operations, reputation and prospects,
as well as the trading price of our shares.
If we do not fulfill our obligation to pay the transfer
  price for the equity interest of Heilongjiang Shuaiyi, then we may be subject
  to fines and prohibitions imposed by relevant PRC authorities that could have
  a material adverse effect on our business.
On July 28, 2008, our subsidiary, New Resources entered into an
equity transfer agreement with the founders of Heilongjiang Shuaiyi to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB 60 million
(approximately $8.8 million). On November 24, 2008, Heilongjiang Shuaiyi
obtained the Certificate of Approval for Establishment of Enterprises of Foreign
Investment issued by Heilongjiang Provincial Government and a new business
license was issued to Heilongjiang Shuaiyi on December 1, 2008. According to the
M&A Rule, the equity interest transfer price should be paid in full within
three months commencing from the issuance of the new business license to
Heilongjiang Shuaiyi. If the transfer price is not paid by this date, we may
apply to the relevant PRC regulatory agency for an extension of up to one year
from the date of the issuance of the license; provided, however, that 60% of the
transfer price will be required to be paid within six months from such date. On
March 10, 2009, we obtained the approval from the relevant PRC regulatory agency
allowing us to make the payment by December 1, 2009. On January 4, 2010 and July
12, 2010, the relevant PRC regulatory agency further extended the payment due
date to December 31, 2010. However, if we are unable to make the transfer
payment in full by the December 31, 2010 deadline we may subject to fines or
penalties imposed by the PRC regulatory agency. In addition, we may not be permitted to exercise any decision-making rights as a
shareholder in Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi's
financial results into our financial statements, both of which result would have
a material adverse effect on our business.
14
The M&A Rule establishes more complex procedures for
some acquisitions of Chinese companies by foreign investors, which could make it
more difficult for us to pursue growth through acquisitions in China.
The M&A Rule establishes additional procedures and
requirements that could make some acquisitions of Chinese companies by foreign
investors more time-consuming and complex, including requirements in some
instances that the PRC Ministry of Commerce be notified in advance of any
change-of-control transaction and in some situations, require approval of the
PRC Ministry of Commerce when a foreign investor takes control of a Chinese
domestic enterprise. In the future, we may grow our business in part by
acquiring complementary businesses, although we do not have any plans to do so
at this time. The M&A Rule also requires PRC Ministry of Commerce anti-trust
review of any change-of-control transactions involving certain types of foreign
acquirers. Complying with the requirements of the M&A Rule to complete such
transactions could be time-consuming, and any required approval processes,
including obtaining approval from the PRC Ministry of Commerce, may delay or
inhibit our ability to complete such transactions, which could affect our
ability to expand our business or maintain our market share.
The implementation of the new PRC employment contract law
and increases in the labor costs in China may hurt our business and
profitability.
A new employment contract law became effective on January 1,
2008 in China. It imposes more stringent requirements on employers in relation
to entry into fixed-term employment contracts, recruitment of temporary
employees and dismissal of employees. In addition, under the newly promulgated
Regulations on Paid Annual Leave for Employees, which also became effective on
January 1, 2008, employees who have worked continuously for more than one year
are entitled to paid vacation ranging from 5 to 15 days, depending on the length
of the employee's service. Employees who waive such vacation entitlements at the
request of the employer will be compensated for three times their normal daily
salaries for each vacation day so waived. As a result of the new law and
regulations, our labor costs may increase. There is no assurance that disputes,
work stoppages or strikes will not arise in the future. Increases in the labor
costs or future disputes with our employees could damage our business, financial
condition or operating results.
Any outbreak of the Swine Flu (H1N1), severe acute
respiratory syndrome, or SARS, the Avian Flu, or another widespread public
health problem in the PRC could adversely affect our operations.
There have been recent outbreaks of the highly pathogenic Swine
Flu, caused by the H1N1 virus, in certain regions of the world, including parts
of China, where all of our manufacturing facilities are located and where all of
our sales occur. Our business is dependent upon our ability to continue to
manufacture and distribute our products, and an outbreak of the Swine Flu, or a
renewed outbreak of SARS, the Avian Flu, or another widespread public health
problem in China, could have a negative effect on our operations. Any such
outbreak could have an impact on our operations as a result of:
quarantines or closures of our manufacturing or distribution facilities or
  the retail outlets, which would severely disrupt our operations,
the sickness or death of our key officers and employees, and
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.
You may have difficulty enforcing judgments against us.
We are a Nevada holding company and most of our assets are
located outside of the United States. Most of our current operations are
conducted in the PRC. In addition, most of our directors and officers are
nationals and residents of countries other than the United States. A substantial
portion of the assets of these persons is located outside the United States. As
a result, it may be difficult for you to effect service of process within the
United States upon these persons. It may also be difficult for you to enforce in
U.S. courts judgments on the civil liability provisions of the U.S. federal
securities laws against us and our officers and directors, most of whom are not
residents in the United States and the substantial majority of whose assets are located
outside of the United States. In addition, there is uncertainty as to whether
the courts of the PRC would recognize or enforce judgments of U.S. courts.
Courts in China may recognize and enforce foreign judgments in accordance with
the requirements of the PRC Civil Procedures Law based on treaties between China
and the country where the judgment is made or on reciprocity between
jurisdictions. China does not have any treaties or other arrangements that
provide for the reciprocal recognition and enforcement of foreign judgments with
the United States. In addition, according to the PRC Civil Procedures Law,
courts in the PRC will not enforce a foreign judgment against us or our
directors and officers if they decide that the judgment violates basic
principles of PRC law or national sovereignty, security or the public interest.
So it is uncertain whether a PRC court would enforce a judgment rendered by a
court in the United States.
15
RISKS RELATED TO THE MARKET FOR OUR STOCK GENERALLY
Our common stock is quoted on the OTCQB which may have an
unfavorable impact on our stock price and liquidity.
Our common stock is quoted on the OTCQB. The OTCQB is a
significantly more limited market than the New York Stock Exchange or Nasdaq
system. The quotation of our shares on the OTCQB may result in a less liquid
market available for existing and potential stockholders to trade shares of our
common stock, could depress the trading price of our common stock and could have
a long-term adverse impact on our ability to raise capital in the future.
The market price of our common stock is volatile, leading
to the possibility of its value being depressed at a time when you may want to
sell your holdings.
The market price of our common stock is volatile, and this
volatility may continue. Numerous factors, many of which are beyond our control,
may cause the market price of our common stock to fluctuate significantly. In
addition to market and industry factors, the price and trading volume for our
common stock may be highly volatile for specific business reasons. Factors such
as variations in our revenues, earnings and cash flow, announcements of new
investments, cooperation arrangements or acquisitions, and fluctuations in
market prices for our products could cause the market price for our shares to
change substantially.
Securities class action litigation is often instituted against
companies following periods of volatility in their stock price. This type of
litigation could result in substantial costs to us and divert our management's
attention and resources.
Moreover, the trading market for our common stock will be
influenced by research or reports that industry or securities analysts publish
about us or our business. If one or more analysts who cover us downgrade our
common stock, the market price for our common stock would likely decline. If one
or more of these analysts cease coverage of us or fail to regularly publish
reports on us, we could lose visibility in the financial markets, which, in
turn, could cause the market price for our common stock or trading volume to
decline.
Furthermore, securities markets may from time to time
experience significant price and volume fluctuations for reasons unrelated to
operating performance of particular companies. These market fluctuations may
adversely affect the price of our common stock and other interests in our
company at a time when you want to sell your interest in us.
We may be subject to penny stock regulations and
restrictions and you may have difficulty selling shares of our common
stock.
The SEC has adopted regulations which generally define
so-called "penny stocks" to be an equity security that has a market price less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exemptions. If our common stock becomes a "penny stock", we may
become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule.
This rule imposes additional sales practice requirements on broker-dealers that
sell such securities to persons other than established customers and "accredited
investors" (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. As a result, this rule may
affect the ability of broker-dealers to sell our securities and may affect the
ability of purchasers to sell any of our securities in the secondary market.
16
For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. Disclosure is
also required to be made about sales commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.
There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest.
Certain provisions of our Articles of Incorporation may
make it more difficult for a third party to effect a change-of-control.
Our Articles of Incorporation authorizes our board of directors
to issue up to 1,000,000 shares of preferred stock. The preferred stock may be
issued in one or more series, the terms of which may be determined at the time
of issuance by the board of directors without further action by the
stockholders. These terms may include preferences as to dividends and
liquidation, conversion rights, redemption rights and sinking fund provisions.
The issuance of any preferred stock could diminish the rights of holders of our
common stock, and therefore could reduce the value of such common stock. In
addition, specific rights granted to future holders of preferred stock could be
used to restrict our ability to merge with, or sell assets to, a third party.
The ability of our board of directors to issue preferred stock could make it
more difficult, delay, discourage, prevent or make it more costly to acquire or
effect a change-in-control, which in turn could prevent our stockholders from
recognizing a gain in the event that a favorable offer is extended and could
materially and negatively affect the market price of our common stock.
The conversion of preferred stock or exercise of warrants
we issued in our previous private placements may result in dilution to the
holders of our common stock and cause the price of our common stock to
decline.
Dilution of the per share value of our common stock could
result from the conversion of our outstanding Series A Preferred Stock issued to
the investors in the recent private placement and the exercise of outstanding
warrants that we issued in connection with our previous private placement
transactions. As of August 9, 2010, there were 197,706 shares of our Series A
Preferred Stock outstanding, which may be converted into our common stock at the
option of the holders of the Series A Preferred Stock in whole or in part at any
time at an initial conversion ratio of 1-for-10. In addition, as of August 9,
2010, there were outstanding warrants to purchase 1,488,501 shares of our common
stock. When the conversion price of the Series A Preferred Stock or the exercise
price of the warrants is less than the trading price of our common stock, the
conversion of Series A Preferred Stock or the exercise of the warrants would
have a dilutive effect on our shareholders. The possibility of the issuance of
shares of our common stock upon the conversion of Series A Preferred Stock or
exercise of the warrants could cause the trading price of our common stock to
decline as well.
We may use these proceeds in ways with which you may not
agree.
While we currently intend to use the proceeds from this
offering for working capital and general corporate purposes, we have
considerable discretion in the application of the proceeds. You will not have
the opportunity, as part of your investment decision, to assess whether the
proceeds are being used in a manner agreeable to you. You must rely on our
judgment regarding the application of the net proceeds of this offering. The net
proceeds may be used for corporate purposes that do not immediately improve our
profitability or increase the price of our shares.
We do not intend to pay dividends for the foreseeable
future.
For the foreseeable future, we intend to retain any earnings to
finance the development and expansion of our business, and we do not anticipate
paying any cash dividends on our common stock. Accordingly, investors must be
prepared to rely on sales of their shares of common stock after price
appreciation to earn an investment return, which may never occur. Investors
seeking cash dividends should not purchase our common stock. Any determination
to pay dividends in the future will be made at the discretion of our board of
directors and will depend on our results of operations, financial condition,
contractual restrictions, restrictions imposed by applicable law and other
factors our board of directors deems relevant.
17
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made statements under the captions "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and "Business" and in other sections of
this prospectus that are forward-looking statements. In some cases, you can
identify these statements by forward-looking words such as "may," "might,"
"will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential," or "continue," the negative of these terms, and other
comparable terminology, although not all forward-looking statements contain
these identifying words. These forward-looking statements, which are subject to
risks, uncertainties, and assumptions, may include projections of our future
financial performance based on our growth strategies and anticipated trends in
our business. These statements are only predictions based on our current
expectations and projections about future events. There are important factors
that could cause our actual results, level of activity, performance, or
achievements to differ materially from the results, level of activity,
performance, or achievements expressed or implied by the forward-looking
statements. Those factors include, but are not limited to, the highly
competitive nature of the markets in which we sell our products, changes in
demand for our products and services, our ability to develop new products and
services, competitive pressures, changes in laws and regulations governing our
business and the other factors discussed under the caption "Risk Factors."
Although we believe the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
level of activity, performance, or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy or completeness of any of
these forward-looking statements. You should not rely upon forward-looking
statements as predictions of future events. We are under no duty to update any
of these forward-looking statements after the date of this prospectus to conform
our prior statements to actual results or revised expectations.
USE OF PROCEEDS
We will not receive proceeds from the sales by the selling
stockholders. If the warrants are exercised for cash, then we will receive the
proceeds of payable by the selling stockholders upon exercise of the warrants.
We will use these proceeds, if received, for general working capital purposes.
BUSINESS
Business Overview
We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading Chinese Golden Grass grower and
producer in China. We specialize in developing, processing, marketing and
distributing a variety of agricultural and nutraceutical products consisting of
Chinese Golden Grass, organic and specialty food products. In addition, we plan
to produce and market other products developed from Cordyceps Militaris within
the coming months and years, including specialty beverage products as indicated
in more detail below.
Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in north-eastern mountainous China. It is a precious
ingredient in traditional Chinese medicine, as Cordyceps Militaris is widely
believed in China to offer high medical and health benefits by nourishing the
yin,
boosting the
yang,
and invigorating the meridians of the
lungs and kidneys. According to Georges Halpern's
Healing Mushrooms,
certain research has shown that Cordyceps Militaris may boost our immune
system, and can be used as a supplement for the purposes of combating certain
effects of fatigue and aging, as well as reducing blood pressure, the
occurrences of certain tumors, and combating arteriosclerosis and certain
gastrointestinal disorders. In addition, Cordyceps Militaris has significantly
high economic values. According to Halpern
,
wild Cordyceps Militaris can
cost as much as $10,000 per kilogram. Due to the extremely sensitive growing
conditions of Cordyceps Militaris, it is very difficult to grow the plant in a
man-made environment. Through several years of laboratory tests, we developed
the technology to commercially grow and produce Cordyceps Militaris in 2006. We
generated 89.44% and 78.70% of our revenues from Chinese Golden Grass for the
three months ended March 31, 2010 and the fiscal year of 2009, respectively. We
believe that we own 19% of the world wide market share in the cultivated Chinese
Golden Grass industry. We plan to continue to focus on Chinese Golden Grass,
which is our fastest growing product line with the greatest market demand and a
significantly high profit margin.
18
We also sell organic and specialty food products through our
subsidiary, Harbin Shuaiyi, which was formed in 2001. After years of
development, we believe that we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.
Our Industry
The nutraceutical industry is currently made up of many small-
and medium-sized companies that manufacture and distribute products generally
intended to, or marketed for the purpose of maintaining, and sometimes
improving, health and general well being. According to China Enterprises
Association, there are currently over 3,000 manufacturers of nutraceutical
products in China, with an annual production value of over $6.25 billion. Of
these manufacturers, large enterprises with registered capital of over $12.5
million only account for 1.45%; medium-sized enterprises with registered capital
under $12.5 million, but over $6.25 million, make up 38%; and workshop-style
enterprises with registered capital below $12,500 make up 12.5% of the total
number of manufacturers.
Widespread economic development in China has not only increased
the disposable income of Chinese consumers, it has also lead to an increase in
consumer awareness of the risks of dietary imbalances and the importance of
maintaining appropriate levels of vitamins and minerals in the human body. Along
with a growing middle class, all of these facts have rapidly increased China's
480 million urban consumers' demand for nutraceutical products. According to
China Personal Health & Supplemental Industry Survey 2005
, the sales
of nutraceutical products in China are expected to reach RMB 70 billion
(approximately $8.75 billion) in 2009, with a compounded annual growth rate of
15.24% . We believe that the next era of nutrition will focus on naturally
occurring properties provided from plants, fruits, and vegetables, which support
good health.
Because of the rarity and high prices of the wild collected
variety, attempts have long been made to cultivate Cordyceps Militaris. By the
mid-1980s, the majority of Cordyceps Militaris available in the worldwide
marketplace were artificially cultivated. Because of the development of modern
biotechnology-based cultivation methods, the availability of this previously
rare health supplement has greatly increased in the last 20 years. The demand
for Cordyceps Militaris has also compounded exponentially, in this same time
frame, partly because of the opening of China to trade with the West in the
1970s, exposing many more people around the world to the concepts and practices
of traditional Chinese medicine. As Cordyceps Militaris has always been highly
revered in traditional Chinese medicine, we believe that with increased exposure
to traditional Chinese medicine, the demand for this plant has also increased.
Such an increase has lead to overharvesting of the wild stocks and a subsequent
shortage of wild collected varieties of Cordyceps Militaris. International
markets for Cordyceps Militaris are mainly in the United States, Canada, Japan,
Korea, Hong Kong and Southeast Asia. The European and Australian markets are
also emerging. According to
Market Survey of Cordyceps Militaris
2008,
published by China Market Monitoring Center in 2008, the current
international market demand for Cordyceps Militaris is about 1,000 tons a year,
while the Chinese domestic market demand is about 500 tons a year with an annual
growth rate of over 13%. With about 50 Cordyceps Militaris manufacturers in
China having an aggregate production capacity of only 250 tons a year, there is
a big gap between supply and demand and therefore a great potential for our
Chinese Golden Grass market.
19
Our Competitive Strengths
We believe that our success to date and potential for future
growth can be attributed to a combination of our strengths, including the
following:
High-end niche products.
We sell organic and specialty food
  products and Chinese Golden Grass products that the followers of traditional
  Chinese medicine believe have high nutrient concentration, potential health
  benefits and high value. Our products are positioned in the high-end market as
  premium healthy food and are distinguished from the common nutraceutical
  products in the market.
Leading market position and significantly high margin.
We
  believe we have established ourselves as a dominant player in China's Chinese
  Golden Grass industry. We believe that we currently own approximately 19% of
  world market of Chinese Golden Grass. By successfully commercializing our
  Cordyceps Militaris planting technology, we believe that we have achieved
  economies of scale and accordingly significantly high margin that no other
  material competitor can match in the near future.
Leading-edge R&D team.
Our research and development team
  has a strong and extensive technology background and has been an early
  participant in the Chinese Golden Grass market. Currently we have 21
  technicians in our R&D department. The head of our research and
  development team, Mr. Lichen Wang, is a lead expert in the field of edible
  fungus in China. Mr. Wang graduated with a Bachelor's degree in edible fungus
  and has served as the deputy director of several research institutes of edible
  fungus in Northeast China.
Experienced management team with a strong track record.
Our
  management team has extensive operating experience and industry knowledge.
  Lianyun Han, our founder and chief executive officer, has more than 10 years
  experience in operational management and business development. Robert Tick,
  our chief financial officer, has over 16 years experience in accounting and
  finance. We believe that our management team's experience and capabilities
  have contributed greatly to our significant growth in the past three years.
Our Growth Strategy
As a leading nutraceutical producer in China, we believe we are
well positioned to capitalize on future industry growth in China. We are
dedicated to providing healthy and high nutritional products to our consumers.
We will implement the following strategic plans to take advantage of industry
opportunities and our competitive strengths:
Focus on brand development
.
With intense price
  competition among many similar or identical products in the industry, we
  believe that building brand awareness is the primary means to generate and
  sustain profitable growth in the future. We believe that developing close
  cooperative relationships with research centers of well-known universities in
  China and globally is key to building brand equity. We also market our
  products through an integrated marketing program that includes advertising in
  relevant media outlets, attending trade shows such as Harbin International
  Fair for Trade and Economic Corporation and Beijing Agriculture Exposition and
  offering seminars and lectures to local communities regarding the products and
  their heath benefits.
Introducing new products
.
We constantly evaluate our
  products and seek to adapt to changing market conditions by updating our
  products to reflect new trends in consumer preferences. We endeavor to expand
  our market presence by introducing additional competitive nutraceutical
  products to our product offerings. Our new products under development include
  specialty beverage products.
Increase production capacity.
Our existing production lines
  of Chinese Golden Grass have been running at close to full capacity while the
  market demand for our existing products continues to increase. In order to
  meet the raw material needs of our products and to expand sales of small
  packages of our Golden Grass products, we plan to add 10 plants to our
  production line, of which three plants are expected to begin
  operating during the second half of 2010. We anticipate that the entire
  project will be completed in 2012. Annual production capacity of Golden Grass
  is expected to increase to 72 tons in 2010, up from 55 tons in
  2009. We will convert more buildings into biotechnologically controlled cultivation
  plants to grow and process Cordyceps Militaris in the future.
20
Further expand our distribution network to increase the prevalence
    of our products nationwide.
Our current sales depend heavily on the
    sales of our large-pack products to pharmaceutical companies. To support our
    rapid growth in sales, we plan to further expand our distribution network
    by selling our small-pack products through drug stores, supermarkets and franchise
    stores. We have one-year contracts with our major distributors which normally
    extend for one more year by the end of the contracts. We maintain constant
    communications with these distributors to keep us informed regarding consumer
    preferences and market trends in order to develop new products. We also organize
    monthly product promotion meetings with the distributors to increase the sales
    of small package products.
Technology innovation.
We believe that the development of
    new technology is critical to our success. We will continuously improve the
    quality of our existing and future products through new technologies. We expect
    to maintain our long-term partnership with Chinese universities and research
    institutes in order to develop new technologies.
Our Products and Production Process
Chinese Golden Grass
Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. Cordyceps Militaris is a species of parasitic fungus
that is typically found in the north-eastern mountainous regions of China. As a
precious ingredient in traditional Chinese medicine, Cordyceps Militaris is
widely believed in China to offer high medical and health benefits by nourishing
the
yin,
boosting the
yang,
and invigorating the meridians of the
lungs and kidneys. Due to the extremely sensitive growing conditions of
Cordyceps Militaris, it is very difficult to grow the plants in man-made
environments. Through several years laboratory tests, we developed the
technology to commercially grow and produce Cordyceps Militaris in 2006. Our
production process primarily includes planting, purifying and packaging.
Our present production capacity of Chinese Golden Grass is
approximately 55 tons annually. We generated 89.44% and 78.70% of our revenues
from Chinese Golden Grass for the three months ended March 31, 2010 and the
fiscal year of 2009, respectively. We believe that we own approximately 19%
worldwide market share in the entire cultivated Chinese Golden Grass industry.
We plan to continue to focus on Chinese Golden Grass, which is our fastest
growing product with the greatest market demand and a significantly high profit
margin. To achieve this end, we plan to increase our annual production capacity
of 72 tons by the end of 2010.
Organic and Specialty Food
Growth in domestic demand for organic products has been driven
by rising incomes in China. Through our indirect subsidiary, Harbin Shuaiyi, we
act as either a sales agent or a distributor to market and sell organic and
specialty food products supplied by third-party producers. These products mainly
include Northeast Peculiar Rice. Northeast Peculiar Rice is grown in accordance
with organic product standards established by the Chinese Ministry of
Agriculture. To qualify as "organic," food must be produced in an environment
which relies upon natural resources, without the use of conventional pesticides,
artificial fertilizers, in an appropriate ecological environment, and must
undergo a series of scientific and technological quality control processes. Our
Northeast Peculiar Rice is rich in protein, fiber fats, amino acids and calcium,
iron, zinc, selenium and other elements and vitamins. After years of
development, we believe we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.
New products under development
We plan to further diversify our Cordyceps Militaris based
product mix to cater to different customer tastes and preferences. Currently, we
have the following products under development. In 2010, we will be targeting
mass consumer markets by introducing  specialty beverage products with the
health benefits of enhancing immunity, reducing fatigue, enhancing circulations,
among other benefits derived from our Cordyceps Militaris.
21
Specialty Beverage Products
. This convenient and delicious Chinese
  traditional healthcare cereal beverage has various nutritional ingredients of
  Cordyceps Militaris, including Cordycepin and polysaccharides. We expect to
  begin manufacturing and selling this product by the second half of 2010.
Marketing and Sales
Currently, we have 132 experienced marketing personnel who are
responsible for market research, promotion and advertisement. We strengthen our
market presence by employing various types of marketing strategies. We
participate in trade shows such as Harbin International Fair for Trade and
Economic Cooperation and Beijing Agriculture Exposition and offer seminars and
lectures to local communities regarding the health benefits of our products.
These activities help to promote our reputation and name recognition in the
industry.
Our sales depend heavily on the sales of our large-pack
products to pharmaceutical companies. To support our rapid growth in sales, we
plan to further expand our distribution network by selling our small-pack
products through drug stores, supermarkets and franchise stores.
Raw Materials and Suppliers
While all Cordyceps Militaris used to produce our Chinese
Golden Grass products are grown by us, the raw materials of our organic and
specialty food products primarily consist of carbamide, wheat,
glucose, citric acid, bitter salt, peptone, and pupa powder. The price for such
material fluctuates depending upon market conditions. However, since we have
long-term suppliers and clients, the influence of material price fluctuation is
not currently material to the Company.
We have established long-term relationships with our key
suppliers. However, we do not have long term supply contracts and we do not
exclusively rely on our key suppliers. We have adopted a dual supplier system
for raw materials. Therefore, if our primary suppliers cannot supply us with our
raw material for any reason, we are able to acquire raw material from another
supplier. All of our suppliers must meet our quality standards and delivery
requirements consistently in order to remain on our approved supplier list. If
deliveries are delayed repeatedly, we terminate the partnership with such
supplier.
The flexible sourcing arrangements are designed to ensure the
stable supply of raw materials and promote healthy competition among our
suppliers. We believe our supplier arrangements encourage our suppliers to
provide high quality raw materials timely and efficiently.
Our Major Suppliers in 2009
The following table lists top suppliers of our raw materials in
2009:
Purchasing Value
Rank
Company Name
Unit (Kg)
in 2009 ($)
Location
Material
1
Heilongjiang
      Xianfeng Agricultural Goods
Trading Market Co., Ltd.
77,500
9,010
46,000
4,100
117,819
117,819
428,409
Harbin
Plastic film
Disinfectant
Plastic bag
Carton
Small packing
boxes
Small package
bag
2
Harbin Zhenfengyuan
      Bio-technology Co., Ltd.
32,472
191,270
369,218
Harbin
Peptone
Vitamin-C
3
Nehe Laocai Grain
      Depot
452,320
165,539
Nehe
Wheat
4
Daqing Qingzhong Seed Co., Ltd.
79,500
19,785
Daqing
Potato
5
Harbin Jiancheng
      Fine Chemical Plant
14,900
1,420
2,150
13,670
Harbin
Glucose
Citric Acid
Bitter Salt
22
Our Major Customers
The following table provides information on our major clients
in fiscal year 2009.
Sales
(in Thousands
Percentage
of
of
Rank
Name
Description of Client
US Dollars)
Total Sales
1
Lai En Century Co. Ltd.
Trading company in China
2,249
14.7%
2
Zhejiang Wanfeng Group Pharmaceutical Co., Ltd.
Pharmaceutical Products Producer in China
1,430
9.3%
3
Disha Pharmaceutical Co., Ltd.
Pharmaceutical Products
      Producer in China
1,347
8.8%
4
Zhejiang Yinlong Trading Company
Trading company in China
1,192
7.8%
5
Hangzhou KangYuanTang Ganoderma
      Lucidum Co., Ltd.
Health Products Producer in
      China
1,190
7.8%
6
Si Chuan Ai Da Biotech Co. Ltd.
Health Products Producer in China
1,153
7.5%
7
Xi'an Yizhiliu Pharmaceutical
      Co., Ltd
Pharmaceutical Products
      Producer in China
1,146
7.5%
8
Beijing Ruichenboji Technology Development Co.,
      Ltd.
Trading company in China
794
5.2%
9
Shenzhan Beilixin Biotech Co.,
      Ltd
Health Products Producer in
      China
240
1.6%
10
General Hospital of Shandong CAPF
Pharmaceutical Products Producer in China
96
0.6%
Our Competition
Most of our competitors for sales of Chinese Golden Grass
products are small-sized local producers and generally have a much lower
production capacity. Compared to these competitors, we believe we have a much
higher production capacity and more advanced growing and production technology.
Our major competitors in China include Heilongjiang Xinyisheng Pharmaceutical
Co., Ltd., Liangshan County Ganoderma and Cordyceps Sci-Tech Development Co.,
Ltd., Jiangsu Xuzhou Kangyuan Cordyceps Biology Co., Ltd., Xuzhou Baofu
Cordyceps Co., Ltd. and Jinzhou Cordyceps Militaris Co., Ltd.
Research and Development
Our research and development activities focus on developing new
products and new technologies. We currently have 21 employees dedicated to
research and development. Since 2003, we have also maintained a close
cooperation relationship with China Institute of Science, one of the most
prestigious academic institutions of scientific and technological research in
China, to improve commercially growing Cordyceps Militaris.
As described below, on April 10, 2006, we spent RMB 30 million
(approximately $4.4 million) in acquiring the technologies of Cordyceps
Militaris cultivation from Mr. Runjiao Wang. In 2009 and 2008, our research and
development expenses were insignificant.
Intellectual Property
We currently have the following patents pending approval:
23
Patent No. /
Expiration
Patent Name
Patent type
Application No.
Date
Status
Technology of Using Plastic Ware to
      Cultivate Cordyceps Militaris
Invention
200810064305.3
N/A
Pending
Planting Cordyceps militaris by the method of making liquid
      spawn.
Invention
200810064705.4
N/A
Pending
Formulation of Cordyceps Militaris and
      Green Bean Paste Beverage
Invention
200810064387.1
N/A
Pending
Formulation of Cordyceps Militaris and Corn Beverage
Invention
200810064389.0
N/A
Pending
Formulation of Cordyceps Militaris and
      Millet Beverage
Invention
200810064390.3
N/A
Pending
Formulation of Cordyceps Militaris and Red Bean Paste
      Beverage
Invention
200810064388.6
N/A
Pending
On April 10, 2006, Daqing Shuaiyi entered into an exclusive
licensing agreement with Mr. Runjiao Wang, pursuant to which Mr. Wang agreed to
grant Daqing Shuaiyi an exclusive right to use the cultivation technology of
Cordyceps Militaries that Mr. Wang developed. According to this licensing
agreement, Daqing Shuaiyi is allowed to use this technology exclusively in China
for ten years beginning on April 10, 2006. In consideration of the rights
granted to Daqing Shuaiyi under this licensing agreement, Daqing Shuaiyi agreed
to pay Mr. Wang a licensing fee in an amount of RMB 30 million (approximately
$4.4 million). In addition, Daqing Shuaiyi has the right of first refusal with
respect to the cultivation technology when the licensing agreement expires.
We have applied for the trademark of "
帅亿东方神
" with the Trademark
Office of the State Administration for Industry and Commerce of China. Under
Chinese laws, we are allowed to use "
帅亿东方神
" for the sales and marketing of our
products even if our trademark application is still pending. Once our
application is approved, the trademark will have a term of ten years and may be
continually renewed thereafter.
We rely on trade secret protection and confidentiality
agreements to protect our proprietary information and knowhow. Our management
and each of our research and development personnel have entered into a standard
confidentiality agreement, which includes a clause acknowledging that all
inventions, designs, trade secrets, works of authorship, developments and other
processes generated by them on our behalf are our property, and assigning to us
any ownership rights that they may claim in those works. Despite our
precautions, it may be possible for third parties to obtain and use, without our
consent, intellectual property that we own or are licensed to use. Unauthorized
use of our intellectual property by third parties, and the expenses incurred in
protecting our intellectual property rights, may adversely affect our business.
See Item 1A, "Risk factors—Risks Related to Our Business—Failure to adequately
protect our intellectual property rights may undermine our competitive position,
and litigation to protect our intellectual property rights may be costly."
Regulation
Because our operating subsidiaries are located in the PRC, we
are regulated by the national and local laws of the PRC. Currently only the
general rules of commerce in China are applicable to us.
We are also subject to the PRC's foreign currency regulations.
The PRC government has controlled Renminbi reserves primarily through direct
regulation of the conversion of Renminbi into other foreign currencies. Although
foreign currencies, which are required for "current account" transactions, can
be bought freely at authorized PRC banks, the proper procedural requirements
prescribed by PRC law must be met. At the same time, PRC companies are also
required to sell their foreign exchange earnings to authorized PRC banks and the
purchase of foreign currencies for capital account transactions still requires
prior approval of the PRC government.
Our Employees
As of December 31, 2009, we employed a total of 302 full-time
employees. The following table sets forth the number of our employees by
function as of December 31, 2009.
24
FUNCTION
NUMBER OF EMPLOYEES
Capital Department
5
Sales Department
132
Production Department
121
R&D Department
21
Financial Department
13
Administrative Office
10
TOTAL
302
Our employees are not represented by a labor organization or
covered by a collective bargaining agreement. We have not experienced any work
stoppages.
We are required under PRC law to make contributions to the
employee benefit plans at specified percentages of the after-tax profit. In
addition, we are required by the PRC law to cover employees in China with
various types of social insurance. We believe that we are in material compliance
with the relevant PRC laws.
Seasonality
The production and sale of our primary product, Chinese Golden
Grass, historically have not been subject to seasonal variations.
Insurance
We do not have any business liability, interruption or
litigation insurance coverage for our operations in China. Insurance companies
in China offer limited business insurance products. While business interruption
insurance is available to a limited extent in China, we have determined that the
risks of interruption, cost of such insurance and the difficulties associated
with acquiring such insurance on commercially reasonable terms make it
impractical for us to have such insurance. Therefore, we are subject to business
and product liability exposure. See "Risk Factors – We do not carry any business
interruption insurance, third-party liability insurance for our production
facilities or insurance that covers the risk of loss of our products in
shipment."
Litigation
From time to time, we may become involved in various lawsuits
and legal proceedings, which arise, in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will
have a material adverse affect on our business, financial condition or operating
results.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
We are a holding company that operates through our indirectly
owned subsidiary Heilongjiang Shuaiyi, a leading Chinese Golden Grass grower and
producer in China. We specialize in developing, processing, marketing and
distributing a variety of agricultural and nutraceutical products consisting of
Chinese Golden Grass, organic and specialty food products. In addition, we plan
to produce and market other products developed from Cordyceps Militaris within
the coming months and years, including specialty beverage products.
25
Our primary product is Chinese Golden Grass, which is developed
from Cordyceps Militaris. We sell our products through an extensive nationwide
sales and distribution network covering four provinces and eight cities in
China. Our Chinese Golden Grass products are grown and processed by our
indirect, wholly-owned subsidiary, Daqing Shuaiyi, and are mainly sold to
pharmaceutical companies for further processing into drugs and nutraceutical
products. We generated approximately 89.44% of our revenues from sales of
Chinese Golden Grass during the first quarter of 2010. We believe that we own
approximately 19% worldwide market share in the entire cultivated Chinese Golden
Grass industry.
We also sell organic and specialty food products through our
subsidiary, Harbin Shuaiyi, which was formed in 2001. After years of
development, we believe that we have become the largest wholesale distributor of
organic and specialty food in Heilongjiang Province, China.
Our sales revenue grew by 18.0% in the fiscal year ended
December 31, 2009 to approximately $15.3 million, from approximately $13.0
million for 2008. Our gross margin for 2009 was 70.2% .
Industry Wide Factors that are Relevant to Our
Business
We expect several key demographic, healthcare, and lifestyle
trends to drive the growth of our business in the coming future:
Increased Focus on Healthy Living
:
Our management
  believes that as China becomes more affluent, its citizens are becoming more
  health conscious. They are leading more active lifestyles and becoming
  increasingly focused on healthy living, nutrition, and supplementation.
  According to
the Nutrition Business
Journal
, a higher percentage
  of today's global population is involved to some degree in health and wellness
  than a few years ago. We believe that growth in the health supplements
  industry will continue to be driven by consumers who increasingly embrace
  health and wellness as a critical part of their lifestyles.
Aging Population
:
The average age of the Chinese
  population is increasing. According to
World Population
Prospects:
  The 2004 Revision
(2005), the percentage of elderly persons in China is
  projected to triple between 2006 and 2050, from 8 percent to 24 percent, a
  total of 322 million people. We believe that these consumers are significantly
  more likely to use health supplements than younger persons and have higher
  levels of disposable income to pursue healthy lifestyles.
Rising Healthcare Costs and Use of Preventive Measures
:
Healthcare related costs have increased substantially in China. A research
  released by Chinese Academy of Social Sciences in 2007 indicated that the
  out-of-pocket health expenditures in China increased by 1,900% from 1990 to
  2004. To reduce medical costs and avoid the complexities of dealing with the
  healthcare system, and given increasing incidence of medical problems and
  concern over the use and effects of prescription drugs, many consumers take
  preventive measures, including alternative medicines and nutritional
  supplements.
Taxation
United States
Nutrastar International Inc. is subject to United States tax at
a tax rate of 34%. No provision for income taxes in the United States has been
made as Nutrastar International Inc. had no income taxable in the United
States.
British Virgin Islands
New Resources was incorporated in the BVI. Under the current
law of the BVI, New Resources is not subject to income or capital gains tax. In
addition, dividend payments are not subject to withholding tax in the BVI.
PRC
In 2007, the PRC government promulgated the New EIT Law, and
the relevant implementation rules, which became effective on January 1, 2008.
Under the New EIT Law and its implementation rules, all domestic and foreign
investment companies will be subject to a uniform enterprise income tax at the
rate of 25%. As a result, our PRC subsidiaries were subject to enterprise income
tax at the rates of 25% in both 2008 and 2009.
26
Under the New EIT Law, dividends from PRC subsidiaries to their
non-PRC shareholders will be subject to a withholding tax at a rate of 20%,
which is further reduced to 10% by the implementation rules, if the non-PRC
shareholder is considered to be a non-PRC tax resident enterprise without any
establishment or place within China or if the dividends payable has no
connection with the non-PRC shareholder's establishment or place within China,
unless any such non-PRC shareholder's jurisdiction of incorporation has a tax
treaty with China that provides for a different withholding arrangement.
In addition, pursuant to the New EIT Law, enterprises
established under the laws of non-PRC jurisdictions, but whose "de facto
management body" is located in the PRC, should be treated as resident
enterprises for PRC tax purposes. However, it is currently uncertain whether we
may be deemed a resident enterprise, or how to interpret whether any income or
gain is derived from sources within China. See Item 1A, "Risk Factors - Under
the New EIT Law, we may be classified as a 'resident enterprise' of China. Such
classification will likely result in unfavorable tax consequences to us and our
non-PRC stockholders." If we, as a Nevada company with substantially all of our
management located in China, were treated as a resident enterprise for PRC tax
purposes, we will be subject to PRC tax on our worldwide income at the 25%
uniform tax rate, which would have an impact on our effective tax rate.
Business Segment Information
Our business operations can be categorized into two segments
based on the type of products we manufacture and sell, specifically (i) Chinese
Golden Grass, and (ii) other agricultural products.
For the three months ended March 31, 2010, our sales revenue
from our Chinese Golden Grass was approximately $4.27 million, and our sales
revenue from our other agricultural products was approximately $0.5 million. In
2009, our sales revenue from our Chinese Golden Grass was approximately $12.07
million, and our sales revenue from our other agricultural products was
approximately $ 3.26 million.
We grow and sell our Chinese Golden Grass through our
subsidiary, Daqing Shuaiyi. Our subsidiary, Harbin Shuaiyi is mainly engaged in
the business of selling our other agricultural products.
Additional information regarding our products can be found in
the notes of our consolidated financial statements contained elsewhere in this
prospectus.
Results of Operations
Three Months Ended March 31, 2010 Compared to Three Months
Ended March 31, 2009
The following table sets forth key components of our results of
operations for the periods indicated, both in dollars and as a percentage of our
revenue.
Three Months Ended
Three Months Ended
March
      31, 2010
March
      31, 2009
As a
As a
percentage of
percentage of
In Thousands
revenues
In Thousands
revenues
Revenues
4,768
100%
4,643
100%
Cost of goods sold
(1,056
)
22.1%
(1,756
)
37.8%
Gross Profit
3,712
77.9%
2,887
62.2%
Selling expenses
(172
)
3.6%
(112
)
2.4%
General and administrative expenses
(430
)
9%
(303
)
6.5%
Income from operations
3,110
65.2%
2,472
53.2%
Other income and (expenses)
Interest income
33
0.69%
12
0.3%
Other income
0.15
0.003%
Exchange gain
0.43
0.01%
1
0.02%
Income before income tax
3,144
65.9%
2,486
53.5%
Provision for income tax
(423
)
8.9%
(316
)
6.8%
Net income
2,721
57.1%
2,170
46.7%
27
Revenues
. Revenues increased approximately $0.13
million, or 2.7%, to approximately $4.77 million for the three months ended
March 31, 2010, from approximately $4.64 million for the same period in 2009.
This increase was mainly attributable to the increase of our sales of our core
product, Chinese Golden Grass, driven by the continued increase in market demand
for our products as well as the sales of our small package Chinese Golden Grass
products. In addition, we increased our selling prices for our packaged Chinese
Golden Grass products.
Our business operations can be categorized into two segments
based on the type of products we manufacture and sell, specifically (i) Chinese
Golden Grass, and (ii) other agricultural products. The following table shows
the different segments comprising our total sales revenue:
Sales Revenue by Product Segments
(all amounts, other
than percentages, in thousands of U.S. dollars)
Three
      Months Ended March 31,
Percent
2010
2009
Change
Components of Sales Revenue
Chinese Golden Grass
$
4,265
$
2,901
47.02%
Other agricultural products
503
1,742
(71.13%
)
Total revenues
$
4,768
$
4,643
2.69%
Cost of Goods Sold.
Our cost of goods sold decreased by
$699,189, or 39.8%, to approximately $1.06 million for the three months ended
March 31, 2010 from approximately $1.76 million during the same period in 2009.
This decrease was mainly due to improved production process and economy of
scale. As a percentage of revenues, the cost of goods sold decreased to 22.1%
for the three months ended March 31, 2010 from 37.8% in 2009. Such decrease of
cost of goods sold as a percentage of sales was mainly attributable to the fact
that the increase of sales volume of small package products with higher unit
selling price. Because the gross margin of small package products is higher than
big package products, the percentage of cost of sales to total sales revenue
decreased in the first quarter of 2010.
Gross Profit.
Our gross profit increased by
approximately $0.82 million, or 28.4%, to approximately $3.71 million for the
three months ended March 31, 2010 from approximately $2.89 million during the
same period in 2009. Gross profit as a percentage of revenues, or gross margin,
was 77.9% for the three months ended March 31, 2010, an increase of 15.6% from
62.2% during the same period in 2009. Such percentage increase was mainly due to
continued product mix shift towards Chinese Golden Grass and the increased sales
of our higher margin small package Chinese Golden Grass products.
Selling Expenses
. Our selling expenses include sales
commissions, the cost of advertising and promotional materials, salaries and
fringe benefits of sales personnel, and other sales related costs. Selling
expenses increased approximately $0.06 million, or 54.5%, to approximately $0.17
million for the three months ended March 31, 2010 from approximately $0.11
million during the same period in 2009. As a percentage of revenues, selling
expenses increased to 3.6% for the three months ended March 31, 2010 from 2.4%
for the same period in 2009. The increase in the amount and percentage of
selling expenses was mainly attributable to the increase of salaries and
travelling expenses of our sales representatives and more marketing activities
to promote our products.
General and Administrative Expenses
. General and
administrative expenses increased approximately $0.13 million, or 42.9%, to
approximately $0.43 million for the three months ended March 31, 2010 from
approximately $0.30 million for the same period in 2009. As a percentage of
revenues, general and administrative expenses increased to 9% for the three
months ended March 31, 2010 from 6.5% for the same period in 2009. The increase
in the amount and percentage of general and administrative expenses was mainly
attributable to the increase of services expenses associated with legal and
audit fees.
Income Before Income Tax
. Income before income tax
increased approximately $0.65 million, or 26.1%, to approximately $3.14 million
during the three months ended March 31, 2010 from approximately $2.49 million
during the same period in 2009. As a percentage of revenues, income before
income tax increased to 65.9% during the three months ended March 31, 2010 from
53.5% during the same period in 2009. The increase of income before income tax
is mainly attributable to the increase in our gross profit as a result of the
increase in our sales..
Income Taxes
. Nutrastar International Inc. is subject to
United States tax at a rate of 34%. No provision for income taxes in the United
States has been made as Nutrastar International Inc. had no income taxable in
the United States. New Resources was incorporated in the BVI and under the
current laws of the BVI, is not subject to income taxes. Our PRC subsidiaries
are subject to national and local income taxes within China at the applicable
tax rate on the taxable income as reported in their PRC statutory financial
statements in accordance with relevant income tax laws. China passed a new
Enterprise Income Tax Law, or the new EIT Law, and its implementing rules, both
of which became effective on January 1, 2008. Under the New EIT Law, newly established
high-technology enterprises, such as our subsidiary Daqing Shuaiyi, are entitled
to a three-year 50% tax reduction. Daqing Shuaiyi has been subject to a 12.5%
income tax rate since 2008 and Harbin Shuaiyi was subject to a tax
rate of 25% in 2009 and is subject to a tax rate of 25% in 2010.
28
Income tax increased approximately $0.1 million to
approximately $0.42 million for the three months ended March 31, 2010 from
approximately $0.32 million for the same period in 2009. We paid more tax in
2010 because of the increase in sales and taxable income.
Net Income
. Net income increased by approximately $0.55
million, or 25.3% to approximately $2.72 million for the three months ended
March 31, 2010 from approximately $2.17 million for the same period of 2009, as
a result of the factors described above.
Year Ended December 31, 2009 Compared to Year Ended December
31, 2008
The following table sets forth key components of our results of
operations for the periods indicated, in dollars and as a percentage of
revenue.
(All amounts, other than percentage, in thousands of US
dollars)
Year
      Ended December 31, 2009
Year
      Ended December 31, 2008
As a
As a
In
Percentage
In
Percentage
Thousands
of Revenue
Thousands
of Revenue
Sales Revenue
$
15,332
$
100%
$
12,990
$
100%
Cost of goods sold
(4,564
)
29.77%
(4,605
)
35.5%
Gross Profit
10,768
70.23%
8,385
64.5%
Selling expenses
(508
)
3.31%
(196
)
1.5%
General and administrative expenses
(1,356
)
8.84%
(1,416
)
10.9%
Loss on disposal of fixed assets
(31
)
0.24%
Income from operations
8,904
58.07%
6,741
51.9%
Other income and (expenses)
Interest
      income
82
0.53%
30
0.23%
Other income
6
0.04%
12
0.08%
Interest
      expenses
Exchange loss
(15
)
0.10%
(20
)
0.15%
Merger
      costs
(2,068
)
15.9%
Income before income tax
8,977
58.55%
4,694
36.1%
Provision for income tax
(1,235
)
8.06%
(975
)
7.5%
Net income
$
7,742
$
50.50%
$
3,719
$
28.6%
Sales Revenue
. Revenues increased approximately $2.3 million,
  or 18.0%, to approximately $15.3 million in fiscal year 2009 from approximately
  $13.0 million for 2008. This increase was mainly attributable to the increase
  of our sales of our core product, Chinese Golden Grass, driven by the continued
  increase in market demand for our products as well as the sales of our small
  package Chinese Golden Grass products, which consisted a larger portion of our
  total revenues in 2009 as compared to last year.
The following table shows the different segments comprising our
total sales revenue:
Sales Revenue by Product Segments
(all amounts, other
than percentages, in thousands of U.S. dollars)
Year
      Ended December 31,
Percent
2009
2008
Change
Components of Sales Revenue
Chinese Golden Grass
$
12,074
$
8,893
35.77%
Other agricultural
      products
3,258
4,097
(20.46%
)
Total revenues
$
15,332
$
12,990
18.04%
Cost of Goods Sold
. Our cost of goods sold decreased by
$40,983, or 0.9%, to approximately $4.56 million in 2009 from approximately
$4.60 million in 2008. This decrease was mainly due to improved production
process and economy of scale. As a percentage of revenues, the cost of goods
sold decreased to 29.8% in 2009 from 35.5% in 2008. Such increase of gross margin was mainly attributable to the
fact that a larger portion of our total revenues was generated from our small
package Chinese Golden Grass products with higher unit selling price as compared
to 2008. Because the gross margin of small package products is higher than that
of larger package products, the percentage of cost of sales to total sales
revenue decreased during 2009.
29
Gross Profit
. Our gross profit increased approximately
$2.4 million, or 28%, to approximately $10.8 million in 2009 from approximately
$8.4 million in 2008. Gross profit as a percentage of revenues was 70.2% in
2009, an increase of 570 basis points from 64.5% in 2008. Such percentage
increase was mainly due to continued product mix shift towards Chinese Golden
Grass and the increased sales of our higher margin small package Chinese Golden
Grass products.
Selling Expenses
.
S
elling expenses increased
approximately $0.31 million, or 159%, to $0.51 million in 2009 from $0.20
million in 2008. As a percentage of revenues, selling expenses increased to 3.3%
in 2009 from 1.5% in 2008. The increase in the amount and percentage of selling
expenses was mainly attributable to the increase of salaries and travelling
expenses of our sales representatives and more marketing activities to promote
our products.
General and Administrative Expenses
. General and
administrative expenses decreased by $60,000, or 4%, to approximately $1.36
million in 2009 from approximately $1.42 million in 2008. As a percentage of
revenues, general and administrative expenses decreased to 8.8% in 2009 from
10.9% in 2008. The decrease in the amount of general and administrative expenses
was mainly attributable to tight cost control during 2009.
Merger Cost.
We incurred expenses related to our merger
during 2008 of approximately $2.07 million. In accordance with the requirements
of and guidance in Staff Accounting Bulletin No. 107 and SFAS 123(R), we charged
$1,693,326 to merger costs based on the grant-date fair value of the 91,088
shares of Series A Preferred Stock transferred by our majority shareholder to
our consultants in the merger. On December 23, 2008, the Company also entered
into a subscription agreement with Tan Zhen Investment Limited, pursuant to
which the Company issued and sold to such investor 20,168 shares of our Series A
Preferred Stock for $375,000, or $18.59 per share, which was expended on payment
of merger costs.
Income Before Income Tax
. Income before income tax
increased approximately $4.3 million, or 91%, to approximately $9.0 million in
2009 from approximately $4.7 million in 2008. As a percentage of revenues,
income before income tax increased to 58.6% in 2009 from 36.1% in 2008. The
increase in income before income tax is mainly attributable to the increase in
our gross profit as a result of the increase in our sales.
Income Tax
. Income tax increased approximately $0.3
million to approximately $1.2 million in 2009 from approximately $1.0 million in
2008. We paid more tax in 2009 because of the increase in sales and taxable
income.
Net Income
. Net income increased approximately $4.0
million, or 108%, to $7.7 million in 2009 from approximately $3.7 million in
2008, as a result of the factors described above.
Liquidity and Capital Resources
As of March 31, 2010, we had cash and cash equivalents
(excluding restricted cash) of approximately $23.29 million. The following table
provides detailed information about our net cash flow for all financial
statement periods presented in this prospectus.
Cash Flow
(All amounts in thousands of U.S. dollars)
Three
      Months Ended March 31,
Year
      Ended December 31,
2010
2009
2009
2008
Net cash provided by operating activities
$
3,173
$
2,774
$
9,324
$
6,467
Net cash provided by (used in) investing activities
(5
)
-
(49
)
744
Net cash provided by (used in) financing activities
(0.4
)
11
1,621
(438
)
Net cash flow
3,174
2,782
10,917
7,050
30
Operating Activities
Net cash provided by operating activities was approximately
$3.17 million for the three-month period ended March 31, 2010, which is an
increase of approximately $0.39 million from approximately $2.78 million net
cash provided by operating activities for the same period of 2009. The increase
of the cash provided by operating activities was mainly attributable to
increased sales.
Net cash provided by operating activities was approximately
$9.3 million in fiscal year ended December 31, 2009, an increase of
approximately $2.9 million from approximately $6.5 million net cash provided by
operating activities in fiscal year ended December 31, 2008. The increase of the
cash provided by operating activities was mainly attributable to increased
sales.
Investing Activities
Our primary uses of cash for investing activities are payments
for the acquisition of property, plant and equipment.
Net cash used in investing activities for the three-month
period ended March 31, 2010 was approximately $0.005 million, while we did not
have net cash used in investing activities for the same period in 2009. The
increase of the cash used in investing activities was mainly due to increase the
investment in payments for the acquisition of property, plant and equipment.
Net cash used by investing activities was approximately $0.05
million in fiscal year 2009, a decrease of approximately $0.8 million from
approximately $0.74 million provided by investing activities in fiscal year
2008. The decrease in net cash provided by investing activities was mainly
attributable to the increase in our purchase of property, plan and equipment, or
PPE, in 2009 while at the same time there was no sale of PPE by us.
Financing Activities
Net cash used in financing activities for the three-month
period ended March 31, 2010 was approximately $0.0004 million, which is a
decrease of approximately $0.0114 million from approximately $0.011 million net
cash provided by financing activities for the same period of 2009.
Net cash used in financing activities for the fiscal year ended
December 31, 2008 was approximately $0.44 million as Net cash provided by
financing activities for the fiscal year ended December 31, 2009 was
approximately $1.6 million as compared to approximately $0.44 million used in
financing activities in fiscal year 2008. The increase of the net cash provided
by financing activities was mainly attributable to the $2.5 million capital
raising in December 2009.
On June 7, 2010 and June 28, 2010, we consummated the first and
the second closing of the private placement transaction contemplated by the 2010
Securities Purchase Agreement, respectively, in which we issued in aggregate
approximately 197,700 Units to certain investors at a purchase price of $28.56
per Unit for gross proceeds of approximately $5.65 million.
We believe that our cash on hand, cash flow from operations as
well as the proceeds we received from the recent private placement transaction
will meet our expected capital expenditure and working capital for the next 12
months. However, we may in the future require additional cash resources due to
changed business conditions, implementation of our strategy to expand our
production capacity or other investments or acquisitions we may decide to
pursue. If our own financial resources are insufficient to satisfy our capital
requirements, we may seek to sell additional equity or debt securities or obtain
additional credit facilities. The sale of additional equity securities could
result in dilution to our stockholders. The incurrence of indebtedness would
result in increased debt service obligations and could require us to agree to
operating and financial covenants that would restrict our operations. Financing
may not be available in amounts or on terms acceptable to us, if at all. Any
failure by us to raise additional funds on terms favorable to us, or at all,
could limit our ability to expand our business operations and could harm our
overall business prospects.
Effects of Inflation
Inflation and changing prices have not had a material effect on
our business and we do not expect that inflation or changing prices will
materially affect our business in the foreseeable future. However, our
management will closely monitor the price change and continually maintain
effective cost control in operations.
31
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity or capital expenditures or capital resources that is
material to an investor in our securities.
Critical Accounting Policies
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America, or
U.S. GAAP, requires our management to make assumptions, estimates and judgments
that affect the amounts reported in the financial statements, including the
notes thereto, and related disclosures of commitments and contingencies, if any.
We consider our critical accounting policies to be those that require the most
significant judgments and estimates in the preparation of financial statements,
including the following:
Accounts Receivable
. The Company maintains allowances for
  doubtful accounts for estimated losses resulting from the failure of customers
  to make required payments. The Company reviews the accounts receivable on a
  periodic basis and makes allowances where there is doubt as to the
  collectability of individual balances. In evaluating the collectability of
  individual receivable balances, the Company considers many factors, including
  the age of the balance, the customer's payment history, its current
  credit-worthiness and current economic trends.
Inventories
. Inventories are stated at the lower of cost,
  determined on a weighted average basis, or market. Costs of inventories
  include purchase and related costs incurred in bringing the products to their
  present location and condition. Market value is determined by reference to
  selling prices after the balance sheet date or to management's estimates based
  on prevailing market conditions. The management will write down the
  inventories to market value if it is below cost. The management also regularly
  evaluates the composition of its inventories to identify slow-moving and
  obsolete inventories to determine if valuation allowance is required.
Impairment
. The Company reviews and evaluates its long-lived
  assets for impairment when events or changes in circumstances indicate that
  the related carrying amounts may not be recoverable. An impairment is
  considered to exist if the total estimated future cash flows on an
  undiscounted basis are less than the carrying amount of the assets, including
  goodwill, if any. An impairment loss is measured and recorded based on
  discounted estimated future cash flows. In estimating future cash flows,
  assets are grouped at the lowest level for which there is identifiable cash
  flows that are largely independent of future cash flows from other asset
  groups.
Property, plant and equipment.
The carrying value of
  property, plant and equipment is assessed annually and when factors indicating
  impairment is present, the carrying value of the property, plant and equipment
  is reduced by the amount of the impairment. The Company determines the
  existence of such impairment by measuring the expected future cash flows
  (undiscounted and without interest charges) and comparing such amount to the
  net asset carrying value. An impairment loss, if exists, is measured as the
  amount by which the carrying amount of the asset exceeds the fair value of the
  asset.
Intangible assets.
The Company's intangible assets include a
  ten-year exclusive right to use a secret process and computer software. The
  Company accounts for its intangible assets pursuant to FASB ASC Subtopic
  350-30, "General Intangibles Other Than Goodwill". Under ASC 350-30-35,
  intangibles with definite lives continue to be amortized on a straight-line
  basis over the lesser of their estimated useful lives or contractual terms.
  Intangibles with indefinite lives are evaluated at least annually for
  impairment by comparing the asset's estimated fair value with its carrying
  value, based on cash flow methodology.
Revenue Recognition
. Revenue is recognized when the following
  four revenue criteria are met: persuasive evidence of an arrangement exists,
  delivery has occurred, the selling price is fixed or determinable, and
  collectability is reasonably assured. Sales revenue is recognized net of value
  added and sales related taxes, sales discounts and returns at the time when
  the merchandise is delivered to the customer. Based on historical experience,
  management estimates that sales returns are immaterial and has not made
  allowance for estimated sales returns.
32
Foreign currency translation
. The Company uses the United
  States dollars ("US Dollar" or "US$" or "$") for financial reporting purposes.
  The PRC subsidiaries within the Company maintains the books and records in
  their functional currency, Chinese Renminbi ("RMB"), being the lawful currency
  in the PRC. Assets and liabilities of the PRC subsidiaries are translated from
  RMB into US Dollars using the applicable exchange rates prevailing at the
  balance sheet date. Items on the statement of operations are translated at
  average exchange rates during the reporting period. Equity accounts are
  translated at historical rates. Adjustments resulting from the translation of
  the Company's financial statements are recorded as accumulated other
  comprehensive income. The exchange rates used to translate amounts in RMB into
  U.S. Dollars for the purposes of preparing the consolidated financial
  statements are based on the rates as published on the website of People's Bank
  of China. The value of RMB against U.S. dollars and other currencies may
  fluctuate and is affected by, among other things, changes in China's political
  and economic conditions. Any significant revaluation of RMB may materially
  affect the Company's results and financial position in terms of U.S. dollar
  reporting.
Stock-based Compensation.
The Company accounts for
  share-based compensation awards to employees in accordance with FASB ASC Topic
  718, "Compensation – Stock Compensation", which requires that share-based
  payment transactions with employees be measured based on the grant-date fair
  value of the equity instrument issued and recognized as compensation expense
  over the requisite service period. The Company accounts for share-based
  compensation awards to non-employees in accordance with FASB ASC Topic 718 and
  FASB ASC Subtopic 505-50, "Equity-Based Payments to Non-employees". Under FASB
  ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to
  non-employees has been determined as the fair value of the consideration
  received or the fair value of equity instrument issued, whichever is more
  reliably measured and is recognized as expenses as the goods or services are
  received.
New Accounting Pronouncements
Effective January 1, 2010, the Company adopted the provisions
in ASU 2009-17, "Consolidation (ASC Topic 810): Improvements to Financial
Reporting by Enterprises Involved with Variable Interest Entities", which
changes how a company determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. The adoption of the provisions in ASU 2009-17 did not have an
impact on the Company's consolidated financial statements.
Effective January 1, 2010, the Company adopted ASU 2010-01,
"Equity (ASC Topic 505): Accounting for Distributions to Shareholders with
Components of Stock and Cash", which clarifies that the stock portion of a
distribution to shareholders that allow them to elect to receive cash or stock
with a potential limitation on the total amount of cash that all shareholders
can elect to receive in the aggregate is considered a share issuance that is
reflected prospectively in earnings per share and is not considered a stock
dividend for purposes of ASC Topic 505 and ASC Topic 260. The adoption of the
provisions in ASU 2010-01 did not have an impact on the Company's consolidated
financial statements.
Effective January 1, 2010, the Company adopted the provisions
in ASU 2010-06, "Fair Value Measurements and Disclosures (ASC Topic 820):
Improving Disclosures about Fair Value Measurements, which requires new
disclosures related to transfers in and out of levels 1 and 2 and activity in
level 3 fair value measurements, as well as amends existing disclosure
requirements on level of disaggregation and inputs and valuation techniques. The
adoption of the provisions in ASU 2010-06 did not have an impact on the
Company's consolidated financial statements.
Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company's
Consolidated Financial Statements upon adoption.
HISTORY AND CORPORATE STRUCTURE
General
We were originally incorporated in the State of Nevada on
December 22, 2002. On October 15, 2003, we acquired all the outstanding common
stock of YzApp Solutions Inc., a company under common control. We sold our
ownership in YzApp Solutions Inc. on December 3, 2008. Following incorporation,
we engaged in the business of developing software which allowed us to act as an
application service provider acting as a conduit between retailers and
financial institutions. Because this business was not successful, we were
focused on the identification of suitable businesses with which to enter into a
business opportunity or business combination until December 23, 2008, when we
completed our reverse acquisition of New Resources. As a result of our reverse
acquisition of New Resources, we are no longer a shell company and active
business operations were revived.
33
On May 19, 2009, we filed amended and restated articles of
incorporation with the Nevada Secretary of State to amend our articles of
incorporation to, among other things, (1) change our name from "YzApp
International Inc." to "Shuaiyi International New Resources Development Inc.,"
(2) increase the total number of shares of common stock that we have the
authority to issue from 50,000,000 to 190,000,000 shares and (3) effect a
1-for-114.59 reverse split of our outstanding common stock.
On January 11, 2010, we changed our name to Nutrastar
International Inc. to more accurately reflect our marketing and branding
strategy and products. Our common stock is currently quoted on the OTCQB under
the symbol NUIN.
Background and History of New Resources and Heilongjiang
Shuaiyi
New Resources is a holding company, which was incorporated in
the BVI under the BVI Business Company Act on March 13, 2008. New Resources was
wholly-owned by New Zealand WAYNE's Investment Holdings Co., Ltd., or the
Shareholder, a BVI company, before we acquired New Resources on December 23,
2008.
Heilongjiang Shuaiyi was established on July 11, 2006 under the
laws of the PRC. Heilongjiang Shuaiyi has two wholly-owned subsidiaries, Daqing
Shuaiyi and Harbin Shuaiyi. On July 28, 2008, pursuant to a restructuring plan
intended to ensure compliance with regulatory requirements of the PRC, the nine
original shareholders of Heilongjiang Shuaiyi, or the Founders, including our
chairperson and chief executive officer, Lianyun Han, entered into an equity
transfer agreement, or the Equity Transfer Agreement with New Resources,
pursuant to which the Founders transferred all of their equity interests in
Heilongjiang Shuaiyi to New Resources for a purchase price of RMB 60 million
(approximately $8.8 million). As a result, New Resources became the 100% owner
of Heilongjiang Shuaiyi and, indirectly, Daqing Shuaiyi and Harbin Shuaiyi. On
November 24, 2008, Heilongjiang Shuaiyi obtained the Certificate of Approval for
Establishment of Enterprises of Foreign Investment issued by Heilongjiang
Provincial Government and a new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008.
On September 12, 2008, the Shareholder entered into separate
Earn-In Agreements with the Founders of Heilongjiang Shuaiyi, which entitle the
Founders to acquire a majority interest in the Shareholder upon the satisfaction
of the conditions set forth in the Earn-In Agreements. Pursuant to the Earn-In
Agreements, each Founder has an option to purchase shares of the Shareholder's
ordinary shares at a purchase price of $0.01 per share (the par value of the
Shareholder's ordinary shares),
provided
that the aggregate price with
respect to the shares eligible to be purchased relating to the satisfaction of
condition (4) below is the sum of $0.01 per share, multiplied the number of such
shares, plus $1,000, upon the satisfaction of each of the following conditions:
(1) six months have expired since the date of the Share Exchange Agreement,
provided
that on or before that date, the Founder and Heilongjiang
Shuaiyi have entered into a binding employment agreement and the Founder is
employed by Heilongjiang Shuaiyi pursuant to that agreement on such date; (2)
the SEC has declared a registration statement filed by the Company under the
Securities Act effective, or investors who purchased common stock from the
Company pursuant to a securities purchase agreement being able to sell their
common stock under Rule 144; (3) Heilongjiang Shuaiyi and its subsidiaries have
achieved not less than $1,560,000 in after-tax net income, as determined under
United States generally accepted accounting principals, or US GAAP, for the six
months ended June 2009; and (4) Heilongjiang Shuaiyi has achieved not less than
$3,900,000 in pre-tax profits, as determined under US GAAP for the fiscal year
ending 2009. Notwithstanding the foregoing, for purposes of determining whether
or not the financial thresholds described above have been achieved, the purchase
of the shares by the Founder or any other person designated by the Founder shall
not be deemed to be an expense, charge, or other deduction from revenues of the
Company even though US GAAP may require contrary treatment. On February 12,
2009, each Founder and the Shareholder entered into an amendment to the Earn-In
Agreements, or the First Amendment, to amend the definition of the first
condition. As a result, pursuant to the First Amendment, in order to satisfy the
first condition for each Founder, only Ms. Lianyun Han needs to enter into a
binding employment agreement with Heilongjiang Shuaiyi within six months after
the share exchange transaction dated December 23, 2008.
Each Founder may purchase 25% of the total number of shares
that he or she is eligible to purchase under his or her Earn-In Agreement, as
amended, upon the satisfaction of each condition described above. The aggregate
number of shares eligible for purchase by all of the Founders under the
Earn-In Agreements is 100,000. Therefore, upon purchase of the above shares by
the Founders, the total number of outstanding shares of the Shareholder will be
100,001 and the Founders will be the controlling shareholders of the
Shareholder.
34
Pursuant to the Earn-in Agreement, as amended, the Shareholder
further agrees, among others, that throughout the exercise period of the Earn-in
Agreement, without the prior written approval of the Founders:
it will not increase the number of authorized shares of the Shareholder's
  common stock, or any increased authorized shares will be deemed as part of the
  option shares that the Founders are entitled to acquire under the Earn-In
  Agreements;
(ii) keeps available the services of current officers and employees of the
  Shareholder and Heilongjiang Shuaiyi; and
(iii) New Resources and Heilongjiang Shuaiyi will not declare or pay any
  dividend or make any other distribution, nor do they repurchase, redeem or
  otherwise reacquire any equity of shares of capital stock or other securities.
The sole purpose of the Earn-In Agreements is to enable
Founders to reacquire ultimate controlling legal ownership of Heilongjiang
Shuaiyi in compliance with regulatory requirements of China.
On December 8, 2008, Heilongjiang Shuaiyi entered into separate
loan agreement and promissory notes, or the Notes, with the Founders, pursuant
to which Heilongjiang Shuaiyi borrowed an aggregate of RMB 60 million
(approximately $8.8 million) from the Founders, which amount is exactly equal to
the proceeds that they are entitled to receive for the transfer of their
ownership of Heilongjiang Shuaiyi under the Equity Transfer Agreement. The Notes
bear no interest and are payable in successive equal yearly payments beginning
on the tenth anniversary of the Notes, December 8, 2018, and within the first
month of each year thereafter. The final payment is due on January 1, 2028. On
February 12, 2009, Heilongjiang Shuaiyi and the Founders amended the Notes,
pursuant to which the Founders subordinate any right to receive any payment with
respect to this loan to the payment or provision for payment in full of all
claims of all present and future creditors of Heilongjiang Shuaiyi. During and
after this restructuring plan, there has been no change to the composition of
the board of directors of Heilongjiang Shuaiyi. Heilongjiang Shuaiyi's board of
directors, chaired by Ms. Han, has continued to comprise representatives of the
Founders. Therefore, Heilongjiang Shuaiyi is still under the same operating and
management control of the Founders. Through this subordinated loan, the Founders
will not receive any cash amount, nor will there be any cash flow out of the
combined entity during the whole period from the date of the Equity Transfer
Agreement though the expiry of the Earn-in Agreements, at which time it is
expected that the Founders will have reacquired the ultimate legal controlling
ownership of Heilongjiang Shuaiyi.
The loan to Heilongjiang Shuaiyi by the Founders is an integral
and inseparable part of the restructuring plan and has the sole purpose of
achieving the restructuring in compliance with PRC regulations. Furthermore, by
providing the subordinated loan to Heilongjiang Shuaiyi and obtaining the
Shareholder's agreement on not declaring any dividend throughout the exercise
period of the Earn-in Agreements without the prior written approval of the
Founders, the Founders continue to bear the residual risks and rewards relating
to Heilongjiang Shuaiyi. As a result, this restructuring plan will be accounted
for as a recapitalization of Heilongjiang Shuaiyi with no adjustment to the
historical basis of the assets and liabilities of Heilongjiang Shuaiyi. New
Resources' financial statements for the subsequent period in which the
restructuring occurred will report Heilongjiang Shuaiyi's results of operation
will be consolidated from the beginning of the first period presented in New
Resources' financial statements as if the restructuring had occurred as of the
beginning of that period.
The following charts demonstrate the ownership information of
the relevant entities before and after the consummation of the restructuring
plan:
Before the Equity Transfer Agreement:
35
After the consummation of the restructuring plan
Acquisition of New Resources
On December 23, 2008, pursuant to a share exchange agreement,
or Share Exchange Agreement, we completed a reverse acquisition transaction of
New Resources whereby we issued to the Shareholder 689,390 shares of our Series
A Preferred Stock, constituting approximately 94% of our issued and outstanding
capital stock on a fully-diluted basis, in exchange for all of the issued and
outstanding capital stock of New Resources. New Resources thereby became our
wholly owned subsidiary and the Shareholder became our controlling
stockholder.
Immediately following closing of the reverse acquisition of New
Resources, the Shareholder transferred 176,529 of the 689,390 shares issued to
it under the share exchange to 14 individuals and entities, pursuant to a
securities allocation agreement that the Shareholder entered into with these
people on December 23, 2008. Among them, ten individuals and entities received
91,088 shares from the Shareholder for providing consulting services to New
Resources and its subsidiaries in assisting them to consummate the share
exchange transaction contemplated by the Share Exchange Agreement prior to
December 23, 2008. The remaining 85,441 shares were gifted from the Shareholder
to four individuals and entities who did not provide services to New Resources
or its subsidiaries.
Upon the closing of the reverse acquisition, Eugene M. Weiss,
our then sole director and officer, submitted a resignation letter pursuant to
which he resigned from all offices that he held effective immediately and from
his position as our director that became effective on January 12, 2009. Lianyun
Han was appointed to our board of directors effective as of the closing of the
reverse acquisition on December 23, 2008. In addition, our board of directors on
December 23, 2008 increased the size of our board of directors to five (5) and
appointed Nana Jiang, Chunming Zhang, John Jing Zhang and Xi Zhu to fill the
vacancies created by such increase, which appointments became effective upon the
effectiveness of the resignation of Mr. Weiss on January 12, 2009. In addition,
our executive officers were replaced by the New Resources executive officers
upon the closing of the reverse acquisition as indicated in more detail
below.
36
For accounting purposes, the share exchange transaction was
treated as a reverse acquisition with New Resources as the acquiror and the
Company as the acquired party. Unless the context suggests otherwise, when we
refer in this report to business and financial information for periods prior to
the consummation of the reverse acquisition, we are referring to the business
and financial information of our subsidiary Heilongjiang Shuaiyi because
Heilongjiang Shuaiyi currently conducts all our business operations.
The following chart reflects our organizational structure as of
the date of this prospectus:
MANAGEMENT
Directors and Executive Officers
The following sets forth information about our directors and
executive officers as of the date of this prospectus:
Name
Age
Position
Lianyun Han
52
Chairperson, CEO
      and President
Robert Tick
41
Chief Financial Officer and
      Treasurer
Hongbing Hua
42
Chief Marketing
      Officer
Nana Jiang
31
Director
Chunming Zhang
39
Director
John Jing Zhang
37
Director
Xi Zhu
26
Director
37
Lianyun Han.
Ms. Han has extensive experience in
operational management and business development. Ms. Han is the founder of our
company and has been our Chief Executive Officer, President and the chairperson
of our board of directors since the completion of the reverse acquisition of New
Resources on December 23, 2008. Ms. Han has been the chairman and chief
executive officer of our subsidiary Heilongjiang Shuaiyi since its formation in
2006. From 1998 to 2006, Ms. Han was the president of Heilongjiang Shuaiyi
Technology Development Co., Ltd., a company that is engaged in the business of
developing, manufacturing, marketing and selling high-tech agricultural
products. Ms. Han holds a Bachelor's degree in Chinese Language and Literature
from Harbin Normal University.
Robert Tick.
Mr. Tick has over 16 years experience in
accounting and finance. Mr. Tick was the Chief Financial Officer of ANDA
Networks, Inc., a telecom equipment provider, from July 2007 to August 2010,
Vice President of Finance from October 2005 to July 2007 and Corporate
Controller from April 2003 to November 2004. From November 2004 to October 2005,
Mr. Tick served as the Controller for T-RAM Semiconductors Inc., a fabless
semiconductor company. Mr. Tick is a Certified Public Accountant and holds a
B.S. in Accounting and Finance from San Francisco State University and an M.B.A.
from Washington State University.
Hongbing Hua.
Mr. Hua has over 15 years experience in
sales and marketing management. Prior to joining the Company, from 2003 to 2004,
Mr. Hua was the Project General Planning Principle of Wanglaoji Herbal Tea, JDB
Group, one of the largest herbal tea manufacturers in China. From 1998 to 2001,
he was the VP Sales & Marketing of Beijing Huiyuan Beverage and Food Group
Co., Ltd., a leading company engaged in the manufacture and sales of juice and
other beverage products in China. Mr. Hua holds a Bachelor's degree in
international finance from Tianjin University.
Chunming Zhang.
Mr. Zhang has decades of working
experience in production management. Mr. Zhang became our director on January
12, 2009. Mr. Zhang joined Heilongjiang Shuaiyi in 2006 as the production
manager. From 1998 to 2006, Mr. Zhang was the vice president of Heilongjiang
Shuangyasha Boiler Factory. Mr. Zhang holds a Bachelor's degree in economics
from Northeast Agricultural University.
Nana Jiang.
Ms. Jiang became our director on January 12,
2009. Ms. Jiang joined Heilongjiang Shuaiyi in 2006 as the managing accountant.
From 1998 to 2006, Ms. Jiang was the managing accountant of Heilongjiang Shuaiyi
Technology Development Co., Ltd., a company that is engaged in the business of
developing, manufacturing, marketing and selling high-tech agricultural
products. Ms. Jiang holds a Bachelor's degree in English from Harbin Normal
University.
John Jing Zhang.
Mr. Zhang became our director on
January 12, 2009. Mr. Zhang currently serves as the chief executive officer of
JC Global Capital Partners, LLC, a financial consulting firm located in
Shanghai, China that specializes in cross-border capital market transactions.
Prior to funding JC Global Capital Partners, LLC in September 2006, from
September 2003 to August 2006, Mr. Zhang was the Managing Director of FirsTrust
Group, a US merchant bank headquartered in Atlanta, GA, where he was responsible
for its entire China operation. Prior to joining FirsTrust Group, Mr. Zhang held
senior positions in two U.S. corporations, ASI Computer Technology, Inc. and CTX
International, Inc., a company that engages in the business of manufacturing and
selling LCD Flat Panel Displays. Mr. Zhang holds an MBA from Emory University.
Xi Zhu.
Mr. Zhu became our director on January 12, 2009.
Mr. Zhu has years of experience in auditing and financial consulting. Currently
he is a Senior Financial Advisor for JINDU Investment, a financial consulting
firm that specializes in PIPE deals. Prior to JINDU Investment, Mr. Zhu was an
auditor of in the International Business Department at BDO Qingdao Branch. BDO
is a world wide network of public accounting firms, serving international
clients. Mr. Zhu was an Auditor Assistant of Foreign Investment Service in Shan
Dong De Sheng Accounting Firm from 2005 to 2006. Mr. Zhu holds a Bachelor's
degree in Administrative Management from Qingdao University. There are no
agreements or understandings for any of our executive officers or director to
resign at the request of another person and no officer or director is acting on
behalf of nor will any of them act at the direction of any other person.
Directors are elected until their successors are duly elected
and qualified.
38
Director Qualifications
Below is a summary of the qualifications, attributes, skills
and experience of each of our directors that led us to the conclusion that such
director should serve as a director of our Company, in light of our business and
structure.
Ms. Lianyun Han
Leadership and Management experience – founder of Heilongjiang Shuaiyi and
  has been Heilongjiang Shuaiyi's Chairwoman and Chief Executive Officer since
  2006 and the Company's Chairwoman and Chief Officer since 2008
Industry background – president of Heilongjiang Shuaiyi Technology
  Development Co., Ltd., a company that is engaged in the business of
  developing, manufacturing, marketing and selling high-tech agricultural
  products, from 1998 to 2006
Mr. Chunming Zhang
Leadership and Management experience –became our director on January 12,
  2009 and joined Heilongjiang Shuaiyi in 2006 as the production manager
Education background – holds a Bachelor's degree in economics from
  Northeast Agricultural University
Ms. Nana Jiang
Leadership and Management experience – became our director on January 12,
  2009 and joined Heilongjiang Shuaiyi in 2006 as the managing accountant
Education background – holds a Bachelor's degree in English from Harbin
  Normal University
Mr. John Jing Zhang
Leadership and Management experience – became our director on January 12,
  2009 and from September 2003 to August 2006, the Managing Director of
  FirsTrust Group, a US merchant bank headquartered in Atlanta, GA
Education background – MBA from Emory University
Mr. Xi Zhu
Leadership and Management experience – became our director on January 12,
  2009 and is a Senior Financial Advisor for JINDU Investment, a financial
  consulting firm that specializes in PIPE deals
Education background - Bachelor's degree in Administrative Management from
  Qingdao University
Board Composition and Committees
The board of directors is currently composed of five members,
Ms. Lianyun Han, Ms. Nana Jiang, Mr. Chunming Zhang, Mr. John Jing Zhang and Mr.
Xi Zhu. All Board action requires the approval of a majority of the directors in
attendance at a meeting at which a quorum is present. We may increase the size
of our board of directors in the future but have not determined the approximate
time to take such action.
We currently do not have standing audit, nominating or
compensation committees. Our board of directors handles the functions that would
otherwise be handled by each of the committees. We intend, however, to establish
an audit committee, a nominating committee and a compensation committee of the
board of directors as soon as practicable. We envision that the audit committee
will be primarily responsible for reviewing the services performed by our
independent auditors, evaluating our accounting policies and our system of
internal controls. The nominating committee would be primarily responsible for
nominating directors and setting policies and procedures for the nomination of
directors. The nominating committee would also be responsible for overseeing the
creation and implementation of our corporate governance policies and procedures.
The compensation committee will be primarily responsible for reviewing and
approving our compensation and benefit policies, including compensation of
executive officers.
39
Our board of directors has not made a determination as to
whether any member of our board is an audit committee financial expert. Upon the
establishment of an audit committee, the board will determine whether any of the
directors qualify as an audit committee financial expert.
Family Relationships
There is no family relationship among any of our officers or
directors.
Code of Ethics
Our board of directors has adopted a code of ethics that
applies to Chief Executive Officer, President, Chief Financial Officer,
Principal Executive Officer, Principal Financial Officer, Principal Accounting
Officer, Controller and persons performing similar functions. The code of ethics
addresses, among other things, ethical conduct, conflicts of interest,
compliance with laws, regulations and policies, including disclosure
requirements under the federal securities laws, confidentiality, trading on
inside information, and reporting of violations of the code. A copy of the code
of ethics has been filed as Exhibit 14.1 to our Annual Report on Form 10-KSB
filed on November 20, 2007. We are in the process of building up the Company
website. Once our website is available, we will make the code of ethics
available on the website. Thereafter, any amendments or waivers to the code of
ethics will be posted on our website within four business days of such amendment
or waiver. Until such time, however, any amendments or waivers to our code of
ethics will be filed with the SEC in a Current Report on Form 8-K.
Involvement in Certain Legal Proceedings
None of our directors or executive officers has, during the
past ten years:
been convicted in a criminal proceeding or been subject to a pending
  criminal proceeding (excluding traffic violations and other minor offences);
had any bankruptcy petition filed by or against the business or property of
  the person, or of any partnership, corporation or business association of
  which he was a general partner or executive officer, either at the time of the
  bankruptcy filing or within two years prior to that time;
been subject to any order, judgment, or decree, not subsequently reversed,
  suspended or vacated, of any court of competent jurisdiction or federal or
  state authority, permanently or temporarily enjoining, barring, suspending or
  otherwise limiting, his involvement in any type of business, securities,
  futures, commodities, investment, banking, savings and loan, or insurance
  activities, or to be associated with persons engaged in any such activity;
been found by a court of competent jurisdiction in a civil action or by the
  Securities and Exchange Commission or the Commodity Futures Trading Commission
  to have violated a federal or state securities or commodities law, and the
  judgment has not been reversed, suspended, or vacated;
been the subject of, or a party to, any federal or state judicial or
  administrative order, judgment, decree, or finding, not subsequently reversed,
  suspended or vacated (not including any settlement of a civil proceeding among
  private litigants), relating to an alleged violation of any federal or state
  securities or commodities law or regulation, any law or regulation respecting
  financial institutions or insurance companies including, but not limited to, a
  temporary or permanent injunction, order of disgorgement or restitution, civil
  money penalty or temporary or permanent cease-and-desist order, or removal or
  prohibition order, or any law or regulation prohibiting mail or wire fraud or
  fraud in connection with any business entity; or
been the subject of, or a party to, any sanction or order, not subsequently
  reversed, suspended or vacated, of any self-regulatory organization (as
  defined in Section 3(a)(26) of the Exchange Act, any registered entity (as
  defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent
  exchange, association, entity or organization that has disciplinary authority
  over its members or persons associated with a member.
40
EXECUTIVE COMPENSATION
Summary Compensation Table – 2009 and 2008
The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No executive
officer received total annual salary and bonus compensation in excess of
$100,000 during the fiscal years 2009 and 2008.
Salary
Bonus
Total
Name and Principal Position
Year
($)
($)
($)
Lianyun Han,
CEO and President
(1)
2009
2008
12,000
12,000
3,000
3,000
15,000
15,000
Eugene M. Weiss,
former President and Director
(2
)
2009
2008
-
-
-
-
-
-
Joseph Meuse,
former President and Director
(3)
2009
2008
-
-
-
-
-
-
Brian Jaggard,
former CEO, President, CFO and Director
(4)
2009
2008
-
-
-
-
-
-
(1)
On December 23, 2008, we acquired New Resources in a
      reverse acquisition transaction that was structured as a share exchange
      and in connection with that transaction, Ms. Lianyun Han became our Chief
      Executive Officer, President and director. Prior to the effective date of
      the reverse acquisition, Ms. Han served at New Resources' wholly owned
      subsidiary Heilongjiang Shuaiyi as its chairperson and chief executive
      officer. The annual, long term and other compensation shown in this table
      include the amount Ms. Han received from Heilongjiang Shuaiyi prior to the
      consummation of the reverse acquisition.
(2)
Eugene M. Weiss resigned from all offices he held with us
      upon the closing of the reverse acquisition of New Resources on December
      23, 2008. Mr. Weiss was our director until January 12, 2009.
(3)
Joseph Meuse resigned from his position as our President
      on August 8, 2008 and appointed Eugene Weiss as our sole officer and
      director.
(4)
Brian Jaggard resigned from his position as our President
      on August 1, 2008 and appointed Joseph Meuse as our sole officer and
      director.
Employment Agreements
Our indirect subsidiary Heilongjiang Shuaiyi entered into an
employment agreement with our CEO and President, Ms. Lianyun Han. Ms. Han's
employment agreement has a five-year term beginning on December 7, 2008 and
ending on December 7, 2013. Ms. Han's employment agreement provides for a
monthly salary of approximately $1,000 and an annual bonus of approximately
$3,000. Ms. Han is subject to customary non-competition and confidentiality
covenants under the agreement. The employment agreement does not entitle Ms. Han
to severance payments or payments following a change in control.
On August 18, 2009, Heilongjiang Shuaiyi and Mr. Hongbin Hua
entered into an employment agreement. The term of the employment agreement is
for five years commencing on August 18, 2009. The employment agreement provides,
among other things, that Mr. Hua's annual base salary will be RMB 1,000,000
(approximately $147,000), or Annual Salary. During the term of the employment
agreement, if either party terminates the employment for any reason, the other
party will be entitled to the compensation equal to 30% of the Annual Salary
from the terminating party. The Employment Agreement also contains covenants
prohibiting Mr. Hua from disclosing any confidential information of the
Company.
41
On July 16, 2010, we and Mr. Tick entered into an employment
agreement. The term of the employment agreement is for three years commencing on
July 16, 2010. The employment agreement provides, among other things, that Mr.
Tick's monthly base salary will be $12,650.
During the term of the employment agreement, if either party
terminates the employment for any reason, a minimum of sixty (60) days notice
must be given in writing to the other party. The employment agreement also
contains covenants prohibiting Mr. Tick from competing with the Company during
his employment with the Company or disclosing any confidential information of
the Company both during his employment and after the termination of
employment.
On July 16, 2010, we and Mr. Tick entered into a stock option
agreement under the Company's 2009 Equity Incentive Plan, or the Plan. Pursuant
to the terms of the stock option agreement, Mr. Tick was granted options to
purchase an aggregate 150,000 shares of common stock of the Company, among
which, an option to purchase 75,000 shares will be vested on December 31, 2011
with an exercise price of $5.00 per share, an option to purchase 100,000 shares
will be vested on December 31, 2012 with an exercise price of $7.00 per share.
Each of the options expires three years after its respective vesting date.
According to the stock option agreement, in the event Mr.
Tick's employment with us is terminated for any reason except for death or
disability, he may exercise the options only to the extent that the options
would have been exercisable on the termination date and no later than three
months after the termination date. If Mr. Tick's employment is terminated
because of his death or disability, the options may be exercised only to the
extent that such options would have been exercisable by Mr. Tick on the
termination date and must be exercised by Mr. Tick no later than twelve months
after the termination date. If the employment is terminated for Cause as defined
in the stock option agreement, the options will terminate immediately. In no
event will the options be exercised later than December 31, 2015.
On the same date, we also entered into a restricted shares
grant agreement under the Plan with Mr. Tick. Pursuant to the terms of the
restricted shares grant agreement, we granted to Mr. Tick 150,000 restricted
shares of the Company's common stock subject to the vesting schedule therein. If
Mr. Tick's service with the Company ceases for any reason other than Mr. Tick's
(a) death, (b) Disability, (c) Retirement, or (d) termination by the Company
without cause, any nonvested restricted shares will be automatically forfeited
to the Company.
Both the options and the restricted shares are also subject to
certain acceleration provision provided in the stock option agreement and the
restricted shares grant agreement, respectively.
We have not provided retirement benefits (other than a state
pension scheme in which all of our employees in China participate) or severance
or change of control benefits to our named executive officer.
Outstanding Equity Awards at Fiscal Year End
None of our executive officers received any equity awards,
including, options, restricted stock or other equity incentives during the
fiscal year ended December 31, 2009.
Compensation of Directors
The table below sets forth the compensation of our directors
for the fiscal year ended December 31, 2009:
Non-Equity
Incentive Plan
All Other
Fees Earned or
Stock Awards
Option Awards
Compensation
Compensation
Name
Paid in Cash ($)
($)
($)
($)
($)
Total ($)
Lianyun Han
(1)
15,000
-
-
-
-
15,000
Nana Jiang
3,470
-
-
-
-
3,470
Chunming Zhang
-
-
-
-
-
-
John Jing Zhang
-
-
-
-
-
-
Xi Zhu
-
-
-
-
-
-
(1)
Ms. Han does not receive additional compensation
for her service as our director. The compensation disclosed herein is her
compensation for serving as our CEO and President as disclosed in the Summary
Compensation Table above.
42
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS; CORPORATE GOVERNANCE
Transactions with Related Persons
The following includes a summary of transactions since the
beginning of the 2009 fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved exceeded or
exceeds the lesser of $120,000 or one percent of the average of our total assets
at year-end for the last two completed fiscal years, and in which any related
person had or will have a direct or indirect material interest (other than
compensation described in the section of "Executive Compensation" above). We
believe the terms obtained or consideration that we paid or received, as
applicable, in connection with the transactions described below were comparable
to terms available or the amounts that would be paid or received, as applicable,
in arm's-length transactions.
On January 10, 2008, Daqing Shuaiyi entered into a land lease agreement
  with Heilongjiang Shuaiyi Technology Development Co., Ltd., pursuant to which
  Daqing Shuaiyi leased a land use right for 20 years over a 410,000 square
  meter tract on which it has nine factory buildings to grow and cultivate
  Chinese Golden Grass.
On October 15, 2007, Heilongjiang Shuaiyi entered into a loan agreement
  with its wholly-owned subsidiary, Daqing Shuaiyi, pursuant to which
  Heilongjiang Shuaiyi agreed to loan RMB 35 million (approximately $5.1
  million) to Daqing Shuiayi. The loan is non-interest bearing and unsecured.
  Daqing Shuaiyi is obligated under the loan agreement to pay off RMB 7 million
  (approximately $1 million) by October 30 each year starting from 2008. The
  loan matures on October 15, 2012.
On September 12, 2008, the Shareholder entered into separate Earn-In
  Agreements with the Funders of Heilongjiang Shuaiyi, including our chairperson
  and chief executive officer, Lianyun Han. Pursuant to the Earn-In Agreements,
  each Founder has an option to purchase shares of the Shareholder's ordinary
  shares at a purchase price of $0.01 per share (the par value of the
  Shareholder's ordinary shares),
provided
that the aggregate price with
  respect to the shares eligible to be purchased relating to the satisfaction of
  condition (4) below is the sum of $0.01 per share, multiplied the number of
  such shares, plus $1,000, upon the satisfaction of each of the following
  conditions: (1) six months have expired since the date of the Share Exchange
  Agreement,
provided
that on or before that date, the Founder and
  Heilongjiang Shuaiyi have entered into a binding employment agreement and the
  Founder is employed by Heilongjiang Shuaiyi pursuant to that agreement on such
  date; (2) the SEC has declared a registration statement filed by the Company
  under the Securities Act effective, or investors who purchased common stock
  from the Company pursuant to a securities purchase agreement being able to
  sell their common stock under Rule 144; (3) Heilongjiang Shuaiyi and its
  subsidiaries have achieved not less than $1,560,000 in after-tax net income,
  as determined under US GAAP for the six months ended June 2009; and (4)
  Heilongjiang Shuaiyi has achieved not less than $3,900,000 in pre-tax profits,
  as determined under US GAAP for the fiscal year ending 2009. Notwithstanding
  the foregoing, for purposes of determining whether or not the financial
  thresholds described above have been achieved, the purchase of the shares by
  the Founder or any other person designated by the Founder shall not be deemed
  to be an expense, charge, or other deduction from revenues of the Company even
  though GAAP may require contrary treatment. Each Founder may purchase 25% of
  the total number of shares that he or she is eligible to purchase under his or
  her Earn-In Agreement upon the satisfaction of each condition described above
  and the aggregate number of shares eligible for purchase by all of the
  Founders under the Earn-In Agreements is 100,000. On February 12, 2009, each
  Founder and the Shareholder entered into the First Amendment to amend the
  definition of the first condition. As a result, pursuant to the First
  Amendment, in order to satisfy the first condition for each Founder, only Ms.
  Lianyun Han needs to enter into a binding employment agreement with
  Heilongjiang Shuaiyi within six months after the date of the Share Exchange
  Agreement.
On December 8, 2008, Heilongjiang Shuaiyi entered into separate loan
  agreement and promissory notes, or the Notes, with the Founders, pursuant to
  which Heilongjiang Shuaiyi borrowed an aggregate of RMB 60 million (approximately $8.8 million)
from the Founders, including from our chairperson and chief executive officer.
The Notes bear no interest and are payable in successive equal yearly payments
beginning on the tenth anniversary of the Notes, December 8, 2018, and within
the first month of each year thereafter. The final payment is due on January 1,
2028. On February 12, 2009, Heilongjiang Shuaiyi and the Founders amended the
Notes, pursuant to which the Shuaiyi Founders subordinate any right to receive
any payment with respect to this loan to the payment or provision for payment in
full of all claims of all present and future creditors of Heilongjiang
Shuaiyi.
43
Except as set forth in our discussion above, none of our
directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.
Promoters and Certain Control Persons
We did not have any promoters at any time during the past five
fiscal years.
Parents of the Company
New Zealand WAYNE's Investment Holdings Co., Ltd. currently
owns 54.87% of Nutrastar International Inc.
Director Independence
We currently do not have any independent directors, as the term
  "independent" is defined by the rules of the Nasdaq Stock Market.
CHANGE IN ACCOUNTANTS
(a) Dismissal of Previous Independent Registered Public
Accounting Firm.
i.
Effective July 12,
    2010, our Board of Directors approved the dismissal of AGCA, Inc., or AGCA,
    as the Company's independent registered public accounting firm.
ii.
AGCA's reports on the
    Company's financial statements as of and for the fiscal years ended December
    31, 2009 and 2008 did not contain an adverse opinion or disclaimer of
    opinion and were not qualified or modified as to uncertainty, audit scope,
    or accounting principles.
iii.
During the Company's
    two most recent fiscal years (ended December 31, 2009 and 2008) and during
    the subsequent interim period through July 12, 2010, there were (1) no
    disagreements with AGCA on any matter of accounting principles or practices,
    financial statement disclosure, or auditing scope or procedures, which
    disagreements, if not resolved to the satisfaction of AGCA, would have
    caused AGCA to make reference to the subject matter of the disagreements in
    connection with its reports, and (2) no events of the type listed in
    paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.
(b)
Engagement of New Independent Registered Public Accounting Firm
i.
Concurrent with the
    decision to dismiss AGCA as the Company's independent auditor, the Board
    approved the engagement of Crowe Horwath (HK) CPA Limited, or Crowe Horwath,
    as the Company's new independent registered public accounting firm.
ii.
During the Company's
    two most recent fiscal years (ended December 31, 2009 and 2008) and through
    the subsequent interim period to July 12, 2010, the Company did not consult
    Crowe Horwath with respect to (a) the application of accounting principles
    to a specified transaction, either completed or proposed; or the type of
    audit opinion that might be rendered on the Company's consolidated financial
    statements, and neither a written report was provided to the Company or oral
    advice was provided that Crowe Horwath concluded was an important factor
    considered by the Company in reaching a decision as to the accounting,
    auditing or financial reporting issue; or (b) any matter that was the
    subject of either a disagreement as defined in Item 304(a)(1)(iv) of
    Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of
    Regulation S-K.
We provided AGCA with a copy of this disclosure on July 15,
2010, providing AGCA with the opportunity to furnish us with a letter addressed
to the SEC containing any new information, clarification of the Company's
expression of its views, or the respect in which AGCA does not agree with the
statements contained herein. A letter from AGCA dated July 16, 2010 was attached
as Exhibit 16.1 to the Current Report on Form 8-K filed on July 16, 2010.
SELLING STOCKHOLDERS
This prospectus relates to the resale by the selling
stockholders named below from time to time of up to a total of 2,965,561 shares
of our common stock that were issued or are issuable to selling stockholders
pursuant to transactions exempt from registration under the Securities Act. All
of the common stock offered by this prospectus is being offered by the selling
stockholders for their own accounts.
Private Placement Transaction
On June 28, 2010, we completed a private placement transaction
disclosed above and issued to certain investors approximately 197,700 Units at a
purchase price of $28.56 per Unit for gross proceeds of $5,646,270. Each Unit
consists of (i) one share of Series A Preferred Stock, with an initial
one-to-ten conversion ratio into shares of the Company's common stock, and (ii)
Series C Warrants to purchase five shares of common stock at an exercise price
of $3.40 per share with a term of three years. As a result, we issued in
aggregate 197,706 shares of our Series A Preferred Stock, initially convertible
into 1,977,060 shares of our common stock, and Series C Warrants to purchase an
aggregate of 988,501 shares of our common stock. The Units were issued in
reliance upon exemptions provided by Section 4(2) of the Securities Act for the
offer and sale of securities not involving a public offering and Regulation D or
Regulation S promulgated thereunder.
Gilford Securities Incorporated served as the placement agent
in connection with this private placement and as partial compensation for its
services, we issued Series C Warrants to it to purchase an aggregate of 39,539
shares of our common stock, representing 2% of the aggregate number of shares of
common stock issuable upon conversion of the Series A Preferred Stock purchased
by the investors in this transaction. The foregoing issuance was made in
reliance upon exemptions provided by Section 4(2) of the Securities Act for the
offer and sale of securities not involving a public offering and Regulation D
promulgated thereunder.
Selling Stockholders
The table below, which was prepared based on information filed
publicly or supplied to us by the selling stockholders, sets forth information
regarding the beneficial ownership of outstanding shares of our common stock
owned by the selling stockholders and the shares that they may sell or otherwise
dispose of from time to time under this prospectus. Each of the selling
stockholders, or their respective transferees, donees or their successors, may
resell, from time to time, all, some or none of the shares of our common stock
covered by this prospectus, as provided in this prospectus under the section entitled "Plan of Distribution" and in any
applicable prospectus supplement. However, we do not know when or in what amount
the selling stockholders may offer their shares for sale under this prospectus,
if any.
44
The number of shares disclosed in the table below as
"beneficially owned" are those beneficially owned as determined under the rules
of the SEC. Such information is not necessarily indicative of ownership for any
other purpose. Under the rules of the SEC, a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting power,"
which includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose of or to direct the
disposition of such security. In computing the number of shares beneficially
owned by a selling stockholder and the percentage of ownership of that selling
stockholder, shares of common stock underlying shares of convertible preferred
stock, options or warrants held by that selling stockholder that are convertible
or exercisable, as the case may be, within 60 days of August 9, 2010 are
included. Those shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other selling stockholder. Each
selling stockholder's percentage of ownership in the following table is based
upon 14,332,731 shares of common stock outstanding as of August 9, 2010.
Unless otherwise indicated and subject to community property
laws where applicable, the selling stockholders named in the following table
have, to our knowledge, sole voting and investment power with respect to the
shares beneficially owned by them. In addition, none of the selling stockholders
has any family relationships with our officers, directors or controlling
stockholders. Furthermore, unless otherwise indicated below, no selling
stockholder is a registered broker-dealer or an affiliate of a registered
broker-dealer.
Information concerning any of the selling stockholders may
change from time to time, and any changed information will be presented in a
prospectus supplement as necessary. Please carefully read the footnotes located
below the table in conjunction with the information presented in the table.
Name and Address
Shares of
Common Stock
Beneficially
Owned Before
the Offering
(1)
Shares of
Common Stock
Included in
Prospectus
Beneficial
Ownership
After the
Offering**
Percentage of
Common Stock
Beneficially
Owned After
Offering
(2)
ARC China Investment Funds
(3)
Banque Privée Edmond de Rothschild Europe
20, Boulevard Emmanuel
      Servais
L-2535 Luxembourg
1,425,077
(3)
1,425,077
(3)
0
*
Wilshire Investments, LLC
(4)
410 17th Street #1705
Denver, CO 80224
38,865
(4)
38,865
(4)
0
*
Martin Key
1003 Cherokee Avenue
Arken, SC 29801
9,028
(5)
9,028
(5)
0
*
Hao Xu
2299 Jinshajiang Road
Building
      27, Room 1401
Shanghai 200333
People's Republic of China
51,800
(6)
51,800
(6)
0
*
Jeffrey A. Grossman
35 Rochelle Dr.
New City, NY 10956
52,862
(7)
52,862
(7)
0
*
Ruiyi Sun
1200 Huaihai Middle Road
2nd Floor, No. 25
Xuhui District, Shanghai 200031
People's
      Republic of China
51,800
(8)
51,800
(8)
0
*
Gal Shmuel Dymant
Suite 1806, Building A
Oriental Media Centre
4 Guanghua Road
Chaoyang District, Beijing 100026
People's Republic of
      China
196,926
(9)
196,926
(9)
0
*
45
Fitel Nominees Limited
(10)
11 St. Jame's
      Square Manchester, M2,
6WH, UK
24,346
(10)
24,346
(10)
0
*
Aran Asset Management SA
(11)
AAM SA,
      Bahnhohplatz 6304
Zug/Switzerland
51,830
(11)
51,830
(11)
0
*
Sequoia Aggressive Growth Fund
(12)
c/o Nemo
      Asset Management PO Box
60374 Abu Dhabi, U.A.E.
259,114
(12)
259,114
(12)
0
*
Steven B. Berman Revocable Trust
Dated
      5/11/09
(13)
1930 Harrison Street, Suite 505
Hollywood,
      FL 33020
51,815
(13)
51,815
(13)
0
*
W. Michael Ogie
6940 Hilton Ct. Columbus, GA 31904
25,914
(14)
25,914
(14)
0
*
Wilds Michael Ogie
1530 Hilton Ave. Columbus, GA
31906
25,914
(15)
25,914
(15)
0
*
Di Zhu ep Chevallier
Lane 100 Yushan Road, Building 17
Room 401 Pudong, 299135,
Shanghai, China
51,812
(16)
51,812
(16)
0
*
Moonlight Investments Ltd.
(17)
c/o North
      Atlantic SAM Le Patio
Palace 41 Avenue Hector Otto MC
98000 Monaco
51,828
(17)
51,828
(17)
0
*
Cons Family Holdings Inc
(18)
370 Rue des
      Seigneurs, Montreal
Quebec H3J2M9 Canada
51,814
(18)
51,814
(18)
0
*
NBAD Private Bank (Suisse) SA
(19)
Quai de
      L'lle 5 PO Box 5055 1204
Geneva 11 Switzerland
51,828
(19)
51,828
(19)
0
*
Loeb Enterprises II, LLC
(20)
70 East 55th
      Street, 4th Floor
NY, NY 10022-2524
90,692
(20)
90,692
(20)
0
*
Hillside Ventures Investments SA
(21)
12
      Carlos Place
London W1k 2ET, UK
51,828
(21)
51,828
(21)
0
*
Steven Kruss Living Trust
(22)
2401 SW 145th
      Avenue,
Miramar, FL 33027
51,815
(22)
51,815
(22)
0
*
Anthony Bobulinski
(23)
1801 Century Park
      West 5th Floor,
Los Angeles, CA 90067
129,544
(23)
129,544
(23)
0
*
ARC China Investment Fund, L.P.
(24)
23 on
      the Bund, Bank of China
Building, 14th Floor 23 Zhongshan
East No.
      1 Road, Shanghai 200002,
PRC
77,740
(24)
77,740
(24)
0
*
Zachs Family Investment Fund II, LLC
(25)
40
      Woodland Street,
Hartford, CT 06105
51,830
(25)
51,830
(25)
0
*
Gilford Securities Incorporated
(26)
777
      3
rd
Ave, 17
th
Floor
New York, NY 10017
39,539
(26)
39,539
(26)
0
*
TOTAL
2,965,561
2,965,561
46
* Less than 1%.
** Assumes that all securities offered are sold.
(1)
Represents total ownership with respect to all shares of
      our common stock underlying the Series C Warrants and Series A Preferred Stock, as
      a single class and on an "as converted" basis.
(2)
As of August 9, 2010, a total of 14,332,731 shares of our
      common stock are considered to be outstanding pursuant to SEC Rule
      13d-3(d)(1). For each beneficial owner above, any options or warrants
      exercisable within 60 days have been included in the
denominator.
(3)
Includes 962,890 shares of our common stock underlying
      the Series A Preferred Stock and 462,187 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Adam Roseman is the director of
      ARC China Investment Funds and has sole voting and investment control over
      the securities held by ARC China Investment Funds.
(4)
Includes 26,260 shares of our common stock underlying the
      Series A Preferred Stock and 12,605 shares underlying the Warrants to
      purchase shares of our common stock. Mr. James A. Lustig is the President
      of Wilshire Investments, LLC and has sole voting and investment control
      over the securities held by Wilshire Investments, LLC.
(5)
Includes 6,100 shares of our common stock underlying the
      Series A Preferred Stock and 2,928 shares underlying the Warrants to
      purchase shares of our common stock.
(6)
Includes 35,000 shares of our common stock underlying the
      Series A Preferred Stock and 16,800 shares underlying the Warrants to
      purchase shares of our common stock.
(7)
Includes 35,720 shares of our common stock underlying the
      Series A Preferred Stock and 17,142 shares underlying the Warrants to
      purchase shares of our common stock.
(8)
Includes 35,000 shares of our common stock underlying the
      Series A Preferred Stock and 16,800 shares underlying the Warrant to
      purchase shares of our common stock.
(9)
Includes 133,060 shares of our common stock underlying
      the Series A Preferred Stock and 63,866 shares underlying the Warrant to
      purchase shares of our common stock.
(10)
Includes 16,450 shares of our common stock underlying the
      Series A Preferred Stock and 7,896 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Douglas Barlow is the Director of
      Fitel Nominees Limited and has shared voting and investment control over
      the securities held by Fitel Nominees Limited.
(11)
Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,810 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Michael C. Thalmann is the
      Chairman and CEO of Aran Asset Management SA and has sole voting and
      investment control over the securities held by Aran Asset Management
      SA.
(12)
Includes 175,080 shares of our common stock underlying
      the Series A Preferred Stock and 84,034 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Christian Naville is the Director
      of Sequoia Aggressive Growth Fund and has shared voting and investment
      control over the securities held by Sequoia Aggressive Growth
  Fund.
(13)
Includes 35,010 shares of our common stock underlying the
      Series A Preferred Stock and 16,805 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Steven B. Berman is the Trustee
      of Steven B. Berman Revocable Trust Dated 5/11/09 and has sole voting and
      investment control over the securities held by Steven B. Berman Revocable
      Trust Dated 5/11/09.
(14)
Includes 17,510 shares of our common stock underlying the
      Series A Preferred Stock and 8,404 shares underlying the Warrant to
      purchase shares of our common stock.
(15)
Includes 17,510 shares of our common stock underlying the
      Series A Preferred Stock and 8,404 shares underlying the Warrant to
      purchase shares of our common stock.
(16)
Includes 35,010 shares of our common stock underlying the
      Series A Preferred Stock and 16,802 shares underlying the Warrant to purchase shares of our common
      stock.
47
(17)
Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,808 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Diego Lissi is the Director of
      Moonlight Investments Ltd. and has sole voting and investment control over
      the securities held by Moonlight Investments Ltd.
(18)
Includes 35,010 shares of our common stock underlying the
      Series A Preferred Stock and 16,804 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Ronal P Cons is the President of
      Cons Family Holdings Inc and has sole voting and investment control over
      the securities held by Cons Family Holdings Inc.
(19)
Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,808 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Valerie Anson is the Director of
      NBAD Private Bank (Suisse) SA and has shared voting and investment control
      over the securities held by NBAD Private Bank (Suisse) SA.
(20)
Includes 61,280 shares of our common stock underlying the
      Series A Preferred Stock and 29,412 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Michael Loeb is the CEO of Loeb
      Enterprises II, LLC and has shared voting and investment control over the
      securities held by Loeb Enterprises II, LLC.
(21)
Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,808 shares underlying the Warrants to
      purchase shares of our common stock. Mr. David Ishag is the Director of
      Hillside Ventures Investments SA and has sole voting and investment
      control over the securities held by Hillside Ventures Investments
    SA.
(22)
Includes 35,010 shares of our common stock underlying the
      Series A Preferred Stock and 16,805 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Steven Kruss is the Trustee of
      Steven Kruss Living Trust and has sole voting and investment control over
      the securities held by Steven Kruss Living Trust.
(23)
Includes 87,530 shares of our common stock underlying the
      Series A Preferred Stock and 42,014 shares underlying the Warrants to
      purchase shares of our common stock.
(24)
Includes 52,530 shares of our common stock underlying the
      Series A Preferred Stock and 25,210 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Adam Roseman is the Director of
      ARC China Investment Fund, L.P. and has sole voting and investment control
      over the securities held by ARC China Investment Fund, L.P.
(25)
Includes 35,020 shares of our common stock underlying the
      Series A Preferred Stock and 16,810 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Eric M. Zachs is the Managing
      Director of Zachs Family Investment Fund II, LLC and has sole voting and
      investment control over the securities held by Zachs Family Investment
      Fund II, LLC.
(26)
Includes 39,539 shares underlying the Warrants to
      purchase shares of our common stock. Mr. Robert A. Maley is the President
      of Gilford Securities Incorporated and has sole voting and investment
      control over the securities held by Gilford Securities Incorporated.
      Gilford Securities Incorporated is a
broker-dealer.
We will not receive any proceeds from the sale of any shares by
the selling stockholders but we will receive funds from the exercise of the
warrants held by the selling stockholders if and when those warrants are
exercised for cash. We have agreed to bear expenses incurred by the selling
stockholders that relate to the registration of the shares being offered and
sold by the selling stockholders, including the SEC registration fee and legal,
accounting, printing and other expenses of this offering.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding beneficial
ownership of our common stock as of August 9, 2010 (i) by each person who is
known by us to beneficially own more than 5% of our voting securities; (ii) by
each of our officers and directors; and (iii) by all of our officers and
directors as a group. Unless otherwise specified, the address of each of the persons set forth below is in care of Nutrastar
International Inc., 7/F Jinhua Mansion, 41 Hanguang Street, Nangang District,
Harbin 150080, People's Republic of China.
48
Name and Address of
Beneficial
Owner
Office, If Any
Shares Beneficially
        Owned
(1)
Common Stock
(2)
Series A Preferred Stock
(3)
% Total
Voting
Power
(4)
Shares
% of
Class
Shares
% of
Class
Directors and Officers
Lianyun Han
Chairperson, President and CEO
8,949,424
(5)
62.44%
0
*
54.87%
Robert Tick
Chief Financial Officer and Treasurer
0
*
0
*
*
Hongbin Hua
Chief Marketing Officer
0
*
0
*
*
Chunming Zhang
Director
0
*
0
*
*
Nana Jiang
Director
0
*
0
*
*
John Jing Zhang
Director
543,899
(6)
3.79%
0
*
3.33%
Xi Zhu
Director
0
*
0
*
*
All officers and directors as a group (7
        persons named above)
9,493,323
66.24%
0
*
58.20%
5% Security Holders
New Zealand WAYNE's
Investment Holdings Co.,
Ltd. 4/F, Yushan Plaza
No.51 Yushan Road
Harbin, China 150090
(5)
8,949,424
(5)
62.44%
0
*
54.87%
ARC China Investment
Funds
(7)
Banque Privée Edmond
de Rothschild Europe
20, Boulevard Emmanuel
Servais
L-2535 Luxembourg
462,187
(7)
3.12%
96,289
48.70%
8.50%
Gal Shmuel Dymant
Suite 1806, Building A
Oriental Media Centre
4 Guanghua Road
Chaoyang District,
Beijing 100026
People's Republic of
China
63,866
(8)
*
13,306
6.73%
1.20%
Sequoia Aggressive
Growth Fund
(9)
c/o Nemo Asset
Management PO Box
60374 Abu Dhabi, U.A.E.
84,034
(9)
*
17,508
8.86%
1.58%
Adam Roseman
(10)
c/o ARC China
Investment Funds
487,397
(10)
3.29%
101,542
51.36%
8.95%
Banque Privée Edmond
de Rothschild
      Europe
20, Boulevard Emmanuel
Servais
L-2535 Luxembourg
Lianyun Han
Chairperson, President and CEO
8,949,424
(5)
62.44%
0
*
54.87%
49
* Less than 1%
(1)
Beneficial Ownership is determined in accordance with the
      rules of the SEC and generally includes voting or investment power with
      respect to securities. For each beneficial owner above, any options
      exercisable within 60 days have been included in the
denominator.
(2)
Based on 14,332,731 shares of common stock issued and
      outstanding as of August 9, 2010.
(3)
Based on 197,706 shares of Series A Preferred Stock
      issued and outstanding as of August 9, 2010. Each share of Series A
      Preferred Stock is convertible initially into ten (10) shares of common
      stock (subject to customary adjustments for stock splits, combinations, or
      equity dividends on common stock). Holders of Series A Preferred Stock
      vote with the holders of common stock on all matters on an "as converted"
      basis. See "Description of Securities – Preference Shares" below for more
      information regarding our Series A Preferred Stock.
(4)
Percentage of Total Capital Stock represents total
      ownership with respect to all shares of our common stock and Series A
      Preferred Stock, as a single class and on an "as-converted" to common
      stock basis.
(5)
Includes 8,949,424 shares of common stock owned by New
      Zealand WAYNE's Investment Holdings Co., Ltd. Pursuant to the Earn-In
      Agreement, dated September 12, 2008, as amended, the Founders, including
      Ms. Han, have the options to acquire a majority interest in New Zealand
      WAYNE's Investment Holdings Co., Ltd. upon the satisfaction of certain
      conditions set forth in the Earn-In Agreement. Upon the passage of six
      months after the date of Share Exchange Agreement, which was entered into
      among the Company, New Resources, along with the subsidiaries of New
      Resources, including Heilongjiang Shuaiyi, Daqing Shuaiyi and Harbin
      Shuaiyi, and New Zealand WAYNE's Investment Holdings Co., Ltd., dated
      December 23, 2008, Ms. Han will own at least a majority ownership of
      Investment Holdings if she exercises her option pursuant to the Earn-In
      Agreement. Ms. Han may be deemed to be a beneficial owner of the shares
      held by Investment Holdings. In addition, pursuant to the Securities
      Purchase Agreement, dated December 17, 2009, New Zealand WAYNE's
      Investment Holdings Co., Ltd., agreed by the Founders, placed a total of
      1,000,000 shares held by it into escrow that may be released to the
      investors in the event we do not meet the performance thresholds for 2010
      and 2011. The remaining 7,949,424 shares of common stock owned by New
      Zealand WAYNE's Investment Holdings Co., Ltd. are subject to a lock up
      agreement with ARC China, Inc., dated May 27, 2010 for a 12-month lock up
      period.
(6)
Including 127,978 shares of common stock held by his
      spouse.
(7)
Includes 462,187 shares underlying a warrant to purchase
      our common stock. Mr. Adam Roseman is the director of ARC China Investment
      Funds and has sole voting and investment control over the securities held
      by ARC China Investment Funds.
(8)
Includes 63,866 shares underlying a warrant to purchase
      our common stock.
(9)
Includes 84,034 shares underlying a warrant to purchase
      our common stock. Mr. Christian Naville is the Director of Sequoia
      Aggressive Growth Fund and has shared voting and investment control over
      the securities held by Sequoia Aggressive Growth Fund.
(10)
Includes (i) 462,187 shares underlying a warrant to
      purchase our common stock and 96,289 shares of Series A Preferred Stock
      directly owned by ARC China Investment Funds, and (ii) 25,210 shares
      underlying a warrant to purchase our common stock and 5,253 shares of
      Series A Preferred Stock. Mr. Adam Roseman is the Director of both ARC
      China Investment Funds and ARC China Investment Fund, L.P. and has sole
      voting and investment control over the securities held by both
    firms.
50
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue up to 190,000,000 shares of common
  stock. On May 19, 2009, we amended our articles of incorporation to effect a
  1-for-114.59 reverse split of our outstanding common stock.
Each outstanding share of common stock entitles the holder
thereof to one vote per share on all matters. Stockholders do not have
preemptive rights to purchase shares in any future issuance of our common stock.
The holders of shares of our common stock are entitled to dividends out of funds
legally available when and as declared by our board of directors. We have never
declared or paid cash dividends. Our board of directors does not anticipate
declaring a dividend in the foreseeable future. Should we decide in the future
to pay dividends, as a holding company, our ability to do so and meet other
obligations depends upon the receipt of dividends or other payments from our
operating subsidiaries and other holdings and investments. In addition, our PRC
operating subsidiaries, from time to time, may be subject to restrictions on its
ability to make distributions to us, including as a result of restrictive
covenants in loan agreements, restrictions on the conversion of local currency
into U.S. dollars or other hard currency and other regulatory restrictions.
All of the issued and outstanding shares of our common stock
are duly authorized, validly issued, fully paid and non-assessable. To the
extent that additional shares of our common stock are issued, the relative
interests of existing stockholders will be diluted.
Preferred Stock
We may issue up to 1,000,000 shares of preferred stock, par
value $0.001 per share, in one or more classes or series within a class as may
be determined by our board of directors, who may establish, from time to time,
the number of shares to be included in each class or series, may fix the
designation, powers, preferences and rights of the shares of each such class or
series and any qualifications, limitations or restrictions thereof. Any
preferred stock so issued by our board of directors may rank senior to the
common stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding up of us, or both.
On December 22, 2008, we filed a Certificate of Designation of
Series A Preferred Stock, or the 2008 Certificate with the State of Nevada
designating and authorizing the issuance of up to 800,000 shares of our series A
voting preferred stock, par value $0.001 per share, or the 2008 Series A
Preferred Stock. On December 23, 2008, we issued 689,390 shares of our 2008
Series A Preferred Stock to the Shareholder of New Resources. The total
consideration for the 689,390 shares of our 2008 Series A Preferred Stock is
50,000 shares of New Resources, which is all the issued and outstanding capital
stock of New Resources. We did not receive any cash consideration in connection
with the share exchange. On December 23, 2008, we also issued and sold to ACI
17,962 shares of our 2008 Series A Preferred Stock for $52,530.50, or $2.92 per
share. In addition, on December 23, 2008, we issued and sold to Tan Zhen
Investment Limited 20,168 shares of our 2008 Series A Preferred Stock for
$375,000, or $18.59 per share.
Following effectiveness of the 1-for-114.59 reverse split of
our outstanding common stock and in accordance with Section 6(a) of the 2008
Certificate, all issued and outstanding shares of the 2008 Series A Preferred
Stock were automatically converted into shares of common stock, on the basis of
17.45 shares of common stock for each one share of 2008 Series A Preferred Stock,
effective on May 29, 2009. After the completion of the conversion, we withdrew
the 2008 Certificate.
In connection with the private placement transaction as
contemplated by the 2010 Securities Purchase Agreement, dated May 27, 2010, we
filed a Certificate of Designation of Series A Preferred Stock, or the 2010
Certificate, with the Secretary of State of the State of Nevada on May 27, 2010,
which became effective upon filing. Pursuant to the 2010 Certificate, there were
300,000 shares of Series A Preferred Stock authorized.
On June 28, 2010, we completed the private placement
transaction and issued to certain investors approximately 197,700 Units at a
purchase price of $28.56 per Unit for gross proceeds of $5,646,270. Each Unit
consists of (i) one share of Series A Preferred Stock, with an initial
one-to-ten conversion ratio into shares of the Company's common stock, and (ii)
Series C Warrants to purchase five shares of common stock at an exercise price
of $3.40 per share with a term of three years. As a result, we issued in
aggregate 197,706 shares of our Series A Preferred Stock, initially convertible
into 1,977,060 shares of our common stock, and Series C Warrants to purchase an
aggregate of 988,501 shares of our common stock.
51
As of the date of this Prospectus, we have 197,706 shares of
our Series A Preferred Stock outstanding.
Warrant
In connection with our private placement which was closed on
December 17, 2009, we issued to each of the investors two warrants to purchase
in aggregate 500,000 shares of our common stock, including a Series A Warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B Warrant having a term of three years with an exercise price of $4.00
per share, both of which are subject to the usual adjustments for certain
corporate events. The shares underlying the warrants are being included in this
registration statement, but none of the Series A or Series B Warrants has been
exercised.
On June 28, 2010, we closed the private placement transaction
as contemplated by the 2010 Securities Purchase Agreement, dated May 27, 2010
and issued to the investors Series C Warrants to purchase an aggregate of
988,501 shares of our common stock. A Series C Warrant has a term of three years
with an exercise price of $3.40 per share. None of the Series C Warrants has
been exercised.
On July 1, 2010, as partial compensation for its services, we
issued to our IR firm, American Capital Adventures, Inc. and its designees, a
Series D Warrant to purchase 100,000 shares of our common stock, which has a
term of three years with an exercise price of $3.80 per share. None of the
Series D Warrant has been exercised.
Anti-takeover Effects of Our Articles of Incorporation and
By-laws
Our Articles of Incorporation and Bylaws contain certain
provisions that may have anti-takeover effects, making it more difficult for or
preventing a third party from acquiring control of the Company or changing our
board of directors and management. Our Articles of Incorporation provide that
our board of directors may issue, without further stockholder approval, up to
1,000,000 shares of preferred stock, par value $0.001 per share, in one or more
classes or series within a class. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of our outstanding voting stock. According to our Bylaws and Articles
of Incorporation, neither the holders of our common stock nor the holders of our
preferred stock have cumulative voting rights in the election of our directors.
The combination of the present ownership by a few stockholders of a significant
portion of our issued and outstanding capital stock and lack of cumulative
voting makes it more difficult for other stockholders to replace our board of
directors or for a third party to obtain control of the Company by replacing our
board of directors.
Anti-takeover Effects of Nevada Law
Business Combinations
The "business combination" provisions of Sections 78.411 to
78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada
corporation with at least 200 stockholders from engaging in various
"combination" transactions with any interested stockholder:
for a period of three years after the date of the transaction in which the
  person became an interested stockholder, unless the transaction is approved by
  the board of directors prior to the date the interested stockholder obtained
  such status; or
after the expiration of the three-year period, unless:
the transaction is approved by the board of directors or a majority of the
  voting power held by disinterested stockholders, or
if the consideration to be paid by the interested stockholder is at least
  equal to the highest of: (a) the highest price per share paid by the
  interested stockholder within the three years immediately preceding the date
  of the announcement of the combination or in the transaction in which it
  became an interested stockholder, whichever is higher, (b) the market value
  per share of common stock on the date of announcement of the combination and
  the date the interested stockholder acquired the shares, whichever is higher,
  or (c) for holders of preferred stock, the highest liquidation value of the
  preferred stock, if it is higher.
52
A "combination" is defined to include mergers or consolidations
or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in
one transaction or a series of transactions, with an "interested stockholder"
having: (a) an aggregate market value equal to 5% or more of the aggregate
market value of the assets of the corporation, (b) an aggregate market value
equal to 5% or more of the aggregate market value of all outstanding shares of
the corporation, or (c) 10% or more of the earning power or net income of the
corporation.
In general, an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years, did own)
10% or more of a corporation's voting stock. The statute could prohibit or delay
mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire our company even though such a transaction may
offer our stockholders the opportunity to sell their stock at a price above the
prevailing market price.
Although we do not believe that we are currently subject to
these "business combination" provisions since we only have approximately 68
stockholders of record, there can be no assurance that in the future such
provisions will not apply to us.
Control Share Acquisitions
The "control share" provisions of Sections 78.378 to 78.3793,
inclusive, of the NRS, which apply only to Nevada corporations with at least 200
stockholders, including at least 100 stockholders of record who are Nevada
residents, and which conduct business directly or indirectly in Nevada, prohibit
an acquiror, under certain circumstances, from voting its shares of a target
corporation's stock after crossing certain ownership threshold percentages,
unless the acquiror obtains approval of the target corporation's disinterested
stockholders. The statute specifies three thresholds: one-fifth or more but less
than one-third, one-third but less than a majority, and a majority or more, of
the outstanding voting power. Once an acquiror crosses one of the above
thresholds, those shares in an offer or acquisition and acquired within 90 days
thereof become "control shares" and such control shares are deprived of the
right to vote until disinterested stockholders restore the right. These
provisions also provide that if control shares are accorded full voting rights
and the acquiring person has acquired a majority or more of all voting power,
all other stockholders who do not vote in favor of authorizing voting rights to
the control shares are entitled to demand payment for the fair value of their
shares in accordance with statutory procedures established for dissenters'
rights.
Although we are not currently subject to these "control share"
provisions since we only have approximately 68 stockholders of record, there can
be no assurance that in the future such provisions will not apply to us.
Transfer Agent and Registrar
Our independent stock transfer agent is Interwest Transfer
Company, Inc, located in 1981 E. Murray Holladay Road, Suite 100, Salt Lake
City, Utah 84117. Their phone number is (801) 272-9294 and facsimile number is
(801) 277-3147.
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Our common stock is quoted under the symbol "NUIN" on the OTCQB
but had not been traded in the OTCQB except on a limited and sporadic basis. The
CUSIP number is 67060M 107.
The following table sets forth, for the periods indicated, the
high and low closing prices of our common stock. These prices reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may
not represent actual transactions. These prices have been adjusted to give
retroactive effect to the 1-for-114.59 reverse split of our common stock that
occurred on May 19, 2009. The last reported sale price of our common stock on
January 25, 2010 was $3.76 per share.
Closing Bid Prices
(1)
High
Low
Year Ended December 31, 2010
1
st
Quarter
$5.00
$3.16
2
nd
Quarter
$3.95
$1.01
3
rd
Quarter (through August 9,
        2010)
$3.03
$2.55
Year Ended December 31, 2009
1
st
Quarter
$28.65
$5.73
2
nd
Quarter
$6.25
$5.73
3
rd
Quarter
$6.25
$6.25
4
th
Quarter
$6.25
$6.25
Year Ended December 31, 2008
1
st
Quarter
$13.75
$13.75
2
nd
Quarter
$13.75
$13.75
3
rd
Quarter
$13.75
$13.75
4
th
Quarter
$28.65
$13.75
_______________________________
(1)
The above table sets forth the range of high and low
      closing bid prices per share of our common stock as reported by
www.quotemedia.com
for the periods
indicated.
53
Holders
On August 9, 2010, there were approximately 68 stockholders of
record of our common stock. The number of record holders does not include
persons who held our common stock in nominee or "street name" accounts through
brokers.
Dividends
We have never declared or paid a cash dividend. Any future
decisions regarding dividends will be made by our board of directors. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has complete discretion on whether to
pay dividends, subject to the approval of our stockholders. Even if our board of
directors decides to pay dividends, the form, frequency and amount will depend
upon our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that the
board of directors may deem relevant.
Securities Authorized for Issuance Under Equity
Compensation Plans
On June 3, 2009, our Board of Directors authorized the
establishment of the Shuaiyi International New Resources Development Inc. 2009
Equity Incentive Plan, or the Plan, whereby we are authorized to issue shares of
our common stock to certain employees, consultants and directors. The maximum
aggregate number of shares of our common stock that may be issued under the Plan
is 1,000,000 shares. The Plan, was approved by our shareholders on June 3, 2009.
On June 17, 2009, the Company granted to certain employees an
aggregate of 500,000 restricted shares pursuant to the Plan.
On January 1, 2010, as disclosed above, pursuant to the Plan,
the Company granted options to our former CFO, Mr. Daniel Lee to purchase an
aggregate 250,000 shares of common stock of the Company, among which, an option
to purchase 100,000 shares will be vested in 2011 with an exercise price of
$7.00 per share, an option to purchase 100,000 shares will be vested in 2012
with an exercise price of $10.00 per share and an option to purchase 50,000
shares will be vested in 2013 with an exercise price of $10.00 per share. Each
of the Options expires three years after its respective vesting date.
On January 1, 2010, pursuant to the Plan, the Company also
granted to Mr. Lee 140,000 restricted shares of the Company's common stock
subject to the vesting schedule therein.
As a result of the resignation of Mr. Lee, effective May 5,
2010, his employment agreement with the Company, dated November 16, 2009, the
stock option agreement with the Company, dated January 1, 2010, and the
restricted shares grant agreement with the Company, dated January 1, 2010 were
terminated, effective on May 5, 2010. In addition, upon his resignation, the
unvested 105,000 restricted shares and the unvested options to purchase 250,000
shares of the Company's common stock granted to Mr. Lee were cancelled.
54
On July 16, 2010, we and Mr. Tick entered into a stock option
agreement under the Plan. Pursuant to the terms of the stock option agreement,
Mr. Tick was granted options to purchase an aggregate 150,000 shares of common
stock of the Company, among which, an option to purchase 75,000 shares will be
vested on December 31, 2011 with an exercise price of $5.00 per share, an option
to purchase 100,000 shares will be vested on December 31, 2012 with an exercise
price of $7.00 per share. Each of the options expires three years after its
respective vesting date.
On the same date, we also entered into a restricted shares
grant agreement under the Plan with Mr. Tick. Pursuant to the terms of the
restricted shares grant agreement, we granted to Mr. Tick 150,000 restricted
shares of the Company's common stock subject to the vesting schedule therein. If
Mr. Tick's service with the Company ceases for any reason other than Mr. Tick's
(a) death, (b) Disability, (c) Retirement, or (d) termination by the Company
without cause, any nonvested restricted shares will be automatically forfeited
to the Company.
SHARES ELIGIBLE FOR FUTURE SALE
As of August 9, 2010, 14,332,731 shares of our common stock
were issued and outstanding.
Shares Covered by this Prospectus
All of the 2,965,561 shares being registered in this offering
may be sold without restriction under the Securities Act, so long as the
registration statement of which this prospectus is a part is, and remains,
effective.
Rule 144
The SEC has recently adopted amendments to Rule 144 which
became effective on February 15, 2008 and apply to securities acquired both
before and after that date. Under these amendments, a person who has
beneficially owned restricted shares of our common stock or warrants for at
least six months is entitled to sell its securities provided that (1) such
person is not deemed to have been one of our affiliates at the time of, or at
any time during the three months preceding, a sale, (2) we are subject to the
Exchange Act reporting requirements for at least 90 days before the sale and (3)
if the sale occurs prior to satisfaction of a one-year holding period, we
provide current information at the time of sale.
Persons who have beneficially owned restricted shares of our
common stock or warrants for at least six months but who are our affiliates at
the time of, or at any time during the three months preceding, a sale, would be
subject to additional restrictions, by which such person would be entitled to
sell within any three-month period only a number of securities that does not
exceed the greater of:
1% of the total number of securities of the same class then outstanding,
  which will equal approximately 143,327 shares immediately after this offering;
  or
the average weekly trading volume of such securities during the four
  calendar weeks preceding the filing of a notice on Form 144 with respect to
  such sale.
provided,
in each case, that we are subject to the
Exchange Act periodic reporting requirements for at least three months before
the sale.
However, since our shares are quoted on the OTCQB, which is not
an "automated quotation system," our stockholders will not be able to rely on
the market-based volume limitation described in the second bullet above. If, in
the future, our securities are listed on an exchange or quoted on NASDAQ, then
our stockholders would be able to rely on the market-based volume limitation.
Unless and until our stock is so listed or quoted, our stockholders can only
rely on the percentage based volume limitation described in the first bullet
above.
Such sales by affiliates must also comply with the manner of
sale, current public information and notice provisions of Rule 144. The selling
stockholders will not be governed by the foregoing restrictions when selling
their shares pursuant to this prospectus.
55
Historically, the SEC staff has taken the position that Rule
144 is not available for the resale of securities initially issued by companies
that are, or previously were, blank check companies, like us. The SEC has
codified and expanded this position in the amendments discussed above by
prohibiting the use of Rule 144 for resale of securities issued by any shell
companies (other than business combination related shell companies) or any
issuer that has been at any time previously a shell company. The SEC has
provided an important exception to this prohibition, however, if the following
conditions are met:
the issuer of the securities that was formerly a shell company has ceased
  to be a shell company;
the issuer of the securities is subject to the reporting requirements of
  Section 13 or 15(d) of the Exchange Act;
the issuer of the securities has filed all Exchange Act reports and
  material required to be filed, as applicable, during the preceding 12 months
  (or such shorter period that the issuer was required to file such reports and
  materials), other than Current Reports on Form 8-K; and
the least one year has elapsed from the time that the issuer filed current
  comprehensive disclosure with the SEC reflecting its status as an entity that
  is not a shell company.
As a result, it is likely that pursuant to Rule 144 our
stockholders, who were stockholders of ours prior to the reverse acquisition of
New Resources that concluded on December 23, 2008, were able to sell the their
shares of our common stock from and after December 31, 2009 (the one year
anniversary of our filing of the Current Report on Form 8-K reporting the
reverse acquisition of New Resources) without registration.
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell, transfer
or otherwise dispose of any or all of their shares of common stock or interests
in shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.
The selling stockholders may use any one or more of the
following methods when disposing of shares or interests therein:
ordinary brokerage transactions and transactions in which the broker-dealer
  solicits purchasers;
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;
purchases by a broker-dealer as principal and resale by the broker-dealer
  for its account;
an exchange distribution in accordance with the rules of the applicable
  exchange;
privately negotiated transactions;
short sales effected after the date the registration statement of which
  this Prospectus is a part is declared effective by the SEC;
through the writing or settlement of options or other hedging transactions,
  whether through an options exchange or otherwise;
broker-dealers may agree with the selling stockholders to sell a specified
  number of such shares at a stipulated price per share; and
a combination of any such methods of sale.
The selling stockholders may, from time to time, pledge or
grant a security interest in some or all of the shares of common stock owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this Prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
56
In connection with the sale of our common stock or interests
therein, the selling stockholders 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 stockholders may also sell shares of our 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 stockholders 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 aggregate proceeds to the selling stockholders from the
sale of the common stock offered by them will be the purchase price of the
common stock less discounts or commissions, if any. Each of the selling
stockholders reserves the right to accept and, together with their agents from
time to time, to reject, in whole or in part, any proposed purchase of common
stock to be made directly or through agents. We will not receive any of the
proceeds from this offering.
Broker-dealers engaged by the selling stockholders may arrange
for other broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchase of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders also may resell all or a portion of
the shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided that they meet the criteria and conform to the
requirements of that rule.
The broker-dealers or agents that participate in the sale of
the common stock or interests therein and the selling stockholders who are
affiliates of broker-dealers may be "underwriters" within the meaning of Section
2(11) of the Securities Act. Any discounts, commissions, concessions or profit
they earn on any resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling stockholders who are
"underwriters" within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act. We know
of no existing arrangements between any of the selling stockholders and any
other stockholder, broker, dealer, underwriter, or agent relating to the sale or
distribution of the shares, nor can we presently estimate the amount, if any, of
such compensation. See "Selling Stockholders" for description of any material
relationship that a stockholder has with us and the description of such
relationship.
To the extent required, the shares of our common stock to be
sold, the names of the selling stockholders, the respective purchase prices and
public offering prices, the names of any agents, dealer or underwriter, any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this
Prospectus.
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states, the
common stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and
is complied with.
We have advised the selling stockholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this Prospectus (as it
may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
We have agreed to pay certain fees and expenses incurred by us
incident to the registration of the shares. We have agreed to indemnify the
selling stockholders against liabilities, including liabilities under the
Securities Act and state securities laws, relating to the registration of the
shares offered by this Prospectus.
57
LEGAL MATTERS
The validity of the common stock offered by this prospectus
will be passed upon for us by Holland & Hart LLP, Reno, Nevada.
EXPERTS
The audited consolidated financial statements of Nutrastar
International Inc. for the fiscal years ended December 31, 2009 and 2008
included in this prospectus and in the registration statement have been audited
by AGCA, Inc., independent registered public accounting firm, to the extent and
for the periods sent forth in their respective reports appearing elsewhere
herein and in the registration statement, and are included in reliance on such
reports, given the authority of said firms as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1
  under the Securities Act with respect to the common stock offered in this offering.
  This prospectus does not contain all of the information set forth in the registration
  statement. For further information with respect to us and the common stock offered
  in this offering, we refer you to the registration statement and to the attached
  exhibits. With respect to each such document filed as an exhibit to the registration
  statement, we refer you to such exhibit for a more complete description of the
  matters involved.
You may inspect our registration statement and the attached
exhibits and schedules without charge at the public reference facilities
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may
obtain copies of all or any part of our registration statement from the SEC upon
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.
Our SEC filings, including the registration statement and the
exhibits filed with the registration statement, are also available from the
SEC's website at www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC.
58
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES FINANCIAL
      STATEMENTS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2010
      (UNAUDITED)
Condensed Consolidated Balance Sheets as of
      March 31, 2010 (Unaudited) and December 31, 2009 (Audited)
F-2
Condensed Consolidated Statements of Income
      and Comprehensive Income (Unaudited) for the Three Months Ended March 31,
      2010 and 2009
F-3
Condensed Consolidated Statement of
      Stockholders' Equity (Unaudited) for the Three Months Ended March 31, 2010
F-4
Condensed Consolidated Statements of Cash
      Flows (Unaudited) for the Three Months Ended March 31, 2010 and 2009
F-5
Notes to Condensed Consolidated Financial
      Statements
F-6
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES FINANCIAL
      STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Reports of Independent Registered Public
      Accounting Firm
F-20
Consolidated Balance Sheets
F-21
Consolidated Statements of Income and
      Comprehensive Income
F-22
Consolidated Statements of Stockholders'
      Equity
F-23
Consolidated Statements of Cash Flows
F-24
Notes to Consolidated Financial Statements
F-25
F-1
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN
US DOLLAR)
March 31
December 31
2010
2009
(
Unaudited
)
(
Audited
)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
23,289,425
$
20,115,677
Accounts
      receivable, net
367,966
215,486
Inventories
538,700
616,073
Prepayments and
      other receivables
10,971
251,235
Total current assets
24,207,062
21,198,471
OTHER ASSETS
Intangible assets, net
2,638,241
2,747,402
Property, plant
      and equipment, net
10,261,227
10,396,507
Total assets
$
37,106,530
$
34,342,380
LIABILITIES
      AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
55,599
$
863
Other payables and accruals
430,056
453,504
Payable for
      intangible asset
878,953
878,709
Income tax payable
277,183
319,873
Due to related
      parties
49,807
49,794
Acquisition payable
8,736,833
8,736,833
Total
      current liabilities
10,428,431
10,439,576
Total liabilities
10,428,431
10,439,576
COMMITMENTS AND
      CONTINGENCIES (Note 20)
SHAREHOLDERS' EQUITY
Preferred Stock, $0.001 par
      value, 1,000,000 shares authorized, none shares issued and outstanding
-
-
Common stock, $0.001 par value, 190,000,000
      shares authorized, 14,312,731 and 14,297,731 shares issued and outstanding
14,313
14,298
Additional
      paid-in capital
4,761,251
4,715,891
Statutory reserves
1,344,401
1,341,687
Retained earnings
19,576,360
16,858,012
Accumulated other comprehensive
      income
981,774
972,916
Total
      shareholders' equity
26,678,099
23,902,804
Total liabilities and
      shareholders' equity
$
37,106,530
$
34,342,380
See accompanying notes to condensed consolidated financial
statements
F-2
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
(UNAUDITED)
(AMOUNTS EXPRESSED IN US DOLLAR)
For the
      Three Months Ended
March
      31,
2010
2009
NET REVENUE
$
4,768,395
$
4,642,724
Cost of sales
(1,056,515
)
(1,755,704
)
GROSS PROFIT
3,711,880
2,887,020
Selling expenses
(171,718
)
(111,532
)
General and
      administrative expenses
(429,786
)
(303,525
)
Income from operations
3,110,376
2,471,963
Other income:
Interest income
33,077
12,746
Exchange
      gain, net
429
1,600
Other, net
-
152
Total
      other income
33,506
14,498
Income before income taxes
3,143,882
2,486,461
Provision for income
      taxes
(422,820
)
(316,192
)
NET INCOME
2,721,062
2,170,269
OTHER COMPREHENSIVE
      INCOME (LOSS):
Foreign currency translation
      adjustments
8,858
(4,311
)
COMPREHENSIVE
      INCOME
$
2,729,920
$
2,165,958
Earnings per share
Basic
$
0.19
$
0.17
Diluted
$
0.19
$
0.17
Weighted average number
      of shares outstanding
Basic
14,312,731
12,800,000
Diluted
14,402,412
12,800,000
See accompanying notes to condensed consolidated financial
statements.
F-3
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010
(AMOUNTS EXPRESSED
IN US DOLLAR)
Accumulated
Common Stock
Additional
Other
Number of
Paid-in
Statutory
Retained
Comprehensive
shares
Amount
Capital
Reserves
Earnings
Income
Total
Balance at January 1, 2010
      (Audited)
14,297,731
$
14,298
$
4,715,891
$
1,341,687
$
16,858,012
$
972,916
$
23,902,804
Net income
-
-
2,721,062
2,721,062
Foreign currency translation
      adjustment
-
-
8,858
8,858
Appropriation of statutory reserves
-
2,714
(2,714
)
-
Share-based payment
15,000
15
45,360
-
45,375
Balance at
March 31, 2010
(Unaudited)
14,312,731
$
14,313
$
4,761,251
$
1,344,401
$
19,576,360
$
981,774
$
26,678,099
See accompanying notes to condensed consolidated financial
statements.
F-4
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(AMOUNTS EXPRESSED IN US DOLLAR)
For the
      Three Months Ended
March
      31,
2010
2009
CASH FLOWS FROM
      OPERATING ACTIVITIES:
Net income
$
2,721,062
$
2,170,269
Adjustments to
      reconcile net income to cash provided by operating activities:
Depreciation and amortization
252,892
252,527
Share-based compensation expense
45,375
-
(Increase) decrease in
      assets:
Accounts receivable
(152,407
)
(142,354
)
Prepayments and other receivables
240,313
3,862
Inventories
77,538
597,554
Increase (decrease) in
      liabilities:
Accounts payable
54,730
9,745
Other
      payables and accruals
(23,572
)
(140,586
)
Income tax payable
(42,775
)
20,662
Due
      to related parties
-
2,250
Net cash provided by operating activities
3,173,156
2,773,929
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of
      property, plant and equipment
(4,816
)
-
Net cash
      used in investing activities
(4,816
)
-
CASH FLOWS FROM
      FINANCING ACTIVITIES:
Repayment of acquisition payable
-
(50,269
)
Advance from
      related party
-
61,588
Repayment to related party
(428
)
-
Net cash provided by (used in) financing activities
(428
)
11,319
Foreign currency translation adjustment
5,836
(3,424
)
INCREASE IN CASH AND
      CASH EQUIVALENTS
3,173,748
2,781,824
CASH AND CASH EQUIVALENTS, at the
      beginning of the period
20,115,677
9,198,243
CASH AND CASH
      EQUIVALENTS, at the end of the period
$
23,289,425
$
11,980,067
NON-CASH TRANSACTIONS
Share-based
      payments to officer under equity incentive plan
$
45,375
$
-
SUPPLEMENTAL DISCLOSURE INFORMATION
Cash paid for
      income taxes
$
356,550
$
356,091
Cash paid for interest
$
-
$
-
See accompanying notes to condensed consolidated financial
statements.
F-5
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 1         DESCRIPTION OF BUSINESS AND
ORGANIZATION
Nutrastar International, Inc. ("
Nutrastar
" or the
"
Company
") was incorporated in the State of Nevada on December 22, 2002.
On December 23, 2008, the Company completed a reverse acquisition with New
Zealand WAYNE'S New Resources Development Co., Ltd. ("
New Resources
"). As
a result of the reverse acquisition with New Resources, the Company is no longer
a shell company and active business operations have been revived. Nutrastar
together with its subsidiaries are referred to as the "
Company
".
On May 19, 2009, the Company filed Amended and Restated
Articles of Incorporation with the Nevada Secretary of State to amend the
Company's current Articles of Incorporation to, among other things, (1) change
the name of the Company from "YzApp International Inc." to "Shuaiyi
International New Resources Development Inc.," (2) increase the total number of
shares of common stock that the Company has the authority to issue from
50,000,000 to 190,000,000 shares and (3) effect a one for 114.59 reverse split
of the Company's outstanding common stock (the "
Reverse Split
"). The
detailed description of the Amendments is stated in the Company's Form 8-K dated
May 26, 2009.
On January 11, 2010, the Company, filed a Certificate of
Amendment to its Articles of Incorporation with the Secretary of State of the
State of Nevada, pursuant to which the Company further changed its name from
"Shuaiyi International New Resources Development Inc." to "Nutrastar
International Inc.".
As of March 31, 2010, details of the subsidiaries of the
Company are as follows:
Domicile and
Percentage
date of
of effective
Subsidiaries' names
incorporation
Paid-up capital
ownership
Principal activities
New Zealand WAYNE'S
British Virgin
$
50,000
100%
Holding company of the
New Resources
Islands
other subsidiaries
Development Co., Ltd
March 13, 2008
("New Resources")
Heilongjiang Shuaiyi New
People's Republic
RMB60,000,000
100%
Principally engaged in
Energy Development
of China ("PRC")
investment holding
Co., Ltd ("Heilongjiang
July 11, 2006
Shuaiyi")
Daqing Shuaiyi Biomass
PRC
RMB10,000,000
100%
Growing and sales of
Technology Co., Ltd.
August 8, 2005
Chinese Golden Grass,
("Daqing Shuaiyi")
which is widely used for
Chinese medicine
Harbin Shuaiyi Green and
PRC
RMB1,500,000
100%
Sales of agricultural
Specialty Food Trading
May 18, 2001
products
LLP. ("Harbin Shuaiyi")
F-6
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2         SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These interim condensed consolidated financial statements are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim condensed consolidated financial statements have been included.
The results reported in the condensed consolidated financial statements for any interim periods are not necessarily indicative of the results that may be reported for the entire year. The accompanying condensed consolidated financial statements have
been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all information and footnotes necessary for a complete presentation of financial statements in conformity with accounting
principles generally accepted in the United States. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2009.
These condensed consolidated financial statements include the financial statements of Nutrastar and its subsidiaries. All significant inter-company balances or transactions have been eliminated on consolidation.
Reclassification
Certain prior period balances have been reclassified to conform to the current period's financial statement presentation. These reclassifications had no impact on previously reported financial position, results of operations or cash flows.
Research and development costs
Research and development costs are expensed as incurred. For the three months ended March 31, 2010 and 2009, research and development costs were $8,789 and $8,777, respectively.
Advertising costs
The Company expenses all advertising costs as incurred. The total amount of advertising costs charged to selling, general and administrative expense were $21,692 and $1,097 for the three months ended March 31, 2010 and 2009, respectively.
Shipping and handling costs
Costs of shipping and handling of products to customers are included in selling, general and administrative expense. Shipping and handling costs for the three months ended March 31, 2010 and 2009 were insignificant.
F-7
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 2         SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency
The Company uses the United States dollars ("U.S. Dollar" or
"US$" or "$") for financial reporting purposes. The PRC subsidiaries within the
Company maintain their books and records in their functional currency, Chinese
Renminbi ("RMB"), being the lawful currency in the PRC. Assets and liabilities
of the PRC subsidiaries are translated from RMB into US Dollars using the
applicable exchange rates prevailing at the balance sheet date. Items on the
statement of operations are translated at average exchange rates during the
reporting period. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the Company's financial statements
are recorded as accumulated other comprehensive income.
The exchange rates used to translate amounts in RMB into U.S.
Dollars for the purposes of preparing the consolidated financial statements are
based on the rates as published on the website of People's Bank of China and are
as follows:-
March 31, 2010
December 31, 2009
Balance sheet items, except for equity accounts
US$1=RMB 6.8263
US$1=RMB6.8282
Three months ended March 31,
2010
2009
Items in the statements of income and
      cash flows
US$1=RMB 6.8269
US$1=RMB6.8357
No representation is made that the RMB amounts could have been,
or could be, converted into U.S. dollars at the above rates. The value of RMB
against U.S. dollars and other currencies may fluctuate and is affected by,
among other things, changes in China's political and economic conditions. Any
significant revaluation of RMB may materially affect the Company's results and
financial position in terms of U.S. dollar reporting.
F-8
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 3         RECENT ACCOUNTING PRONOUNCEMENTS
Effective January 1, 2010, the Company adopted the provisions
in ASU 2009-17, "Consolidation (ASC Topic 810): Improvements to Financial
Reporting by Enterprises Involved with Variable Interest Entities", which
changes how a company determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. The adoption of the provisions in ASU 2009-17 did not have an
impact on the Company's consolidated financial statements.
Effective January 1, 2010, the Company adopted ASU 2010-01,
"Equity (ASC Topic 505): Accounting for Distributions to Shareholders with
Components of Stock and Cash", which clarifies that the stock portion of a
distribution to shareholders that allow them to elect to receive cash or stock
with a potential limitation on the total amount of cash that all shareholders
can elect to receive in the aggregate is considered a share issuance that is
reflected prospectively in earnings per share and is not considered a stock
dividend for purposes of ASC Topic 505 and ASC Topic 260. The adoption of the
provisions in ASU 2010-01 did not have an impact on the Company's consolidated
financial statements.
Effective January 1, 2010, the Company adopted the provisions
in ASU 2010-06, "Fair Value Measurements and Disclosures (ASC Topic 820):
Improving Disclosures about Fair Value Measurements, which requires new
disclosures related to transfers in and out of levels 1 and 2 and activity in
level 3 fair value measurements, as well as amends existing disclosure
requirements on level of disaggregation and inputs and valuation techniques. The
adoption of the provisions in ASU 2010-06 did not have an impact on the
Company's consolidated financial statements.
Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company's
Consolidated Financial Statements upon adoption.
NOTE 4         FAIR VALUE MEASUREMENTS AND FINANCIAL
INSTRUMENTS
ASC Topic 820,
Fair Value Measurement and Disclosures
,
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair
value hierarchy which requires classification based on observable and
unobservable inputs when measuring fair value. The fair value hierarchy
distinguishes between assumptions based on market data (observable inputs) and
an entity's own assumptions (unobservable inputs). The hierarchy consists of
three levels:
Level one —
Quoted market prices in active markets
      for identical assets or liabilities;
Level two —
Inputs other than level one inputs that
      are either directly or indirectly observable; and
Level three —
Unobservable inputs developed using estimates
      and assumptions, which are developed by the reporting entity and reflect
      those assumptions that a market participant would use.
Determining which category an asset or liability falls within
the hierarchy requires significant judgment. The Company evaluates its hierarchy
disclosures each quarter.
There were no assets or liabilities measured at fair value on a
non-recurring basis as of March 31, 2010 or December 31, 2009.
The carrying values of cash and cash equivalents, trade and
other receivables and payables approximate their fair values due to the short
maturities of these instruments.
F-9
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 5
ACCOUNTS RECEIVABLE,
      NET
Accounts receivable
      consisted of the following:
March 31
December 31
2010
2009
(Unaudited)
(Audited)
Accounts receivable
$
367,966
$
215,486
Less: Allowance for doubtful
      accounts
-
-
Accounts receivable,
      net
$
367,966
$
215,486
NOTE 6
INVENTORIES
Inventories by major
      categories are summarized as follows:
March 31
December 31
2010
2009
(Unaudited)
(Audited)
Raw materials
$
161,660
$
183,934
Work in progress
195,701
294,983
Finished goods
181,339
137,156
Total
$
538,700
$
616,073
NOTE 7
PREPAYMENTS AND OTHER
      RECEIVABLES
Prepayments and other
      receivables consist of the following:
March 31
December 31
2010
2009
(Unaudited)
(Audited)
Prepayments
$
2,035
$
12,812
Other receivables, net of
      $nil allowance
8,936
238,423
$
10,971
$
251,235
F-10
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 8         INTANGIBLE ASSETS,
NET
Intangible assets, net consisted of the following:
March 31
December 31
2010
2009
(Unaudited)
(Audited)
Computer software, cost
$
1,455
$
1,454
Exclusive right to use a secret process, cost
4,396,533
4,395,309
Less: Accumulated amortization
(1,759,747
)
(1,649,361
)
$
2,638,241
$
2,747,402
In April 2006, the Company purchased from a third party a
ten-year exclusive right to use a secret process and method in the cultivation
and growing of Chinese Golden Grass, which is widely used for Chinese medicine,
for a cash consideration of RMB30,000,000, payable over five years. The
exclusive right is amortized over its term of ten years using the straight-line
method.
Amortization expenses for the three months ended March 31, 2010
and 2009 were $109,915 and $109,774, respectively.
NOTE 9         PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net
      consisted of the following:
March 31
December 31
2010
2009
(Unaudited)
(Audited)
Cost:
Buildings
$
11,675,653
$
11,672,404
Office equipment
20,085
15,264
Machinery
128,321
128,286
Motor vehicles
54,857
54,842
Total cost
11,878,916
11,870,796
Less: Accumulated depreciation
(1,617,689
)
(1,474,289
)
Net book value
$
10,261,227
$
10,396,507
Depreciation expenses for the three months ended March 31, 2010
and 2009 were $142,977 and $142,753, respectively
F-11
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 10         OTHER PAYABLES AND
      ACCRUALS
Other payables and accruals consisted
      of the following:
March 31
December 31
2010
2009
(Unaudited)
(Audited)
Accrued staff costs
$
418,952
$
370,395
Advance from customer
3,983
-
Other taxes payable
1,962
25,030
Other payables
5,159
58,079
$
430,056
$
453,504
NOTE 11         PAYABLE FOR INTANGIBLES
As described in Note 8, the Company purchased an exclusive
right from an independent party for a secret process and method for a stated
value of RMB30,000,000 payable over 5 years from the date of purchase. The
agreement provides that all payments by the Company for the secret process and
method will be refundable if the secret process and method proves ineffective.
Under ASC Subtopic 835-30, "Imputation of Interest" (formerly APB 21, "Interest
on Receivables and Payables"), the payable for intangibles are stated without
imputed interest as the noninterest factor fairly represents the warranty for
performance.
The following table presents the amounts payable for the next
five years and thereafter:
(Unaudited)
Reminder of year ending
      December 31, 2010
$
878,953
2011 and thereafter
-
Total
878,953
Current portion
878,953
Non-current
      portion
$
-
NOTE 12         ACQUISITION PAYABLE
The acquisition payable represents the transfer price of
RMB60,000,000, equivalent to USD 8,736,833, payable by New Resources for the
acquisition of 100% equity interest in Heilongjiang Shuaiyi, as further
discussed in Note 20, the acquisition payable is due for payment in full on or
before June 30, 2010 by New Resources to the Shuaiyi Founders who are also
shareholders of the Company. See Note 18(b).
F-12
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 13         STATUTORY RESERVES
In accordance with the PRC Companies Law, the Company's PRC
subsidiaries were required to transfer 10% of their profits after tax, as
determined in accordance with accounting standards and regulations of the PRC,
to the statutory surplus reserve and a percentage of not less than 5%, as
determined by management, of the profits after tax to the public welfare fund.
However, the Company's PRC subsidiaries were not required to transfer any profit
after tax to the statutory surplus reserve only after the accumulated statutory
surplus reserves reached 50% of registered capital of the Company's PRC
subsidiaries. With the amendment of the PRC Companies Law which was effective
from January 1, 2006, enterprises in the PRC were no longer required to transfer
any profit to the public welfare fund. Any balance of public welfare fund
brought forward from December 31, 2005 should be transferred to the statutory
surplus reserve. The statutory surplus reserve is non-distributable.
NOTE 14         COMMON STOCK PURCHASE
WARRANTS
Warrants issued and outstanding at March 31, 2010, and changes
during the three months then ended, are as follows:
Weighted
Average
Number of
Average
Remaining
underlying
Exercise
Contractual Life
shares
Price
(years)
Outstanding at December 31, 2009
500,000
$
3.63
2.96
Granted
-
-
Forfeited
-
Exercised
-
-
Outstanding at March 31, 2010
      (Unaudited)
500,000
$
3.63
2.71
Exercisable at March 31, 2010 (Unaudited)
500,000
$
3.63
2.71
NOTE 15         SHARE-BASED COMPENSATION
On January 1, 2010, the Company entered into a stock option
agreement with Mr. Daniel K. Lee ("Mr. Lee"), the Chief Financial Officer of the
Company, under the Company's 2009 Equity Incentive Plan. Pursuant to the terms
of the Stock Option Agreement, Mr. Lee was granted options (the "Options") to
purchase an aggregate 250,000 shares of common stock of the Company, among
which, an option to purchase 100,000 shares will be vested in 2011 with an
exercise price of $7.00 per share, an option to purchase 100,000 shares will be
vested in 2012 with an exercise price of $10.00 per share and an option to
purchase 50,000 shares will be vested in 2013 with an exercise price of $10.00
per share. Each of the Options expires three years after its respective vesting
date.
F-13
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 15         SHARE-BASED COMPENSATION (continued)
According to the Stock Option Agreement, in the event Mr. Lee's
employment with the Company is terminated for any reason except for death or
disability, he may exercise the Options only to the extent that the Options
would have been exercisable on the termination date and no later than three
months after the termination date. If Mr. Lee's employment is terminated because
of his death or disability, the Options may be exercised only to the extent that
such Options would have been exercisable by Mr. Lee on the termination date and
must be exercised by Mr. Lee no later than twelve months after the termination
date. If Mr. Lee is terminated for cause, the Options will terminate
immediately. In no event will the Options be exercised later than December 31,
2015.
On May 5, 2010, Mr. Lee resigned as the Chief Financial Officer
and Treasurer of the Company, effectively immediately.
No expense has been recognized related to the Options which
were forfeited because the requisite service for the Options has not been
rendered.
On January 1, 2010, the Company also entered into a restricted
shares grant agreement (the "Restricted Shares Grant Agreement") under the
Company's 2009 Equity Incentive Plan with Mr. Lee. Pursuant to the terms of the
Restricted Shares Grant Agreement, the Company granted to Mr. Lee 140,000
restricted shares of the Company's common stock subject to the vesting schedule
therein. If Mr. Lee's service with the Company ceases for any reason other than
Mr. Lee's (a) death, (b) Disability, (c) Retirement, or (d) termination by the
Company without cause, any nonvested restricted shares will be automatically
forfeited to the Company.
The Restricted Share vests under the following schedule:
Number of Shares
Vesting Date
15,000
January 1, 2010
20,000
April 1, 2010
35,000
July 1, 2010
35,000
January 1, 2011
35,000
July 1, 2011
As a result of the resignation of Mr. Lee, his employment
agreement with the Company, dated November 16, 2009, the stock option agreement
with the Company, dated January 1, 2010, and the restricted shares grant
agreement with the Company, dated January 1, 2010 were terminated, effective on
May 5, 2010. In addition, upon his resignation, the unvested 105,000 restricted
shares and the unvested options to purchase 250,000 shares of the Company's
common stock granted to Mr. Lee were cancelled.
The Company recognizes compensation cost for an award with only
service conditions that has a graded vesting schedule on a straight-line basis
over the requisite service period for the entire award, provided that the
compensation cost recognized at any date must at least equal the portion of the
grant-date value of the award that is vested at that date. No compensation cost
is recognized for instruments that employees forfeit because a service condition
or a performance condition is not satisfied.
Accordingly, the Company recognized a compensation expense of
$45,375, related to the restricted shares granted to Mr. Lee, which vested
before his resignation, for the three months ended March 31, 2010, based on the
estimated grant-date fair value of $3.025 of the Company's common stock.
Before January 1, 2010, the Company's common stock had scarcely
been traded. The Company has determined the fair value of its common stock as of
January 1, 2010 based on the volume weighted average of the fair value of the
Company's common stock issued in the private placement of shares and warrants to
unaffiliated investors on December 17, 2009 and the closing prices of Company's
common stock traded during January 2010.
F-14
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 16         EARNINGS PER SHARE
The following table is a reconciliation of the net income and
the weighted average shares used in the computation of basic and diluted
earnings per share for the periods presented:
For the Three months
      ended
March 31,
2010
2009
(Unaudited)
(Unaudited)
Income available to common
      stockholders:
- Basic
$
2,721,062
$
2,170,269
- Diluted
$
2,721,062
$
2,170,269
Weighted average number of shares:
- Basic
14,312,731
12,800,000
- Effect of dilutive warrants and options
89,681
-
- Diluted
14,402,412
12,800,000
Net income per share
- Basic
$
0.19
$
0.17
- Diluted
$
0.19
$
0.17
As discussed in Note 1, the Company effected a 1-for-114.59
Reverse Split of its common stock. The weighted average number of shares for the
purposes of calculating the earnings per share has been retroactively adjusted
as if the Reverse Split took effect as of the beginning of the earliest period
presented.
NOTE 17         INCOME TAXES
The Company's income tax expense consisted of:
For the Three Months
      Ended
March 31,
2010
2009
(Unaudited)
(Unaudited)
Current income tax – PRC
$
422,820
$
316,192
Deferred
-
-
Income tax expenses
$
422,820
$
316,192
The Company had deferred tax assets as follows:
March 31,
December 31,
2010
2009
(Unaudited)
(Audited)
Net operating losses carried forward
$
370,639
$
355,212
Less: Valuation allowance
(370,639
)
(355,212
)
Net deferred tax assets
$
-
$
-
As of March 31, 2010 and December 31, 2009, the Company did not
have any other significant temporary differences and carry forwards that may
result in deferred tax.
F-15
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 18         RELATED PARTY TRANSACTIONS
(a)     Due to related parties
March 31
December 31
2010
2009
(Unaudited)
(Audited)
Due to Ms. Lianyun Han, Chairperson, CEO
      and President of the Company
$
49,807
$
49,794
The amount due to Ms. Lianyun Han was non-interest bearing,
unsecured and without fixed repayment date.
(b)     Acquisition payable
The acquisition payable arose from the Equity Transfer
Agreement which formed part of the restructuring of Heilongjiang Shuaiyi in July
2008, pursuant to which New Resources acquired 100% equity interest in
Heilongjiang Shuaiyi from Ms. Lianyun Han, Chairperson, CEO and President of the
Company, and other individual shareholders (collectively the "
Shuaiyi
Founders
").
As part of the restructuring plan, Heilongjiang Shuaiyi entered
into separate loan agreements dated December 8, 2008, as amended on February 12,
2009, and promissory notes with the Shuaiyi Founders, pursuant to which, the
Shuaiyi Founders have agreed to lend to Heilongjiang Shuaiyi a loan in the
aggregate amount of RMB60,000,000 (approximately $8.8 million, "
Subordinated
Loan
"). The amount of the Subordinated Loan exactly equals to the transfer
price payable to the Shuaiyi Founders by New Resources for the acquisition of
Heilongjiang Shuaiyi in compliance with regulatory requirements of the PRC. The
Subordinated Loan ranks behind all other debts of Heilongjiang Shuaiyi, bears no
interest and is only repayable after 10 years, in successive equal yearly
payments beginning on the tenth anniversary of the Notes, December 8, 2018, and
within the first month of each year thereafter. The final payment will be due on
January 1, 2028.
According to the PRC rules and regulations, New Resources is
required to settle the transfer price for acquisition of Heilongjiang Shuaiyi by
way of remittance of the RMB60,000,000 to Shuaiyi Founders within three months
from the issue of the new business license. However, New Resources has obtained
the approval of the relevant business bureau for the extension of the time to
one year until December 1, 2009. On January 4, 2010, the relevant PRC regulatory
agency further extended the payment due date to June 30, 2010. As of March 31,
2020, New Resources had only paid $50,269 of the transfer price and,
accordingly, the corresponding Subordinated Loan has not been drawn yet.
The acquisition payable due to the Shuaiyi Founders
comprised:
March 31
December 31
2010
2009
(Unaudited)
(Audited)
Ms. Lianyun Han, Chairperson, CEO
      and President of the Company
$
5,951,326
$
5,951,326
Ms. Nana Jiang, director of the Company
278,551
278,551
Mr. Chunming Zhang , director of the
      Company
351,484
351,484
Mr. Weihan Zhang, director of a subsidiary of the Company
      and the son of Ms. Lianyun Han
439,354
439,354
Family members of Ms. Lianyun Han
878,708
878,708
Other Shuaiyi Founders
837,410
837,410
Total
$
8,736,833
$
8,736,833
F-16
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 18         RELATED PARTY TRANSACTIONS (continued)
(c)     Purchase of goods
For the three months ended March 31, 2010 and 2009, the Company purchased rice amounting to $nil and $395,702, respectively, from Heilongjiang Shuaiyi Technology Development Co., Ltd. ("Shuaiyi Technology"). Shuaiyi Technology and
the Company are under common control and management.
(d)     Lease of land
For the three months ended March 31, 2010 and 2009, the Company paid rental expense of $2,252 and $2,249 for land to Shuaiyi Technology.
NOTE 19         CONCENTRATION OF CREDIT RISK
As of March 31, 2010 and December 31, 2009, 100% of the Company's cash included cash on hand and deposits in accounts maintained within the PRC where there is currently no rule or regulation in place for obligatory insurance to cover bank
deposits in the event of bank failure. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts
For the three months ended March 31, 2010 and 2009, all of the Company's sales arose in the PRC. In addition, all accounts receivable as of March 31, 2010 and December 31, 2009 also arose in the PRC.
Except for one customer who accounted for 41.4% of the Company's revenue for the three months ended March 31, 2010, there was no other single customer who accounted for more than 10% of the Company's revenue for the three months ended
March 31, 2010 or 2009.
As of March 31, 2010, five customers accounted for 24%, 21%, 14%, 12% and 10% of total accounts receivable of the Company. As of December 31, 2009, five customers accounted for 18%, 13%, 12%, 12% and 12% of accounts receivable of the Company. Except
as disclosed, no other customer accounted for 10% or more of the Company's accounts receivable as of March 31, 2010 or December 31, 2009.
F-17
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 20 COMMITMENTS
AND CONTINGENCIES
(a)     Operating leases
The Company has entered into tenancy agreements for the leases
of exhibition hall and land with a third party and a related company, Shuaiyi
Technology (see Note 18(d)), respectively, for the purposes of the operation of
its subsidiaries. The Company's commitments for minimum lease payments under
these operating leases for the next five years and thereafter as of March 31,
2010 are as follows:
(Unaudited)
Remainder of fiscal year ending
      December 31, 2010
$
26,824
Fiscal year ending December 31, 2011
9,008
Fiscal year ending December 31, 2012
9,008
Fiscal year ending December 31, 2013
9,008
Fiscal year ending December 31, 2014
9,008
Thereafter
117,110
Total
$
179,966
(b)     PRC employee costs
According to the prevailing laws and regulations of the PRC,
the Company's subsidiaries in the PRC are required to cover its employees with
medical, retirement and unemployment insurance programs. Management believes
that due to the transient nature of its employees, they do not need to provide
all employees with such social insurances, and have not paid the social
insurances for all employees.
In the event that any current or former employee files a
complaint with the PRC government, the Company's subsidiaries may be subject to
making up the social insurances as well as administrative fines. As the Company
believes that these fines would not be material, no provision has been made in
this regard.
(c)     Transfer price for equity interest in Heilongjiang Shuaiyi
On July 28, 2008, the Company's subsidiary, New Resources
entered into an equity transfer agreement with the Shuaiyi Founders to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB60,000,000
(approximately $8.8 million). A new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008. According to PRC merger and acquisition rules, the
equity interest transfer price should be paid in full within three months
commencing from the issuance of the new business license to Heilongjiang
Shuaiyi. If the transfer price is not paid by this date, the Company may apply
to the relevant PRC business bureau for an extension of up to one year from the
date of the issuance of the license; provided, however, that 60% of the transfer
price will be required to be paid within six months from such date. However, if
the Company is unable to make the payment for the transfer price by the March 1,
2009 or extended deadline and the relevant PRC business bureau does not grant
the Company additional time to make the payment, the Company may be subject to
fines or penalties imposed by the PRC business bureau. In addition, the Company
may not be permitted to exercise any decision-making rights as a shareholder in
Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi's financial results
into the Company's financial statements.
On March 10, 2009, New Resources obtained the approval from the
relevant PRC business bureau for the extension of time allowed for the payment
of the transfer price to one year until December 1, 2009. On January 4, 2010,
the relevant PRC regulatory agency further extended the payment due date to June
30, 2010. The Company has engaged financial advisors with a view to raising
additional capital for the Company. The Company believes that it will be able to
make the payment for the transfer price within the time allowed by the relevant
PRC business bureau and therefore has not accrued any amount related to this
contingency. However, there can be no assurance that the Company will be
successful in raising sufficient capital for the purpose of the payment of the
transfer price to the Shuaiyi Founders.
F-18
NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 21         SEGMENT INFORMATION
The Company operates in two business segments identified by
product, "Chinese Golden Grass" and "other agricultural products". The Chinese
Caterpillar Fungus segment consists of the growing and sales of Chinese Golden
Grass, which business is conducted through the Company's subsidiary, Daqing
Shuaiyi. The other agricultural products segment consists of the sales of rice,
flour and silage corn etc, agricultural products which business is mainly
conducted through the Company's subsidiary, Harbin Shuaiyi.
Throughout the three months ended March 31, 2010 and 2009, all
of the Company's operations were carried out in one geographical segment -
China.
The Company's segment revenue and results for the three months
ended March 31, 2010 and 2009 are as follows:
Chinese
Other
Golden
Agricultural
Corporate
Three months ended March 31, 2010
Grass
Products
unallocated
Consolidated
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Segment revenue from external customers
$
4,265,043
$
503,352
$
-
$
4,768,395
Segment profit (loss)
$
3,300,048
$
48,253
$
(204,419
)
$
3,143,882
Income before income taxes
$
3,143,882
Other segment information:
Depreciation and
      amortization
$
250,463
$
1,460
$
969
$
252,892
Expenditure for segment
      assets
$
4,526
$
-
$
290
$
4,816
Chinese
Other
Golden
Agricultural
Corporate
Three months ended March 31, 2009
Grass
Products
unallocated
Consolidated
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Segment revenue from external customers
$
2,900,846
$
1,741,878
$
-
$
4,642,724
Segment profit (loss)
$
2,080,125
$
485,220
$
(78,884
)
$
2,486,461
Income before income taxes
$
2,486,461
Other segment information:
Depreciation and
      amortization
$
249,877
$
1,963
$
687
$
252,527
Expenditure for segment
      assets
$
-
$
-
$
-
$
F-19
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Stockholders of  Nutrastar
International Inc.:
We have audited the accompanying consolidated balance sh
eets of
Nutrastar International Inc.
(formerly known as
Shuaiyi International New Resources D
evelopment Inc., the "Company") as of December 31, 2009 and 2008
and the related consolidated statements of income and comprehensive income,
stockholders' equity, and cash flows for the years then ended. 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 consolidated 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 purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts 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 consolidated financial position of
Nutrastar International Inc. (formerly known as Shuaiyi International New
Resources Development Inc., the "Company") as of December 31, 2009 and 2008, the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
As discussed in Notes 1 and 18 (c), the consolidated financial
statements were prepared on the assumption that New Zealand WAYNE'S New
Resources Development Co., Ltd. will be able to pay up the investment money
related to Heilongjiang Shuaiyi New Energy Development Co., Ltd. on or before
June 30, 2010. In case New Zealand WAYNE'S New Resources Development Co., Ltd.
fails to pay the amount in full on time, the basis of consolidation may not be
appropriate.
/s/AGCA, Inc.
Arcadia, California
March 25, 2010
F-20
NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US
DOLLAR)
December
      31,
2009
2008
ASSETS
CURRENT ASSETS
Cash and cash
      equivalents
$
20,115,677
$
9,198,243
Accounts receivable, net
215,486
283,822
Inventories
616,073
1,168,079
Prepayments and other receivables
251,235
14,105
Total
      current assets
21,198,471
10,664,249
OTHER ASSETS
Intangible
      assets, net
2,747,402
3,183,995
Property, plant and equipment,
      net
10,396,507
10,902,976
Total
      assets
$
34,342,380
$
24,751,220
LIABILITIES AND
      SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
863
$
3,206
Other payables
      and accruals
453,504
472,959
Payable for intangible asset –
      Current portion
878,709
877,886
Income tax
      payable
319,873
119,486
Due to related parties
49,794
8,998
Acquisition
      payable
8,736,833
8,778,861
Total current liabilities
10,439,576
10,261,396
NON-CURRENT LIABILITIES
Payable for intangible asset, net
      of current portion
-
877,886
Total
      liabilities
10,439,576
11,139,282
COMMITMENTS AND CONTINGENCIES (Note 18)
SHAREHOLDERS' EQUITY
Preferred Stock,
    $0.001 par value, 1,000,000 shares authorized, none and 727,520
      shares issued and outstanding
-
727
Common stock,
    $0.001 par value, 190,000,000 shares authorized, 14,297,731 and 11,746,041 shares issued and
      outstanding
14,298
11,746
Additional paid-in capital
4,715,891
2,192,716
Statutory
      reserves
1,341,687
1,326,239
Retained earnings
16,858,012
9,131,744
Accumulated other
      comprehensive income
972,916
948,766
Total shareholders' equity
23,902,804
13,611,938
Total
      liabilities and shareholders' equity
$
34,342,380
$
24,751,220
See accompanying notes to consolidated financial statements
F-21
NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
(AMOUNTS EXPRESSED IN US DOLLAR)
Year Ended
      December 31,
2009
2008
NET REVENUE
$
15,332,445
$
12,989,760
Cost of sales
(4,563,965
)
(4,604,948
)
GROSS PROFIT
10,768,480
8,384,812
Selling expenses
(507,587
)
(196,313
)
General and
      administrative expenses
(1,356,499
)
(1,416,111
)
Loss on disposal of fixed assets
-
(31,247
)
Income from operations
8,904,394
6,741,141
Other income (expenses):
Interest
      income
81,542
29,741
Exchange loss
(15,398
)
(20,376
)
Merger
      costs
-
(2,068,326
)
Other, net
6,388
11,522
Total
      other income (expenses), net
72,532
(2,047,439
)
Income before income taxes
8,976,926
4,693,702
Provision for income
      taxes
(1,235,210
)
(974,653
)
NET INCOME
7,741,716
3,719,049
OTHER COMPREHENSIVE
      INCOME:
Foreign currency translation
      adjustments
24,150
23,741
COMPREHENSIVE
      INCOME
$
7,765,866
$
3,742,790
Earnings per share
Basic
$
0.590
$
0.305
Diluted
$
0.580
$
0.305
Weighted average number
      of shares outstanding
Basic
13,131,521
12,198,913
Diluted
13,341,521
12,198,913
See accompanying notes to consolidated financial statements
F-22
NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS EXPRESSED IN US DOLLAR)
Accumulated
Preferred Stock
Common Stock
Additional
other
Number
Number
paid-in
Statutory
Retained
comprehensive
of shares
Amount
of shares
Amount
capital
reserves
earnings
income
Total
Balance at
January 1, 2008
689,390
$
689
-
$
-
$
86,174
$
693,028
$
6,045,906
$
925,025
$
7,750,822
Effect of reverse acquisition
-
-
11,746,041
11,746
(14,195
)
-
-
-
(2,449
)
Issue of shares
38,130
38
-
-
427,411
-
-
-
427,449
Share-based payment by shareholders
-
-
-
-
1,693,326
-
-
-
1,693,326
Net income
-
-
-
-
-
-
3,719,049
-
3,719,049
Foreign currency translation adjustment
-
-
-
-
-
-
-
23,741
23,741
Comprehensive income
3,742,790
Appropriation of statutory reserves
-
-
-
-
-
633,211
(633,211
)
-
-
Balance at December 31, 2008
727,520
727
11,746,041
11,746
2,192,716
1,326,239
9,131,744
948,766
13,611,938
Issue of shares
-
-
1,000,000
1,000
2,499,000
-
-
-
2,500,000
Net income
-
-
-
-
-
-
7,741,716
-
7,741,716
Foreign currency translation adjustment
-
-
-
-
-
-
-
24,150
24,150
Comprehensive income
7,765,866
Appropriation of statutory reserves
-
-
-
-
-
15,448
(15,448
)
-
-
Conversion of preferred stock into common stock
(727,520
)
(727
)
12,695,223
12,695
(11,968
)
-
-
-
-
1-for-114.59 reverse split
-
-
(11,643,533
)
(11,643
)
11,643
-
-
-
-
Share-based payment
-
-
500,000
500
24,500
-
-
-
25,000
Balance at December 31, 2009
-
$
-
14,297,731
$
14,298
$
4,715,891
$
1,341,687
$
16,858,012
$
972,916
$
23,902,804
See accompanying notes to consolidated financial statements.
F-23
NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN
US DOLLAR)
Years Ended
      December 31,
2009
2008
CASH FLOWS FROM
      OPERATING ACTIVITIES:
Net income
$
7,741,716
$
3,719,049
Adjustments to reconcile net
      income to cash provided by operating activities:
Depreciation and
      amortization
1,004,386
1,123,447
Loss from disposition of property, plant and equipment
-
31,247
Merger costs
-
2,068,326
Share-based compensation expense
25,000
-
(Increase) decrease in
      assets:
Accounts receivable
68,574
(134,017
)
Prepayments and other receivables
(237,020
)
141,563
Inventories
552,874
(466,314
)
Increase (decrease) in
      liabilities:
Accounts payable
(2,345
)
(28,151
)
Other
      payables and accruals
(19,890
)
(35,852
)
Income tax payable
200,193
38,245
Due
      to related parties
(8,998
)
8,795
Net cash provided by operating activities
9,324,490
6,466,338
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of merger
      costs related to reverse acquisition
-
(375,000
)
Purchase of property, plant and
      equipment
(49,155
)
(32,501
)
Proceeds from
      sale of property, plant and equipment
-
1,151,411
Net cash
      (used in) provided by investing activities
(49,155
)
743,910
CASH FLOWS FROM
      FINANCING ACTIVITIES:
Proceeds from issue of shares
2,500,000
427,449
Advances from
      shareholders
49,773
-
Repayment of acquisition payable
(50,269
)
-
Repayment of
      payables for intangible asset
(878,349
)
(865,292
)
Net cash
      provided by (used in) financing activities
1,621,155
(437,843
)
Foreign currency
      translation adjustment
20,944
277,490
INCREASE IN CASH AND CASH
      EQUIVALENTS
10,917,434
7,049,895
CASH AND CASH
      EQUIVALENTS, at the beginning of the year
9,198,243
2,148,348
CASH AND CASH EQUIVALENTS, at the
      end of the year
$
20,115,677
$
9,198,243
NON-CASH TRANSACTIONS
Share-based payment awarded by shareholders to
      consultants for services related to the reverse acquisition
$
-
$
1,693,326
Share-based
      payment to employees under equity incentive plan
$
25,000
$
-
SUPPLEMENTAL DISCLOSURE INFORMATION
Cash paid for
    interest
$
-
$
-
Cash
    paid for income taxes
$
907,835
$
892,547
See accompanying notes to consolidated financial statements
F-24
NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 1
DESCRIPTION OF BUSINESS AND
    ORGANIZATION
Nutrastar
International Inc. ("
Nutrastar
")
w
as incorporated in the State of Nevada on December 22, 2002. On
December 23, 2008, the Company completed a reverse acquisition of New Zealand
WAYNE'S New Resources Development Co., Ltd. ("New Resources"). As a result of
the reverse acquisition of New Resources, the Company is no longer a shell
company and active business operations have been revived. Nutrastar
together with its subsidiaries are referred to as the "Company".
On May 19, 2009, the Company filed Amended and Restated
Articles of Incorporation with the Nevada Secretary of State to amend the
Company's current Articles of Incorporation to, among other things, (1) change
the name of the Company from "YzApp International Inc." to "Shuaiyi
International New Resources Development Inc.," (2) increase the total number of
shares of common stock that the Company has the authority to issue from
50,000,000 to 190,000,000 shares and (3) effect a one for 114.59 reverse split
of the Company's outstanding common stock (the "Reverse Split"). The detailed
description of the Amendments is stated in the Company's Form 8-K dated May 26,
2009.
On January 11, 2010, the Company filed a Certificate of
Amendment to its Articles of Incorporation with the Secretary of State of the
State of Nevada, pursuant to which the Company further changed its name from
"Shuaiyi International New Resources Development Inc." to "Nutrastar
International Inc.".
As of December 31, 2009, details of the subsidiaries of the
Company are as follows:
Domicile and
Percentage
date of
of effective
Subsidiaries' names
incorporation
Paid-up capital
ownership
Principal activities
New Zealand WAYNE'S
British Virgin
$
50,000
100%
Holding company of
New Resources
Islands
the other subsidiaries
Development Co., Ltd
March 13, 2008
("New Resources")
Heilongjiang Shuaiyi New
People's
RMB60,000,000
100%
Principally engaged in
Energy Development Co.,
Republic of
investment holding
Ltd ("Heilongjiang
China ("PRC")
Shuaiyi")
July 11, 2006
Daqing Shuaiyi Biomass
PRC
RMB10,000,000
100%
Growing and sales of
Technology Co., Ltd.
August 8, 2005
Chinese Golden Grass,
("Daqing Shuaiyi")
which is widely used
for Chinese medicine
Harbin Shuaiyi Green and
PRC
RMB1,500,000
100%
Sales of agricultural
Specialty Food Trading
May 18, 2001
products
LLP. ("Harbin Shuaiyi")
Reverse Acquisition
On December 23, 2008, the Company entered into a share exchange
agreement ("Share Exchange Agreement") under which the Company issued 689,390
shares of the Company's series A preferred stock, par value $0.001, to the sole
shareholder of New Zealand WAYNE'S New Resources Development Co., Ltd ("New
Resources") in exchange for all the issued and outstanding shares of New
Resources (the "Share Exchange"). Immediately following the Share Exchange, the
shareholder of New Resources owned approximately 94% of the Company's total
issued and outstanding share capital.
F-25
NUTRASTAR INTERNATIONAL INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 1
DESCRIPTION OF BUSINESS AND
      ORGANIZATION (CONTINUED)
Reverse Acquisition (continued)
As a result, the Share Exchange has been accounted for as a
reverse acquisition using the purchase method of accounting, whereby New
Resources is deemed to be the accounting acquirer and Nutrastar (formerly
YzAPP) to be the accounting acquiree. The financial statements before the date
of Share Exchange are those of New Resources with the results of Nutrastar being
consolidated from the date of Share Exchange. No goodwill has been recorded.
New Resources was incorporated in the British Virgin Islands,
which owns 100% of the outstanding capital stock of Heilongjiang Shuaiyi.
Heilongjiang Shuaiyi owns 100% equity interests in Daqing Shuaiyi and Harbin
Shuaiyi.
Recapitalization of Daqing Shuaiyi and Harbin Shuaiyi
In September 2007, Heilongjiang Shuaiyi, Daqing Shuaiyi and
Harbin Shuaiyi underwent a restructuring exercise whereby Heilongjiang Shuaiyi
acquired 100% equity interests in Daqing Shuaiyi and Harbin Shuaiyi, and former
ultimate controlling shareholders of Daqing Shuaiyi and Harbin Shuaiyi have
become the controlling shareholders of New Energy.
Before and after the restructuring, all of the three entities,
Heilongjiang Shuaiyi, Daqing Shuaiyi and Harbin Shuaiyi are under the common
control.
This restructuring exercise has been accounted for as
combinations of entities under common control using the "as if" pooling method
of accounting, with no adjustment to the historical basis of the assets and
liabilities of Daqing Shuaiyi and Harbin Shuaiyi and the operations were
consolidated as though the restructuring occurred as of the beginning of the
first accounting period presented in these financial statements.
The shareholding percentages before and after this
restructuring exercise were as follows:
Heilongjiang Shuaiyi
Daqing Shuaiyi
Harbin Shuaiyi
Before
After
Before
After
Before
After
Shareholder
%
%
%
%
%
%
Heilongjiang Shuaiyi
-
-
-
100
-
100
Daqing
47.1
-
-
-
-
Lianyun Han, CEO of the
      Company
-
80.4
-
20
-
Weihan Zhang*
-
5.9
20
-
51
-
Heilongjiang Shuaiyi Science Development Co. Ltd.**
52.9
-
60
-
-
-
Lianju Han
-
5.9
10
-
-
-
Xinjun Li
-
-
5
-
29
-
Nana Jiang
-
-
5
-
-
-
Lianxue Han
-
5.9
-
-
-
Fengxi Lang
-
1.9
-
-
-
100
100
100
100
100
100
*
Mr. Weihan Zhang is the son of Ms. Lianyun Han. Mr.
      Weihan Zhang and Ms. Lianyun Han are acting in concert and considered
      parties to the same control group.
**
Equity interests in Heilongjiang Shuaiyi Science
      Development Co. Ltd. are held as follows:
(i)
44.47% by Ms. Lianyun Han;
(ii)
40.86% by Mr. Weihan Zhang; and
(iii)
14.67% by 9 other minority
shareholders.
F-26
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 1
DESCRIPTION OF BUSINESS AND
      ORGANIZATION (CONTINUED)
Recapitalization of Daqing Shuaiyi and Harbin Shuaiyi
(continued)
Before the restructuring exercise, Ms. Lianyun Han together
with her son, Mr. Weihan Zhang had an effective interest of 78.7% in
Heilongjiang Shuaiyi, 71.2% in Daqing Shuaiyi, and 71% in Harbin Shuaiyi,
respectively. Immediately after the restructuring exercise, Ms. Lianyun Han
together with her son, Mr. Weihan Zhang, had an aggregate interest of 86.3% in
Heilongjiang Shuaiyi, which holds a 100% interest in each of Daqing Shuaiyi and
Harbin Shuaiyi. In addition, Ms. Lianyun Han has been the managing director of
all the entities before and after, and throughout, this restructuring exercise.
As a result, there was no change in control of the entities due to this
restructuring exercise.
The considerations for the equity transfers in this
restructuring exercise were based on the face value of the paid-up capital of
Daqing Shuaiyi and Harbin Shuaiyi and satisfied in cash in compliance with the
regulatory requirements in the PRC. The acquisitions of Daqing Shuaiyi and
Harbin Shuaiyi were funded by the capital of Heilongjiang Shuaiyi, in which the
former controlling shareholders of Daqing Shuaiyi and Harbin Shuaiyi had already
established a majority ownership by way of cash contributions to Heilongjiang
Shuaiyi's paid-up capital.
Restructuring of Heilongjiang Shuaiyi
Pursuant to a restructuring plan intended to ensure compliance
with regulatory requirements of the PRC, in July 2008, New Resources entered
into a equity transfer agreement ("
Equity Transfer Agreement
") to acquire
100% equity interest in Heilongjiang Shuaiyi from Ms. Lianyun Han, the then
controlling shareholder and chairman of board of directors of Heilongjiang
Shuaiyi, and Heilongjiang Shuaiyi's other individual shareholders (collectively
"
Shuaiyi Founders
"). The Equity Transfer Agreement was approved by the
relevant PRC government authority on October 23, 2008. On November 24, 2008,
Heilongjiang Shuaiyi obtained the Certificate of Approval for Establishment of
Enterprises of Foreign Investment issued by Heilongjiang Provincial Government
and a new business license was issued to Heilongjiang Shuaiyi on December 1,
2008.
As part of the restructuring plan, each of Shuaiyi Founders
respectively entered into an earn-in agreement ("
Earn-in Agreement
"),
dated September 12, 2008 (as amended on February 12, 2009) with New Zealand
WAYNE's Investment Holdings Co., Ltd., Heilongjiang Shuaiyi's sole shareholder
("
New Zealand
"). Pursuant to the Earn-in Agreements, Shuaiyi Founders
obtained the right and option to acquire controlling shares ("
Option
Shares
") in Shareholder at the par value of the Option Shares plus a nominal
amount of $1,000, upon the satisfaction of each of the following conditions: (1)
six months have expired since the date of the Share Exchange Agreement with
Nutrastar (formerly YzAPP), provided that on or before that date, Ms. Lianyun
Han and Heilongjiang Shuaiyi have entered into a binding employment agreement
and Ms. Lianyun Han is employed by Heilongjiang Shuaiyi pursuant to that
agreement on such date; (2) the U.S. Securities and Exchange Commission has
declared a registration statement filed by the Company under the Securities Act
effective, or investors who purchased common stock from the Company pursuant to
a securities purchase agreement being able to sell their common stock under Rule
144; (3) Heilongjiang Shuaiyi and its subsidiaries have achieved not less than
$1,560,000 in after-tax net income, as determined under US GAAP for the six
months ended June 30, 2009; and (4) Heilongjiang Shuaiyi and its subsidiaries
have achieved not less than $3,900,000 in pre-tax profits, as determined under
US GAAP for the fiscal year 2009.
On January 28, 2010, the Company filed a registration statement
on Form S-1, which was declared effective by SEC on February 4, 2010. As a
result, all of the conditions to the Earn-in Agreement have been met such that
Shuaiyi Founders are entitled to reacquire the ultimate legal ownership of
Heilongjiang Shuaiyi.
F-27
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 1
DESCRIPTION OF BUSINESS AND
      ORGANIZATION (CONTINUED)
Restructuring of Heilongjiang Shuaiyi (continued)
Pursuant to the Earn-in Agreement, the New Zealand further agrees, among others, that throughout the exercise period of the Earn-in Agreement, without the prior written approval of Shuaiyi Founders:
(i)
it will not increase the number of authorized shares of the New Zealand's common stock, or any increased authorized shares will be deemed as part of the Option Shares;
(ii)
keeps available the services of current officers and employees of New Resources and Heilongjiang Shuaiyi;
(iii)
New Resources and Heilongjiang Shuaiyi do not declare or pay any dividend or make any other distribution, nor do they repurchase, redeem or otherwise reacquire any equity of shares of capital stock or other securities.
Also as part of the restructuring plan, Heilongjiang Shuaiyi entered into separate loan agreements dated December 8, 2008, as amended on February 12, 2009, and promissory notes with Shuaiyi Founders, pursuant to which, Shuaiyi Founders have agreed
to lend to Heilongjiang Shuaiyi a loan in the aggregate amount of RMB60,000,000 (approximately $8.8 million, "
Subordinated Loan
"). The amount of the Subordinated Loan exactly equals to the transfer price payable to the Shuaiyi
Founders by New Resources for the acquisition of Heilongjiang Shuaiyi in compliance with regulatory requirements of the PRC. The Subordinated Loan ranks behind all other debts of Heilongjiang Shuaiyi, bears no interest and is only repayable after 10
years, in successive equal yearly payments beginning on the tenth anniversary of the Notes, December 8, 2018, and within the first month of each year thereafter.  The final payment will be due on January 1, 2028.
According to the PRC rules and regulations, New Resources is required to settle the transfer price for acquisition of Heilongjiang Shuaiyi by way of remittance of the RMB60,000,000 to Shuaiyi Founders within three months from the issue of the new
business license. However, New Resources has obtained the approval of the relevant business bureau for the extension of the time to one year until December 1, 2009.  On January 4, 2010, the relevant PRC regulatory agency further extended the payment
due date to June 30, 2010. As of December 31, 2009, New Resources has only paid $50,269 of the transfer price and, accordingly, the corresponding Subordinated Loan has not been drawn yet.
During and after this restructuring plan, there has been no change to the composition of the board of directors of Heilongjiang Shuaiyi. The board of directors of Heilongjiang Shuaiyi, chaired by Ms. Lianyun Han, has continued to comprise
representatives of Shuaiyi Founders. Therefore, Heilongjiang Shuaiyi is still under the same operating and management control of Shuaiyi Founders. In addition, due to the Subordinated Loan, Shuaiyi Founders will not receive any cash amount, nor will
there be any cash flow out of the combined entity during the whole period from the date of the Equity Transfer Agreement though the expiry of the Earn-in Agreement, at which time it is expected Shuaiyi Founders will have reacquired the ultimate
legal controlling ownership of Heilongjiang Shuaiyi. Furthermore, by providing the Subordinated Loan to Heilongjiang Shuaiyi and obtaining the agreement of the New Zealand on not declaring any dividend throughout the exercise period of the Earn-in
Agreement without the prior written approval of Shuaiyi Founders, Shuaiyi Founders continue to bear the residual risks and rewards relating to Heilongjiang Shuaiyi. As a result, this restructuring has been accounted for as a recapitalization of
Heilongjiang Shuaiyi with no adjustment to the historical basis of the assets and liabilities of Heilongjiang Shuaiyi. Results of Heilongjiang Shuaiyi have been consolidated as though the restructuring occurred as of the beginning of the first
accounting period presented in these financial statements.
F-28
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES
Principle of consolidation
These consolidated financial statements include the financial
statements of Nutrastar and its subsidiaries. All significant inter-company
balances or transactions have been eliminated on consolidation.
Basis of preparation
These consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America.
Use of estimates
The preparation of these consolidated financial statements in
conformity with generally accepted accounting principles requires the Company to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the related disclosure of contingent assets and liabilities at
the date of these consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. The Company bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. Accordingly, actual results
may differ from these estimates under different assumptions or conditions.
Reclassification
Certain prior year balances have been reclassified to conform
to the current year's financial statement presentation. These reclassifications
had no impact on previously reported financial position, results of operations,
or cash flows.
Cash and cash equivalents
Cash and cash equivalents consist of all cash balances and
highly liquid investments with an original maturity of three months or less.
Because of the short maturity of these investments, the carrying amounts
approximate their fair value. Restricted cash is excluded from cash and cash
equivalents.
Accounts receivable
Accounts receivable is stated at cost, net of allowance for
doubtful accounts. The Company maintains allowances for doubtful accounts for
estimated losses resulting from the failure of customers to make required
payments. The Company reviews the accounts receivable on a periodic basis and
makes allowances where there is doubt as to the collectability of individual
balances. In evaluating the collectability of individual receivable balances,
the Company considers many factors, including the age of the balance, the
customer's payment history, its current credit-worthiness and current economic
trends.
Inventories
Inventories are stated at the lower of cost, determined on a
weighted average basis, or market. Costs of inventories include purchase and
related costs incurred in bringing the products to their present location and
condition. Market value is determined by reference to selling prices after the
balance sheet date or to management's estimates based on prevailing market
conditions. The management will write down the inventories to market value if it
is below cost. The management also regularly evaluates the composition of its
inventories to identify slow-moving and obsolete inventories to determine if
valuation allowance is required.
F-29
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
Financial instruments
The Company values its financial instruments as required by
FASB ASC 320-12-65 (formerly SFAS No. 107, "Disclosures about Fair Value of
Financial Instruments"). The estimated fair value amounts have been determined
by the Company, using available market information or other appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data to develop estimates of fair value. Consequently, the
estimates are not necessarily indicative of the amounts that could be realized
or would be paid in a current market exchange.
The Company's financial instruments primarily consist of cash
and cash equivalents, trade accounts receivable, other current assets; trade
accounts payable, accrued expenses, other current liabilities, and due to
related parties.
As of the balance sheet dates, the estimated fair values of the
financial instruments were not materially different from their carrying values
as presented due to the short maturities of these instruments and that the
interest rates on the borrowings approximate those that would have been
available for loans of similar remaining maturity and risk profile at respective
year ends.
Fair value measurements
ASC Topic 820,
Fair Value Measurement and Disclosures
,
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. This topic also establishes a fair
value hierarchy which requires classification based on observable and
unobservable inputs when measuring fair value. There are three levels of inputs
that may be used to measure fair value:
Level
1
-
Quoted prices in active markets for identical assets or
      liabilities.
Level
2
-
Observable inputs other than Level 1 prices such as
      quoted prices for similar assets or liabilities; quoted prices in markets
      that are not active; or other inputs that are observable or can be
      corroborated by observable market data for substantially the full term of
      the assets or liabilities.
Level
3
-
Unobservable inputs that are supported by little or no
      market activity and that are significant to the fair value of the assets
      or liabilities.
The carrying values of cash and cash equivalents, trade
receivables and payables, and short-term debts approximate their fair values due
to their short maturities.
There were no assets and liabilities measured at fair value on
a nonrecurring basis as of December 31, 2009 and 2008.
F-30
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses, if any. Gains or
losses on disposals are reflected as gain or loss in the year of disposal. The
cost of improvements that extend the life of property, plant and equipment are
capitalized. These capitalized costs may include structural improvements,
equipment and fixtures. All ordinary repair and maintenance costs are expensed
as incurred.
Depreciation for financial reporting purposes is provided using
the straight-line method over the estimated useful lives of the assets as
follows:
Useful Life
(In years)
Buildings
20-40
Machinery and motor vehicles
5-10
Office equipment
5
The carrying value of property, plant and equipment is assessed
annually and when factors indicating impairment is present, the carrying value
of the property, plant and equipment is reduced by the amount of the impairment.
The Company determines the existence of such impairment by measuring the
expected future cash flows (undiscounted and without interest charges) and
comparing such amount to the net asset carrying value. An impairment loss, if
exists, is measured as the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
Intangible assets
The Company's intangible assets include a ten-year exclusive
right to use a secret process and computer software. The Company's amortization
policy on intangible assets is as follows:
Useful Life
(In years)
Exclusive right
10
Computer software
4
The Company accounts for its intangible assets pursuant to FASB
ASC Subtopic 350-30, "General Intangibles Other Than Goodwill". Under ASC
350-30-35, intangibles with definite lives continue to be amortized on a
straight-line basis over the lesser of their estimated useful lives or
contractual terms. Intangibles with indefinite lives are evaluated at least
annually for impairment by comparing the asset's estimated fair value with its
carrying value, based on cash flow methodology.
Impairment of goodwill is tested at least annually at the
reporting unit. The test consists of two steps. Firstly, the Company identifies
potential impairment by comparing the fair value of the reporting unit to its
carrying amount, including goodwill. If the fair value of the reporting unit is
greater than its carrying amount, goodwill is not considered impaired. Secondly,
if there is impairment identified in the first step, an impairment loss is
recognized for any excess of the carrying amount of the reporting unit's
goodwill over the implied fair value of goodwill. The implied fair value of
goodwill is determined by allocating the fair value of the reporting unit in a
manner similar to a purchase price allocation, in accordance with FASB ASC
805-10, "Business Combinations". If the carrying value of a reporting unit
exceeds its estimated fair value, the Company compares the implied fair value of
the reporting unit's goodwill to its carrying amount, and any excess of the
carrying value over the fair value is charged to earnings. The Company's fair
value estimates are based on numerous assumptions and it is possible that actual
fair value will be significantly different than the estimates.
F-31
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
Impairment of long-lived assets
The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash
flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. In estimating future cash flows, assets are
grouped at the lowest level for which there is identifiable cash flows that are largely independent of future cash flows from other asset groups.
Revenue recognition
Revenue is recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured.
Sales revenue is recognized net of value added and sales related taxes, sales discounts and returns at the time when the merchandise is delivered to the customer. Based on historical experience, management estimates that sales returns are immaterial
and has not made allowance for estimated sales returns.
Research and development costs
Research and development costs are expensed to operations as incurred.  Research and development costs were $36,728 and $32,815 for the years ended December 31, 2009 and 2008, respectively.
Advertising costs
The Company expenses all advertising costs as incurred.  Advertising costs charged to selling expenses were $1,915 and $3,258 for the years ended December 31, 2009 and 2008, respectively.
Shipping and handling costs
Substantially all costs of shipping and handling of products to customers are included in selling expense. Shipping and handling costs for the years ended December 31, 2009 and 2008 were nil and $298, respectively.
Share-Based Payments
The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, "Compensation – Stock Compensation", which requires that share-based payment transactions with employees be measured based on
the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period.
The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, "Equity-Based Payments to Non-employees". Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50,
stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as expenses as the goods or services
are received.
F-32
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
Income taxes
The Company is subject to income taxes in the United States and
other foreign jurisdictions where it operates. The Company accounts for income
taxes in accordance with FASB ASC Topic 740, "Income Taxes". FASB ASC Topic 740
requires an asset and liability approach for financial accounting and reporting
for income taxes and allows recognition and measurement of deferred tax assets
based upon the likelihood of realization of tax benefits in future years. Under
the asset and liability approach, deferred taxes are provided for 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. A valuation allowance is provided for deferred tax assets if it is
more likely than not these items will either expire before the Company is able
to realize their benefits, or that future deductibility is uncertain.
The Company's income tax returns are subject to examination by
the Internal Revenue Service ("IRS") and other tax authorities in the locations
where it operates. The Company assesses potentially unfavorable outcomes of such
examinations based on the criteria of FASB ASC 740-10-25-5 through 740-10-25-7
and 740-10-25-13 (formerly FASB Interpretation No. 48 ("FIN 48") "Accounting for
Uncertainty in Income Taxes") which the Company adopted on January 1, 2007. The
interpretation prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken (or expected to be
taken) in a tax return. This Interpretation also provides guidance on
derecognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, accounting for income taxes in interim
periods and income tax disclosures.
Comprehensive income
FASB ASC Topic 220, "Comprehensive Income", establishes
standards for reporting and displaying comprehensive income and its components
in the consolidated financial statements. Accumulated other comprehensive income
includes foreign currency translation adjustments.
Foreign currency
The Company uses the United States dollars ("US Dollar" or
"US$" or "$") for financial reporting purposes. The PRC subsidiaries within the
Company maintains the books and records in their functional currency, Chinese
Renminbi ("RMB"), being the lawful currency in the PRC. Assets and liabilities
of the PRC subsidiaries are translated from RMB into US Dollars using the
applicable exchange rates prevailing at the balance sheet date. Items on the
statement of operations are translated at average exchange rates during the
reporting period. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the Company's financial statements
are recorded as accumulated other comprehensive income.
The exchange rates used to translate amounts in RMB into U.S.
Dollars for the purposes of preparing the consolidated financial statements are
based on the rates as published on the website of People's Bank of China and are
as follows:-
December 31, 2009
December 31, 2008
Balance sheet items, except for
      equity accounts
US$1=RMB6.8282
US$1=RMB6.8346
Items in the statements of income and cash flows
US$1=RMB6.8310
US$1=RMB6.9480
No representation is made that the RMB amounts could have been,
or could be, converted into U.S. dollars at the above rates.
The value of RMB against U.S. dollars and other currencies may
fluctuate and is affected by, among other things, changes in China's political
and economic conditions. Any significant revaluation of RMB may materially
affect the Company's financial condition in terms of U.S. dollar reporting.
F-33
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
Earnings per share
The Company reports earnings per share in accordance with the
provisions of FASB ASC Topic 260, "Earnings per Share." FASB ASC Topic 260
requires presentation of basic and diluted earnings per share in conjunction
with the disclosure of the methodology used in computing such earnings per
share. Basic earnings per share excludes dilution and is computed by dividing
income available to common stockholders by the weighted average common shares
outstanding during the period. Diluted earnings per share takes into account the
potential dilution (using the treasury stock method) that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock.
All per share data including earnings per share has been
retroactively restated to reflect the reverse acquisition on December 23, 2008
whereby the 689,390 shares of preferred stock issued by Nutrastar (the nominal
acquirer) to the shareholder of New Resources (the nominal acquiree) are deemed
to be the number of shares outstanding for the period prior to the reverse
acquisition. For the period after the reverse acquisition, the number of shares
considered to be outstanding is the actual number of shares outstanding during
that period.
As discussed in note 1, the Company effected a 1-for-114.59
Reverse Split of its common stock and all outstanding shares of Series A
Preferred Stock were automatically converted to common stock. The weighted
average number of shares for the purposes of calculating the earnings per share
has been retroactively adjusted as if the Reverse Split took effect as of the
beginning of the earliest period presented. As holders of Series A Preferred
Stock were entitled to vote with the holders of common stock on all matters on a
an as-converted to common stock basis, basic and diluted earnings per share have
been calculated and presented on the basis that all shares of the Company's
common stock and Series A Preferred Stock are considered a single class and on
an as-converted to common stock basis before the Reverse Split.
The following table is a reconciliation of the net income and
the weighted average shares used in the computation of basic and diluted
earnings per share for the periods presented:
Year ended
      December 31,
2009
2008
Income for the purposes
      of basic and diluted EPS:
$
7,741,716
$
3,719,049
Weighted average number of shares:
- Basic
13,131,521
12,198,913
- Effect of dilutive
      warrants
210,000
–
- Diluted
13,341,521
12,198,913
Segment reporting
The Company follows FASB ASC Topic 280, "Segment Reporting",
which requires that companies disclose segment data based on how management
makes decision about allocating resources to segments and evaluating their
performance.
The Company believes that during the years ended December 31,
2009 and 2008, it operated in two business segments – growing and sales of
Chinese Golden Grass, which is widely used for Chinese medicine, and sales of
agricultural products, respectively. Throughout the years ended December 31,
2009 and 2008, all of the Company's operations were carried out in one
geographical segment - China.
F-34
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
Commitments and contingencies
The Company follows FASB ASC Subtopic 450-20, "Loss Contingencies" in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when
information available prior to issuance of the financial statements indicates that it is probable that a liability could be been incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are
expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.
Recent accounting pronouncements
In June 2009, the FASB established the FASB Accounting Standards Codification
TM
(ASC) as the single source of authoritative U.S generally accepted accounting principles (GAAP) recognized by the FASB to be applied to nongovernmental
entities. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The ASC superseded all previously existing
non-SEC accounting and reporting standards, and any prior sources of U.S. GAAP not included in the ASC or grandfathered are not authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through
Accounting Standards Updates (ASUs). The ASC did not change current U.S. GAAP but changes the approach by referencing authoritative literature by topic (each a "Topic") rather than by type of standard. The ASC has been effective for the
Company effective July 1, 2009. Adoption of the ASC did not have a material impact on the Company's Consolidated Financial Statements, but references in the Company's Notes to Consolidated Financial Statements to former FASB positions,
statements, interpretations, opinions, bulletins or other pronouncements are now presented as references to the corresponding Topic in the ASC.
Effective January 1, 2009, the Company adopted FASB ASC 350-30 and ASC 275-10-50 (formerly FSP FAS 142-3,
Determination of the Useful Life of Intangible Assets
), which amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142,
Goodwill and Other Intangible Assets
. The Company will apply ASC 350-30 and ASC 275-10-50 prospectively to intangible assets acquired
subsequent to the adoption date. The adoption of these revised provisions had no impact on the Company's Consolidated Financial Statements.
Effective January 1, 2009, the Company adopted FASB ASC 815-10-65 (formerly SFAS 161,
Disclosures about Derivative Instruments and Hedging Activities
), which amends and expands previously existing guidance on derivative instruments to require
tabular disclosure of the fair value of derivative instruments and their gains and losses., This ASC also requires disclosure regarding the credit-risk related contingent features in derivative agreements, counterparty credit risk, and strategies
and objectives for using derivative instruments. The adoption of this ASC did not have a material impact on the Company's Consolidated Financial Statements.
During 2008, the Company adopted FASB ASC 820-10 (formerly FSP FAS 157-2,
Effective Date of FASB Statement 157
), which deferred the provisions of previously issued fair value guidance for nonfinancial assets and liabilities to the first
fiscal period beginning after November 15, 2008. Deferred nonfinancial assets and liabilities include items such as goodwill and other nonamortizable intangibles. Effective January 1, 2009, the Company adopted the fair value guidance for
nonfinancial assets and liabilities. The adoption of FASB ASC 820-10 did not have a material impact on the Company's Consolidated Financial Statements.
F-35
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
Recent accounting pronouncements (continued)
Effective January 1, 2009, the Company adopted FASB ASC 810-10-65 (formerly SFAS 160,
Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51
), which amends previously issued guidance to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for
the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as equity. Among other
requirements, this Statement requires that the consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented on the face of the consolidated income statement.  The adoption of the provisions
in this ASC did not have a material impact on the Company's Consolidated Financial Statements.
Effective January 1, 2009, the Company adopted FASB ASC 805-10, (formerly SFAS 141R,
Business Combinations
), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling interest in an acquiree and the goodwill acquired. In addition, the provisions in this ASC require that any additional reversal of deferred tax asset valuation allowance
established in connection with fresh start reporting on January 7, 1998 be recorded as a component of income tax expense rather than as a reduction to the goodwill established in connection with the fresh start reporting. The Company will apply ASC
805-10 to any business combinations subsequent to adoption.
Effective January 1, 2009, the Company adopted FASB ASC 805-20 (formerly FSP FAS 141R-1,
Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies
), which amends ASC 805-10 to require that an acquirer recognize at fair value, at the acquisition date, an asset acquired or a
liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period. If the acquisition-date fair value of such an asset acquired or
liability assumed cannot be determined, the acquirer should apply the provisions of ASC Topic 450,
Contingences
, to determine whether the contingency should be recognized at the acquisition date or after such date. The adoption of ASC 805-20
did not have a material impact on the Company's Consolidated Financial Statements.
Effective July 1, 2009, the Company adopted FASB ASC 825-10-65 (formerly FASB Staff Position ("FSP") No. FAS 107-1 and Accounting Principles Board 28-1,
Interim Disclosures about Fair Value of Financial Instruments
), which amends
previous guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The adoption of FASB ASC 825-10-65 did not have a material
impact on the Company's Consolidated Financial Statements.
Effective July 1, 2009, the Company adopted FASB ASC 320-10-65 (formerly FSP FAS 115-2 and FAS 124-2,
Recognition and Presentation of Other-Than-Temporary Impairments
). Under ASC 320-10-65, an other-than-temporary impairment must be
recognized if the Company has the intent to sell the debt security or the Company is more likely than not will be required to sell the debt security before its anticipated recovery. In addition, ASC 320-10-65 requires impairments related to credit
loss, which is the difference between the present value of the cash flows expected to be collected and the amortized cost basis for each security, to be recognized in earnings while impairments related to all other factors to be recognized in other
comprehensive income. The adoption of ASC 320-10-65 did not have a material impact on the Company's Consolidated Financial Statements.
F-36
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
Recent accounting pronouncements (continued)
Effective July 1, 2009, the Company adopted FASB ASC 820-10-65 (formerly FSP FAS 157-4,
Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly
), which provides guidance on how to determine the fair value of assets and
liabilities when the volume and level of activity for the asset or liability has significantly decreased when compared with normal market activity for the asset or liability as well as guidance on identifying circumstances that indicate a
transaction is not orderly. The adoption of ASC 820-10-65 did not have a material impact on the Company's Consolidated Financial Statements.
Effective July 1, 2009, the Company adopted FASB ASC 855-10 (formerly SFAS 165,
Subsequent Events
), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial
statements are issued or are available to be issued. Adoption of ASC 855-10 did not have a material impact on the Company's Consolidated Financial Statements.
In the fourth quarter of fiscal 2009, the Company adopted ASC 715,
Compensation – Retirement Benefits
(formerly FASB FSP FAS 132(R)-1,
Employers' Disclosures about Postretirement Benefit Plan Assets
), which expands the disclosure requirements about plan assets for defined benefit pension plans and postretirement plans. The adoption of
these disclosure requirements has had no material effect on the Company's Consolidated Financial Statements.
In the quarter ended December 31, 2009, the Company adopted ASC Update No. 2009-05, which provides guidance on measuring the fair value of liabilities under FASB ASC 820 (formerly SFAS 157,
Fair Value Measurements
).  . The adoption of this
Update has had no material effect on the Company's Consolidated Financial Statements.
In January 2010, the FASB
issued ASU No. 2010-05—
Compensation—Stock Compensation (Topic 718): Escrowed
Share Arrangements and the Presumption of Compensation
. This Update simply
codifies EITF Topic No. D-110, "Escrowed Share Arrangements and the Presumption
of Compensation" dated June 18, 2009. ASU No. 2010-05 includes the SEC staff
announcement at the EITF meeting that clarified SEC staff views on overcoming
the presumption that for certain shareholders escrowed share arrangements
represent compensation. Historically, the SEC staff has expressed the view that
an escrowed share arrangement involving the release of shares to certain
shareholders based on performance-related criteria is presumed to be
compensatory. The SEC staff clarified that entities should consider the
substance of the transaction in evaluating whether the presumption of
compensation may be overcome, including whether the transaction was entered into
for a reason unrelated to employment, such as to facilitate a financing
transaction. In that situation, the staff generally believes that the escrowed
shares should be reflected as a discount in the allocation of proceeds. The
Company has applied the SEC staff announcement to any escrowed share arrangement
effective from June 18, 2009.
F-37
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
New accounting pronouncement to be adopted
In June 2009, the FASB issued SFAS No. 166,
Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140
, (codified by ASU No. 2009-16 issued in December 2009). SFAS No. 166 limits the circumstances in which a
financial asset should be derecognized when the transferor has not transferred the entire financial asset by taking into consideration the transferor's continuing involvement. The standard requires that a transferor recognize and initially
measure at fair value all assets obtained (including a transferor's beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. The concept of a qualifying special-purpose entity is
removed from SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," along with the exception from applying FIN 46(R),
Consolidation of Variable Interest Entities
. The standard
is effective for the first annual reporting period that begins after November 15, 2009 (i.e. the Company's fiscal 2010). Earlier application is prohibited. It is expected the adoption of this Statement will have no material effect on the
Company's Consolidated Financial Statements.
In June 2009, the FASB issued SFAS No. 167,
Amendments to FASB Interpretation No. 46(R)
, (codified by ASU No. 2009-17 issued in December 2009). The standard amends FIN No. 46(R) to require a company to analyze whether its interest in a
variable interest entity ("VIE") gives it a controlling financial interest. A company must assess whether it has an implicit financial responsibility to ensure that the VIE operates as designed when determining whether it has the power to
direct the activities of the VIE that significantly impact its economic performance. Ongoing reassessments of whether a company is the primary beneficiary are also required by the standard. SFAS No. 167 amends the criteria to qualify as a primary
beneficiary as well as how to determine the existence of a VIE. The standard also eliminates certain exceptions that were available under FIN No. 46(R). This Statement will be effective as of the beginning of each reporting entity's first
annual reporting period that begins after November 15, 2009 (i.e. the Company's fiscal 2010). Earlier application is prohibited. Comparative disclosures will be required for periods after the effective date. It is expected the adoption of this
Statement will have no material effect on the Company's Consolidated Financial Statements.
In October 2009, the FASB concurrently issued the following ASC Updates (ASU):
•     ASU No. 2009-13—
Revenue Recognition (ASC Topic 605): Multiple-Deliverable Revenue Arrangements
(formerly EITF Issue No. 08-1). ASU No. 2009-13 modifies the revenue recognition guidance for arrangements that involve the delivery of
multiple elements, such as product, software, services or support, to a customer at different times as part of a single revenue generating transaction. This standard provides principles and application guidance to determine whether multiple
deliverables exist, how the individual deliverables should be separated and how to allocate the revenue in the arrangement among those separate deliverables. The standard also expands the disclosure requirements for multiple deliverable revenue
arrangements.
•     ASU No. 2009-14—
Software (ASC Topic 985): Certain Revenue Arrangements That Include Software Elements
(formerly EITF Issue No. 09-3)
.
ASU No. 2009-14 removes tangible products from the scope of software revenue recognition
guidance and also provides guidance on determining whether software deliverables in an arrangement that includes a tangible product, such as embedded software, are within the scope of the software revenue guidance.
F-38
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 2
SUMMARIES OF SIGNIFICANT ACCOUNTING
      POLICIES (CONTINUED)
New accounting pronouncement to be adopted (continued)
•     ASU No. 2009-13 and ASU No. 2009-14 should be applied
 on a prospective basis for revenue arrangements entered into or materially
 modified in fiscal years beginning on or after June 15, 2010, with earlier
 application permitted. Alternatively, an entity can elect to adopt these
 standards on a retrospective basis, but both these standards must be adopted in
 the same period using the same transition method. The Company expects to apply
 these ASU Updates on a prospective basis for revenue arrangements entered into
 or materially modified beginning April 1, 2011. The Company is currently
 evaluating the potential impact these ASC Updates may have on its financial position and results of operations.
In October 2009, the FASB also issued ASU No. 2009-15—
Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing.
ASU 2009-15 amends ASC 470-20,
Debt with Conversion and Other
Options
, to provide accounting and reporting guidance for own-share lending arrangements issued in contemplation of convertible debt issuance. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009 (i.e. the
Company's fiscal 2010) with retrospective application required. The Company is currently evaluating the potential impact this ASC Updates may have on its financial position and results of operations.
In January 2010, the FASB issued the following ASC Updates:
•     ASU No. 2010-01—
Equity (Topic 505): Accounting for
Distributions to Shareholders with Components of Stock and Cash
. This Update
clarifies that the stock portion of a distribution to shareholders that allows
them to elect to receive cash or stock with a potential limitation on the total
amount of cash that all shareholders can elect to receive in the aggregate is
considered a share issuance that is reflected in EPS prospectively and is not a
stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings
Per Share). The amendments in this Update are effective for interim and annual
periods ending on or after December 15, 2009 with retrospective application.
•     ASU No. 2010-02—
Consolidation (Topic 810): Accounting and
Reporting for Decreases in Ownership of a Subsidiary
. This Update amends
Subtopic 810-10 and related guidance to clarify that the scope of the decrease
in ownership provisions of the Subtopic and related guidance applies to (i) a
subsidiary or group of assets that is a business or nonprofit activity; (ii) a
subsidiary that is a business or nonprofit activity that is transferred to an
equity method investee or joint venture; and (iii) an exchange of a group of
assets that constitutes a business or nonprofit activity for a noncontrolling
interest in an entity, but does not apply to: (i) sales of in substance real
estate; and (ii) conveyances of oil and gas mineral rights. The amendments in
this Update are effective beginning in the period that an entity adopts FAS 160
(now included in Subtopic 810-10).
•     ASU No. 2010-06—
Fair Value Measurements and Disclosures
(Topic 820): Improving Disclosures about Fair Value Measurements
. This
Update amends Subtopic 820-10 that require new disclosures about transfers in
and out of Levels 1 and 2 and activity in Level 3 fair value measurements. This
Update also amends Subtopic 820-10 to clarify certain existing disclosures. The
new disclosures and clarifications of existing disclosures are effective for
interim and annual reporting periods beginning after December 15, 2009, except
for the disclosures about purchases, sales, issuances, and settlements in the
roll forward of activity in Level 3 fair value measurements, which are effective
for fiscal years beginning after December 15, 2010.
The Company expects that the adoption of the above Updates
issued in January 2010 will not have any significant impact on its financial
position and results of operations.
Other accounting standards that have been issued or proposed by
the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Company's
Consolidated Financial Statements upon adoption.
F-39
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 3
ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
As of December 31,
2009
2008
Accounts receivable
$
215,486
$
283,822
Less: Allowance for doubtful debts
-
-
Accounts receivable, net
$
215,486
$
283,822
NOTE 4
INVENTORIES
Inventories by major categories are summarized as follows:
As of December 31,
2009
2008
Raw materials
$
183,934
$
147,824
Work in progress
294,983
832,680
Finished goods
137,156
187,575
Total
$
616,073
$
1,168,079
NOTE 5
PREPAYMENTS AND OTHER RECEIVABLES
Prepayments and other receivables consist of the following:
As of
      December 31,
2009
2008
Prepayments
$
12,812
$
-
Other receivables, net of $nil
      allowance
238,423
14,105
$
251,235
$
14,105
F-40
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 6
INTANGIBLE ASSETS, NET
Intangible assets, net consisted of the following:
As of December 31,
2009
2008
Computer software, cost
$
1,454
$
1,453
Exclusive right to use a secret
      process, cost
4,395,309
4,391,193
Less: Accumulated
      amortization
(1,649,361
)
(1,208,651
)
$
2,747,402
$
3,183,995
In April 2006, the Company purchased from a third party a
ten-year exclusive right to use a secret process and method in the cultivation
and growing of Chinese Golden Grass, which is widely used for Chinese medicine,
for a cash consideration of RMB30,000,000, payable over five years. The
exclusive right is amortized over its term of ten years using the straight-line
method.
Amortization expenses for the years ended December 31, 2009 and
2008 were $439,398 and $432,597, respectively.
NOTE 7
PROPERTY, PLANT AND EQUIPMENT,
      NET
Property, plant and equipment, net consisted of the following:
As of
      December 31,
2009
2008
Cost:
Buildings
$
11,672,404
$
11,647,541
Office equipment
15,264
9,317
Machinery
128,286
98,903
Motor vehicles
54,842
54,790
Total cost
11,870,796
11,810,551
Less: Accumulated
      depreciation
(1,474,289
)
(907,575
)
Net book value
$
10,396,507
$
10,902,976
Depreciation expenses for the years ended December 31, 2009 and
2008 were $564,988 and $690,850, respectively.
NOTE 8
OTHER PAYABLES AND ACCRUALS
Other payables and accruals consisted of the following:
As of
      December 31,
2009
2008
Accrued staff costs
$
370,395
$
235,421
Other taxes payable
25,030
232,481
Other payables
58,079
5,057
$
453,504
$
472,959
F-41
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 9
PAYABLE FOR INTANGIBLES
As described in Note 6, the Company purchased an exclusive
right from an independent party for a secret process and method for a stated
value of RMB30,000,000 payable over 5 years from the date of purchase. The
agreement provides that all payments by the Company for the secret process and
method will be refundable if the secret process and method proves ineffective.
Under ASC Subtopic 835-30, "Imputation of Interest" (formerly APB 21, "Interest
on Receivables and Payables"), the payable for intangibles are stated without
imputed interest as the noninterest factor fairly represents the warranty for
performance.
The following table presents the amounts payable for
      the next five years and thereafter:
Year ending December 31, 2010
$
878,709
2011 and thereafter
-
Total
878,709
Current portion
878,709
Non-current portion
$
-
NOTE 10
ACQUISITION PAYABLE
The acquisition payable represents the transfer price of
RMB60,000,000 payable by New Resources for the acquisition of 100% equity
interest in Heilongjiang Shuaiyi, as further discussed in Note 18, the
acquisition payable is due for payment in full on or before June 30, 2010 by New
Resources to Shuaiyi Founders who are also shareholders of the Company.
NOTE 11
SHAREHOLDERS' EQUITY
Series A Voting Convertible Preferred
Stock
In accordance with the Company's Articles of Incorporation, the
Company's Board of Directors unanimously approved the filing of a Certificate of
Designation designating and authorizing the issuance of up to 800,000 shares of
our Series A Voting Preferred Stock. The Certificate of Designation was filed on
December 22, 2008. The holders of the Company's Series A Preferred Stock are
entitled to vote on all matters together with all other classes of stock on an
as-converted to common stock basis. Holders of Series A Preferred Stock have
protective class voting veto rights on matters, such as business combination
transactions, payment of dividends, the issuance of other classes of stock with
senior rights, changes to our charter documents and stock redemptions. Shares of
Series A Preferred Stock have a senior liquidation payment preference in the
event of a liquidation or sale of the Company.
On December 23, 2008, which was the date of the Share Exchange
as set out in Note 1, the Company entered into an amendment, (the " Amendment
"), of a stock purchase agreement, (the "SPA)", dated August 6, 2008, by and
among ACI (formerly BMC Acquisitions Corp., LLC), Belmont Partners LLC, or
Belmont, and the Company. ACI was the Company's majority shareholder prior to
the Company's reverse acquisition of New Resources. Pursuant to the SPA, the
Company was required to issue to Belmont a number of shares of its common stock
sufficient for Belmont to retain 1.1% ownership interest in the Company.
Pursuant to the Amendment, ACI assumed the foregoing obligation of the Company
and agreed to transfer its shares of the Company's common stock in order to
satisfy such obligation. On the same day, the Company entered into a
subscription agreement with ACI, pursuant to which the Company issued and sold
to ACI 17,962 shares of Series A Preferred Stock for $52,530.50, or $2.92 per
share.
On December 23, 2008, the Company also entered into a
subscription agreement with Tan Zhen Investment Limited, (the " Investor "),
pursuant to which the Company issued and sold to the Investor 20,168 shares of
the Company's Series A Preferred Stock for $375,000, or $18.59 per share.
On May 29, 2009, all issued and outstanding shares of the
Series A Preferred Stock were automatically converted into 12,695,223 shares of
common stock on the basis of one share of Series A Preferred Stock for 2,000
shares of common stock, which was adjusted to a conversion ratio of one share of
Series A Preferred Stock for 17.45 shares of common stock upon the effectiveness
of the 1-for-114.59 reverse split of the Company's outstanding common stock.
As of December 31, 2009 and 2008, the Company had none and
727,520 shares of Series A Preferred Stock issued and outstanding, respectively.
F-42
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 11
SHAREHOLDERS' EQUITY (CONTINUED)
Private Placement Transaction
On December 17, 2009, the Company completed a private placement
transaction and sold 1,000,000 shares of its common stock to certain accredited
investors at $2.50 per share for a total of $2.5 million pursuant to a
securities purchase agreement, or the Securities Purchase Agreement. In
addition, the Company issued to each of the investors two warrants to purchase
in aggregate 500,000 shares of its common stock, including a Series A warrant
having a term of three years with an exercise price of $3.25 per share and a
Series B warrant having a term of three years with an exercise price of $4.00
per share. These warrants contain standard anti-dilution provisions for stock
dividends, stock splits, stock combination, recapitalization and a change of
control transaction. Because these warrants do not contain any contingent
exercise provisions and their settlement amount will equal the difference
between the fair value of a fixed number of the Company's equity shares and a
fixed strike price, these warrants, which are freestanding instruments, qualify
for the scope exception under the guidance provided in ASC 815-40-15-5 through
815-40-15-8, and are considered indexed to the Company's own stock. Accordingly,
these warrants have been classified as equity.
Pursuant to the Securities Purchase Agreement, the Company
agreed to register the shares and the warrants within a pre-defined period. The
Company is subject to registration delay payments in cash in the amounts
prescribed by the Securities Purchase Agreement if it is unable to file the
registration statement, cause it to become effective or maintain its
effectiveness as required by the Securities Purchase Agreement. As discussed in
Note 20, on February 4, 2010, the SEC declared effective the registration
statement on Form S-1 filed by the Company on January 28, 2010. As a result, no
provision for any registration delay payment is required.
Warrants outstanding as of December 31, 2009 consist of the
following:
Warrants Outstanding and Exercisable
Weighted
Average
Number of
Average
Remaining
underlying
Exercise
Contractual Life
shares
Price
(years)
Balance, December 31,
      2008
–
Issued
500,000
$
3.625
3.00
Balance, December
      31, 2009
500,000
$
3.625
2.96
F-43
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 11
SHAREHOLDERS' EQUITY (CONTINUED)
Securities Escrow Arrangement
In addition, pursuant to the Securities Purchase Agreement, the
major stockholder of the Company, New Zealand has agreed to place a total of
1,000,000 shares of the Company's common stock held by it into escrow to secure
the make good obligations described below on behalf of the investors. Under the
Securities Purchase Agreement, New Zealand has agreed that: (i) in the event
that the Company's consolidated financial statements reflect less than
$9,000,000 of after-tax income for the fiscal year ending December 31, 2010, it
will transfer to the investors, on a pro rata basis, for no additional
consideration, 500,000 shares of the Company common stock owned by it; and (ii)
in the event that the Company's consolidated financial statements reflect less
than $11,000,000 of after-tax net income for the fiscal year ending December 31,
2011, it will transfer to the investors, on a pro rata basis, for no additional
consideration, 500,000 shares of the Company's common stock owned by it.
Historically, SEC staff expressed the view that an escrow share
arrangement involving the release of shares to certain shareholders based on
performance-related criteria is presumed to be compensatory, equivalent to a
reverse stock split followed by the grant of a restricted stock award under a
performance-based plan.
However, in EITF No. D-110 (codified by FASB ASU No. 2010-05)
dated June 18, 2009, the SEC staff has announced that when evaluating
whether the presumption of compensation has been overcome, the substance of the
arrangement, including whether the arrangement was entered into for purposes
unrelated to, and not contingent upon, continued employment, should be
considered.
The Company has evaluated the terms of the Securities Purchase
Agreement based on the SEC staff's clarification in EITF No. D-110 (codified by
FASB ASU No. 2010-05) and concluded that because the escrow shares would be
released or distributed to the investor without regard to the continued
employment of any officer of the Company, the arrangement is in substance an
inducement to facilitate the Private Placement, rather than as compensatory.
Therefore, the Company will account for the securities escrow arrangement under
the Securities Purchase Agreement according to its nature and reflected as a
reduction of the proceeds allocated to the newly issued securities in the
Private Placement, following the guidance provided in FASB ASU No. 2010-05.
NOTE 12
STATUTORY RESERVES
In accordance with the PRC Companies Law, the Company's PRC
subsidiaries were required to transfer 10% of their profits after tax, as
determined in accordance with accounting standards and regulations of the PRC,
to the statutory surplus reserve and a percentage of not less than 5%, as
determined by management, of the profits after tax to the public welfare fund.
However, the Company's PRC subsidiaries were not required to transfer any profit
after tax to the statutory surplus reserve only after the accumulated statutory
surplus reserves reached 50% of registered capital of the Company's PRC
subsidiaries. With the amendment of the PRC Companies Law which was effective
from January 1, 2006, enterprises in the PRC were no longer required to transfer
any profit to the public welfare fund. Any balance of public welfare fund
brought forward from December 31, 2005 should be transferred to the statutory
surplus reserve. The statutory surplus reserve is non-distributable.
F-44
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 13
SHARE-BASED PAYMENT
Immediately following closing of the Share Exchange as set out
in Note 1, the New Zealand transferred 91,088 shares out of the 689,390 shares
of Series A Preferred Stock issued to it under the Share Exchange Agreement to
ten individuals and entities for consulting services provided by them to New
Resources and its subsidiaries in assisting them to consummate the share
exchange transaction contemplated by the Share Exchange Agreement prior to
December 23, 2008.
In accordance with the requirements of and guidance in Staff
Accounting Bulletin No. 107 and ASC Topic 718, "Compensation – Stock
Compensation"), the Company charged $1,693,326 to merger costs based on the
grant-date fair value of the 91,088 shares of Series A Preferred Stock
transferred by New Zealand to the Company's consultants. As the Company's shares
had scarcely been traded, the Company determined that the price of $18.59 at
which 20,168 shares of the Company's Series A Preferred Stock were issued to the
Investor, as discussed in Note 11, appropriately represented a fair value of the
Company's Series A Preferred Stock, because the Investor was an independent
third party before the transaction and the terms for the issuance of those
shares to the Investor were based on arm's length negotiation. Accordingly, this
being a current cash transaction between unrelated willing parties provides the
best evidence for the fair value of the Company's shares in accordance with
AICPA Practice Aid, "Valuation of Privately-Held-Company Equity Securities
Issued as Compensation".
On June 3, 2009, the Company established the "Shuaiyi
International New Resources Development Inc. 2009 Equity Incentive Plan" (the
"
Plan
"). The purposes of the Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees, directors and consultants, and to promote the
long-term growth and profitability of the Company. The Plan permits the granting
of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units and
Performance Shares as the Company's board of director may determine. The maximum
number of shares that may be issued under the Plan was 1,000,000. On June 17,
2009, 500,000 restricted shares were issued under the Plan and accordingly,
remaining shares that can be issued under the Plan was 500,000 shares as of
December 31, 2009.
Under the Plan, on June 17, 2009, the directors granted 500,000
restricted shares to employees by entering into "Restricted Shares Grant
Agreements" (the "
Agreements
") with the employees. Under the Agreements,
the shares were grant for no consideration and vested on the date of grant.
Accordingly, these shares vested immediately and all restrictions as to
transferability, sale, assignment or otherwise disposition of the shares have
been released on the date of grant.
Under ASC 718-10-30-2 (formerly SFAS 123R), the Company
recognized a compensation expense of $25,000 based on the fair value of $0.05
per share which is the last traded price of the shares at the grant date. This
expense is accounted under "General and administrative expenses".
As the 500,000 shares do not impose any obligations that
require the Company to transfer assets, these have been classified as equity.
F-45
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 14
OTHER INCOME (EXPENSES), NET
Year ended
      December 31,
2009
2008
Service income
$
7,078
11,623
Other expenses
(690
)
(101
)
$
6,388 $
11,522
NOTE 15
INCOME TAXES
The entities within the Company file separate tax returns in
the respective tax jurisdictions that they operate.
New Resources being incorporated in the British Virgin Islands
("BVI") is not subject to any income tax in the BVI.
The Company's PRC subsidiaries are subject to PRC enterprise
income tax ("EIT"). Before January 1, 2008, the PRC EIT rate was generally 33%.
In March 2007, the PRC government enacted a new PRC Enterprise Income Tax Law,
or the New EIT Law, and promulgated related regulation, Implementation
Regulations for the PRC Enterprise Income Tax Law. The New EIT Law and
Implementation Regulations became effective from January 1, 2008. The NEW EIT
Law, among other things, imposes a unified income tax rate of 25% for both
domestic and foreign invested enterprises registered in the PRC.
The New EIT Law provides a grandfathering on tax holidays which
were granted under the then effective tax laws and regulations. Therefore, one
of the Company's subsidiaries, Daqing Shuaiyi, being engaged in growing and
sales of agricultural products, has continued to be entitled to a preferential
tax treatment: an EIT holiday for the two years ended December 31, 2006 and 2007
and a 50% reduction on the EIT rate for the three years ended December 31, 2008,
2009 and 2010.
The Company's income tax expense consisted of:
Year ended
      December 31,
2009
2008
Current income tax –
      PRC
$
1,235,210
$
974,653
Deferred
-
-
$
1,235,210
$
974,653
As of December 31, 2009 and 2008, the Company did not have any
significant temporary differences and carryforwards that may result in deferred
tax.
F-46
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 15
INCOME TAXES (CONTINUED)
A reconciliation of the provision for income taxes determined
at the local income tax to the Company's effective income tax rate is as
follows:
Year ended December 31,
2009
2008
Pre-tax income
$
8,976,926
$
4,693,702
U.S. federal corporate income tax rate
34%
34%
Income tax computed at
      U.S. federal corporate income tax rate
(3,052,155
)
(1,595,859
)
Reconciling items:
Impact of
      tax holiday of Daqing Shuaiyi
1,149,845
868,500
Rate differential for PRC
      earnings
816,304
610,355
Non-deductible expenses
(149,204
)
(857,649
)
Effective tax expense
$
(1,235,210
)
$
(974,653
)
The Company has analyzed the tax positions taken or expected to
be taken in its tax filings and has concluded it has no material liability
related to uncertain tax positions or unrecognized tax benefits as of December
31, 2009 and 2008. The Company classifies interest and/or penalties related to
income tax matters in income tax expense. As of December 31, 2009 and 2008,
there was no interest and penalties related to uncertain tax positions. The
Company does not anticipate any significant increases or decreases to its
liability for unrecognized tax benefits within the next 12 months.
The New EIT Law also imposes a withholding tax of 10% unless
reduced by a tax treaty, for dividends distributed by a PRC-resident enterprise
to its immediate holding company outside the PRC for earnings accumulated
beginning on January 1, 2008 and undistributed earnings generated prior to
January 1, 2008 are exempt from such withholding tax. The Company has not
provided for income taxes on accumulated earnings of its PRC subsidiaries as of
December 31, 2009 or 2008 since these earnings are intended to be reinvested
indefinitely in the overseas jurisdictions. It is not practicable to estimate
the amount of additional taxes that might be payable on such undistributed
earnings.
According to the PRC Tax
Administration and Collection Law, the statute of limitations is three years if
the underpayment of taxes is due to computational or other errors made by the
taxpayer or the withholding agent.  The statute of limitations extends to five
years under special circumstances. In the case of transfer pricing issues, the
statute of limitations is ten years. There is no statute of limitations in the
case of tax evasion. Accordingly, the income tax returns of the Company's PRC
operating subsidiaries for the years ended December 31, 2007 through 2009 are
open to examination by the PRC state and local tax authorities.
F-47
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 16
RELATED PARTY TRANSACTIONS
(a)
Due to related parties
As of
      December 31,
2009
2008
Due to:
- Heilonjiang Shuaiyi Technology Development
      Co., Ltd. ("Shuaiyi Technology")
(i)
$
-
$
8,998
-Ms. Lianyun Han,
      CEO and Chairman of the Company
49,794
-
$
49,794
$
8,998
Note (i) Shuaiyi Technology and the Company are under common
control and management. Due to Shuaiyi Technology arose from the land rent
payable to Shuaiyi Technology.
The amounts due to related parties were non-interest bearing,
unsecured and had no fixed repayment date.
(b)
Purchase of goods
For the years ended December 31, 2009 and 2008, the Company
purchased rice amounting to $790,133 and $1,579,315, respectively, from Shuaiyi
Technology.
(c)
Lease of land
For the years ended December 31, 2009 and 2008, the Company
paid rental expense of $9,003 and $8,851 for land to Shuaiyi Technology.
NOTE 17
CONCENTRATION RISK
(a)
Concentration of credit
      risk
As of December 31, 2009 and 2008, 100% of the Company's cash
included cash on hand and deposits in accounts maintained within the PRC where
there is currently no rule or regulation in place for obligatory insurance to
cover bank deposits in the event of bank failure. However, the Company has not
experienced any losses in such accounts and believes it is not exposed to any
risks on its cash in bank accounts.
For the years ended December 31, 2009 and 2008, all of the
Company's sales arose in the PRC. In addition, all accounts receivable as of
December 31, 2009 and 2008 also arose in the PRC.
Except for one customer who accounted for 14.7% of the
Company's revenue for the year ended December 31, 2009, there was no other
single customer who accounted for more than 10% of the Company's revenue for
either the year ended December 31, 2009 or 2008.
As of December 31, 2009, five customers accounted for 18%, 13%,
12%, 12% and 12% of total accounts receivable of the Company. As of December 31,
2008, three customers accounted for 32%, 23% and 15% of accounts receivable of
the Company. Except as disclosed, no other customer accounted for 10% or more of
the Company's accounts receivable as of December 31, 2009 and 2008.
(b)
Concentration of operating risk
Substantially all of the Company's operations are conducted in
China. The Company's operations are subject to various political, economic, and
other risks and uncertainties inherent in China. Among other risks, the
Company's operations are subject to the risks of restrictions on transfer of
funds; export duties, quotas, and embargoes; domestic and international customs
and tariffs; changing taxation policies; foreign exchange restrictions; and
political conditions and governmental regulations.
F-48
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 18
COMMITMENTS AND CONTINGENCIES
(a)
Operating leases
The Company has entered into tenancy agreements for the lease
of exhibition hall and land with a third party and a related company (see Note
16), respectively, for the purposes of the operation of its subsidiaries. The
Company's commitments for minimum lease payments under these operating leases for
the next five years and thereafter as of December 31, 2009 are as follows:
Year ending December 31,
2010
$
35,881
2011
9,007
2012
9,007
2013
9,007
2014
9,007
Thereafter
117,091
Total
$
189,000
(b)
PRC employee costs
According to the prevailing laws and regulations of the PRC,
the Company's subsidiaries in the PRC are required to cover its employees with
medical, retirement and unemployment insurance programs. Management believes
that due to the transient nature of its employees, they do not need to provide
all employees with such social insurances, and have not paid the social
insurances for all employees.
In the event that any current or former employee files a
complaint with the PRC government, the Company's subsidiaries may be subject to
making up the social insurances as well as administrative fines. As the Company
believes that these fines would not be material, no provision has been made in
this regard.
(c)
Transfer price for equity interest in
    Heilongjiang Shuaiyi
On July 28, 2008, the Company's subsidiary, New Resources
entered into an equity transfer agreement with the Shuaiyi Founders to acquire
all of their equity interests in Heilongjiang Shuaiyi for RMB60,000,000
(approximately $8.8 million). A new business license was issued to Heilongjiang
Shuaiyi on December 1, 2008. According to PRC merger and acquisition rules, the
equity interest transfer price should be paid in full within three months
commencing from the issuance of the new business license to Heilongjiang
Shuaiyi. If the transfer price is not paid by this date, the Company may apply
to the relevant PRC business bureau for an extension of up to one year from the
date of the issuance of the license; provided, however, that 60% of the transfer
price will be required to be paid within six months from such date. However, if
the Company is unable to make the payment for the transfer price by the March 1,
2009 or extended deadline and the relevant PRC business bureau does not grant
the Company additional time to make the payment, the Company may be subject to
fines or penalties imposed by the PRC business bureau. In addition, the Company
may not be permitted to exercise any decision-making rights as a shareholder in
Heilongjiang Shuaiyi or to consolidate Heilongjiang Shuaiyi's financial results
into the Company's financial statements.
On March 10, 2009, New Resources obtained the approval from the
relevant PRC business bureau for the extension of time allowed for the payment
of the transfer price to one year until December 1, 2009. On January 4, 2010,
the relevant PRC regulatory agency further extended the payment due date to June
30, 2010. The Company has engaged financial advisors with a view to raising
additional capital for the Company. The Company believes that it will be able to
make the payment for the transfer price within the time allowed by the relevant
PRC business bureau and therefore has not accrued any amount related to this
contingency. However, there can be no assurance that the Company will be
successful in raising sufficient capital for the purpose of the payment of the
transfer price to the Shuaiyi Founders.
F-49
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 19
SEGMENT INFORMATION
During the years ended December 31, 2009 and 2008, the Company
operated in two business segments identified by product, "Chinese Golden Grass"
and "other agricultural products". The Chinese Golden Grass segment consists of
the growing and sales of Chinese Golden Grass
(formally referred to as
"Chinese Caterpillar Fungus"), which was conducted through the Company's
subsidiary, Daqing Shuaiyi. The other agricultural products segment consists of
the sales of rice, flour and silage corn etc, which were mainly conducted
through the Company's subsidiary, Harbin Shuaiyi.
Throughout the years ended December 31, 2009 and 2008, all of
the Company's operations were carried out in one geographical segment – China.
Year
      Ended December 31, 2009
Chinese
Other
Golden
Agricultural
Corporate
Grass
Products
unallocated
Consolidated
Segment revenue from external customers
$
12,073,855
$
3,258,590
$
-
$
15,332,445
Segment profit
$
8,804,435
$
609,084
$
(436,593
)
$
8,976,926
Income from operations before
      income taxes
$
8,976,926
Segment assets
$
27,528,235
$
1,171,648
$
5,642,497
$
34,342,380
Total assets
$
34,342,380
Other segment information:
Depreciation and amortization
$
994,056
$
7,443
$
2,887
$
1,004,386
Expenditure for segment
      assets
$
1,440
$
43,219
$
4,496
$
49,155
Year ended December 31, 2008
Chinese
Other
Golden
Agricultural
Corporate
Grass
Products
unallocated
Consolidated
Segment revenue from external customers
$
8,892,894
$
4,096,866
$
-
$
12,989,760
Segment profit
$
6,547,634
$
759,133
$
(2,613,065
)
$
4,693,702
Income from operations before
      income taxes
$
4,693,702
Segment assets
$
21,282,501
$
956,782
$
2,511,937
$
24,751,220
Total assets
$
24,751,220
Other segment information:
Depreciation and amortization
$
1,114,118
$
6,089
$
3,240
$
1,123,447
Expenditure for segment
      assets
$
27,005
$
3,353
$
2,143
$
32,501
F-50
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 20
SUBSEQUENT EVENTS
On January 28, 2010, the Company filed with the Securities and
Exchange Commission (SEC) a registration statement on Form S-1 ("Form S-1") to
register 1,500,000 shares of the Company's common stock that may be sold from
time to time by the selling stockholders named in the Form S-1, which includes:
1,000,000 shares of common stock;
250,000 shares of common stock issuable upon the exercise of the Series A
  Warrants; and
250,000 shares of common stock issuable upon the exercise of the Series B
  warrants.
On February 4, 2010, the Form S-1 was declared effective by the
SEC.
NOTE 21
RESTRICTED NET ASSETS
The Company's operations are primarily conducted through its
PRC subsidiaries Daqing Shuaiyi and Harbin Shuaiyi. Daqing Shuaiyi and Harbin
Shuaiyi may only pay dividend out of its retained earnings determined in
accordance with the accounting standards and regulations in the PRC and after it
has met the PRC requirements for appropriation to statutory reserves (see Note
12).
In addition, Daqing Shuaiyi and Harbin Shuaiyi's businesses and
assets are primarily denominated in RMB, which is not freely convertible into
foreign currencies. All foreign exchange transactions take place either through
the People's Bank of China or other banks authorized to buy and sell foreign
currencies at the exchange rates quoted by the People's Bank of China. Approval
of foreign currency payments by the People's Bank of China or other regulatory
institutions requires submitting a payment application form together with
suppliers' invoices, shipping documents and signed contracts. These currency
exchange control procedures imposed by the PRC government authorities may
restrict the ability of Daqing Shuaiyi and Harbin Shuaiyi to transfer their net
assets to the Company through loans, advances or cash dividends, which consisted
of paid-up capital, retained earnings and statutory reserves and which aggregate
amount of approximately RMB206 million (or $30 million) exceeded 25% of the
Company's consolidated net assets. Accordingly, condensed parent company
financial statements have been prepared in accordance with Rule 5-04 and Rule
12-04 of SEC Regulation S-X as set out in Note 22.
NOTE 22
SUPPLEMENTAL PARENT COMPANY FINANCIAL
    INFORMATION
The Company records its investment in subsidiaries under the
equity method of accounting as prescribed in ASC Topic 323, "Investments –
Equity Method and Joint Ventures". Such investment and long-term loans to
subsidiaries are presented on the balance sheet as "Investments in subsidiaries"
and the income of the subsidiaries is presented as "Equity in income of
subsidiaries" on the statement of income.
These supplemental condensed parent company financial
statements should be read in conjunction with the notes to the Company's
Consolidated Financial Statements. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with U.S. GAAP
have been condensed or omitted.
As of December 31, 2008 and 2009, there were no material
contingencies, significant provisions for long-term obligations, or guarantees
of the Company, except as separately disclosed in the Consolidated Financial
Statements, if any.
F-51
NUTRASTAR
INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
NOTE 22
SUPPLEMENTAL PARENT
    COMPANY FINANCIAL INFORMATION
Nutrastar International Inc.
Condensed Balance
      Sheets
As of December 31,
2009
2008
ASSETS
Investments in
      subsidiaries
$
23,912,342
$
13,611,938
Total assets
$
23,912,342
$
13,611,938
LIABILITIES
Current liabilities:
Due
      to a subsidiary
$
9,538
$
–
Total liabilities
9,538
–
Shareholders' equity
Preferred Stock, $0.001 par value, 1,000,000
      shares authorized, none and 727,520 shares issued and
      outstanding
–
727
Common stock, $0.001 par
      value, 190,000,000 shares authorized, 14,297,731 and
      11,746,041 shares issued and outstanding
14,298
11,746
Additional paid-in
    capital
4,715,891
2,192,716
Retained
    earnings
18,199,699
10,457,983
Accumulated other
      comprehensive income
972,916
948,766
Total shareholders' equity
23,902,804
13,611,938
Total liabilities and shareholders'
      equity
$
23,912,342
$
13,611,938
Condensed Statement of Income
Year ended December 31,
2009
2008
NET REVENUE
$
–
$
–
Administrative expenses
(34,538
)
–
Merger expenses
–
(2,068,326
)
Income tax
–
–
Equity in income of
      subsidiaries
7,776,254
5,787,375
Net income
$
7,741,716
$
3,719,049
Condensed Statement of Cash
      Flows
Year ended December 31,
2009
2008
Net cash used in
      operating activities
$
(34,538
)
$
–
Net cash used in investing activities
(2,465,462
)
(427,449
)
Net cash provided by
      financing activities
2,500,000
427,449
Cash, beginning of year
–
–
Cash, end of
      year
$
–
$
–
F-52
2,965,561 Shares
NUTRASTAR INTERNATIONAL INC.
Common Stock, $0.001 Par Value Per
Share
___________
PROSPECTUS
___________
, 2010
PART II
INFORMATION NOT REQUIRED IN THE
PROSPECTUS
Item 13. Other Expenses of Issuance and Distributions
The following table sets forth the costs and expenses, other
than underwriting discounts and commissions, payable by us in connection with
the sale of common stock being registered. All amounts, other than the SEC
registration fee, are estimates. We will pay all these expenses.
Amount to be Paid
SEC Registration Fee
$
635
Printing Fees and Expenses
2,500
Legal Fees and Expenses
25,000
Accounting Fees and Expenses
10,000
Blue Sky Fees and Expenses
2,000
Transfer Agent and Registrar Fees
1,500
Miscellaneous
3,000
Total
$
44,635
Item 14. Indemnification of Directors and Officers
Section 78.138 of the Nevada Revised Statutes, or NRS, provides
that a director or officer will not be individually liable unless it is proven
that (i) the director's or officer's acts or omissions constituted a breach of
his or her fiduciary duties, and (ii) such breach involved intentional
misconduct, fraud or a knowing violation of the law.
Section 78.7502 of NRS permits a company to indemnify its
directors and officers against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending or completed action, suit or proceeding if the officer or director (i)
is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner
the officer or director reasonably believed to be in or not opposed to the best
interests of the corporation and, if a criminal action or proceeding, had no
reasonable cause to believe the conduct of the officer or director was unlawful.
Section 78.751 of NRS permits a Nevada company to indemnify its
officers and directors against expenses incurred by them in defending a civil or
criminal action, suit or proceeding as they are incurred and in advance of final
disposition thereof, upon receipt of an undertaking by or on behalf of the
officer or director to repay the amount if it is ultimately determined by a
court of competent jurisdiction that such officer or director is not entitled to
be indemnified by the company. Section 78.751 of NRS further permits the company
to grant its directors and officers additional rights of indemnification under
its articles of incorporation or bylaws or otherwise.
Section 78.752 of NRS provides that a Nevada company may
purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the
company, or is or was serving at the request of the company as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or
agent, or arising out of his status as such, whether or not the company has the
authority to indemnify him against such liability and expenses.
Our Amended and Restated Bylaws implement the indemnification
and insurance provisions permitted by Chapter 78 of the Nevada Revised Statutes
by providing that:
The Company shall indemnify its legal representative, officers and
  directors to the fullest extent permitted by the Nevada Revised Statutes
  against liability, reasonable expense or other matter whatsoever; and
The Company may at the discretion of the Board of Directors purchase and
  maintain insurance on behalf of any person who holds or who has held any
  position identified in the paragraph above against any and all liability
  incurred by such person in any such position or arising out of his status as
  such.
II-1
Insofar as indemnification by us for liabilities arising under
the Securities Act may be permitted to our directors, officers or persons
controlling the company pursuant to provisions of our articles of incorporation
and bylaws, or otherwise, we have been advised that in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable. In the event that a claim for indemnification by
such director, officer or controlling person of us 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 offered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding, which may result in a claim for such
indemnification.
Item 15. Recent Sales of Unregistered Securities
On June 7, 2010, we completed the first closing of the private
placement transaction disclosed above and issued approximately 123,403 Units at
a purchase price of $28.56 per Unit for gross proceeds of $3,524,342. Each Unit
consists of (i) one share of Series A Preferred Stock, with an initial
one-to-ten conversion ratio into shares of the Company's Common Stock, and (ii)
Series C Warrants to purchase five shares of Common Stock at an exercise price
of $3.40 per share with a term of three years. As a result, we issued 123,403
shares of our Series A Preferred Stock, initially convertible into 1,234,030
shares of our common stock, and warrants to purchase an aggregate of 617,008
shares of our common stock. The Units were issued in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D or Regulation S
promulgated thereunder.
On June 28, 2010, we completed the second closing of the
private placement transaction and issued approximately 74,297 Units at a
purchase price of $28.56 per Unit for gross proceeds of $2,121,928. Each Unit
consists of (i) one share of Series A Preferred Stock, with an initial
one-to-ten conversion ratio into shares of the Company's Common Stock, and (ii)
Series C Warrants to purchase five shares of Common Stock at an exercise price
of $3.40 per share with a term of three years. As a result, we issued 74,303
shares of our Series A Preferred Stock, initially convertible into 743,030
shares of our common stock, and warrants to purchase an aggregate of 371,493
shares of our common stock. The Units were issued in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D or Regulation S
promulgated thereunder.
In addition, Gilford Securities Incorporated served as the
placement agent in connection with this private placement. As partial
compensation for its services, we issued to Gilford Securities Incorporated
Series C Warrants to purchase an aggregate of 39,539 shares of our common stock,
representing 2% of the aggregate number of shares of common stock issuable upon
conversion of the Series A Preferred Stock purchased by the investors in this
transaction. The foregoing issuance was made in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D promulgated
thereunder.
On July 1, 2010, as partial compensation for its services, we
issued to our IR firm, American Capital Adventures, Inc. and its designees, a
Series D Warrant to purchase 100,000 shares of our common stock, which has a
term of three years with an exercise price of $3.80 per share. The foregoing
issuance was made in reliance upon exemptions provided by Section 4(2) of the
Securities Act for the offer and sale of securities not involving a public
offering and Regulation D promulgated thereunder.
On December 17, 2009, we completed a private placement
transaction under which we sold 1,000,000 shares of our common stock to certain
investors at $2.5 per share for a total of $2.5 million. In addition, we granted
to each of the investors two warrants to purchase in aggregate 500,000 shares of
our common stock, including a Series A warrant having a term of three years with
an exercise price of $3.25 per share and a Series B warrant having a term of
three years with an exercise price of $4.00 per share. The issuance of these
shares of common stock and the warrants was made in reliance upon exemptions
provided by Section 4(2) of the Securities Act for the offer and sale of
securities not involving a public offering and Regulation D promulgated
thereunder.
On December 23, 2008, we issued 689,390 shares of our Series A
Preferred Stock to the Shareholder of New Resources. The total consideration for
the 689,390 shares of our Series A Preferred Stock is 50,000 shares of New
Resources, which is all the issued and outstanding capital stock of New
Resources. Such amount of shares of Series A Preferred Stock were subsequently converted into 8,949,424
shares of our common stock on May 29, 2009. We did not receive any cash
consideration in connection with the share exchange. The number of our shares
issued to the Shareholder of New Resource was determined based on an arms-length
negotiation. The issuance of our shares to the Shareholder of New Resource was
made in reliance on the exemption provided by Section 4(2) of the Securities Act
for the offer and sale of securities not involving a public offering and
Regulation D promulgated thereunder.
II-2
On December 23, 2008, we issued and sold to ACI 17,962 shares
of our Series A Preferred Stock for $52,530.50, or $2.92 per share. Such amount
of shares of Series A Preferred Stock were subsequently converted into 313,437
shares of our common stock on May 29, 2009. The issuance of our shares to ACI
was made in reliance on the exemption provided by Section 4(2) of the Securities
Act for the offer and sale of securities not involving a public offering and
Regulation D promulgated thereunder.
On December 23, 2008, we issued and sold to Tan Zhen Investment
Limited 20,168 shares of our Series A Preferred Stock for $375,000, or $18.59
per share. Such amount of shares of Series A Preferred Stock were subsequently
converted into 351,932 shares of our common stock on May 29, 2009. The issuance
of our shares to the Investor was made in reliance on the exemption provided by
Section 4(2) of the Securities Act for the offer and sale of securities not
involving a public offering and Regulation D promulgated thereunder.
In instances described above where we indicate that we relied
upon Section 4(2) of the Securities Act in issuing securities, our reliance was
based upon the following factors: (a) the issuance of the securities was an
isolated private transaction by us which did not involve a public offering; (b)
there were only a limited number of offerees; (c) there were no subsequent or
contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the negotiations for
the sale of the stock took place directly between the offeree and us.
In instances described above where we issued securities in
reliance upon Regulation D, we relied upon Rule 506 of Regulation D of the
Securities Act. These stockholders who received the securities in such instances
made representations that (a) the stockholder is acquiring the securities for
his, her or its own account for investment and not for the account of any other
person and not with a view to or for distribution, assignment or resale in
connection with any distribution within the meaning of the Securities Act, (b)
the stockholder agrees not to sell or otherwise transfer the purchased shares
unless they are registered under the Securities Act and any applicable state
securities laws, or an exemption or exemptions from such registration are
available, (c) the stockholder has knowledge and experience in financial and
business matters such that he, she or it is capable of evaluating the merits and
risks of an investment in us, (d) the stockholder had access to all of our
documents, records, and books pertaining to the investment and was provided the
opportunity ask questions and receive answers regarding the terms and conditions
of the offering and to obtain any additional information which we possessed or
were able to acquire without unreasonable effort and expense, and (e) the
stockholder has no need for the liquidity in its investment in us and could
afford the complete loss of such investment. Management made the determination
that the investors in instances where we relied on Regulation D are accredited
investors (as defined in Regulation D) based upon management's inquiry into
their sophistication and net worth. In addition, there was no general
solicitation or advertising for securities issued in reliance upon Regulation D.
In instances described above where we indicate that we relied
upon Regulation S promulgated under the Securities Act in issuing securities,
our reliance was based upon the following factors (a) each subscriber was
neither a U.S. person nor acquiring the shares for the account or benefit of any
U.S. person, (b) each subscriber agreed not to offer or sell the shares
(including any pre-arrangement for a purchase by a U.S. person or other person
in the United States) directly or indirectly, in the United States or to any
natural person who is a resident of the United States or to any other U.S.
person as defined in Regulation S unless registered under the Securities Act and
all applicable state laws or an exemption from the registration requirements of
the Securities Act and similar state laws is available, (c) each subscriber made
his, her or its subscription from the subscriber's residence or offices at an
address outside of the United States and (d) each subscriber or the subscriber's
advisor has such knowledge and experience in financial and business matters that
the subscriber is capable of evaluating the merits and risks of, and protecting
his interests in connection with an investment in us.
Item 16. Exhibits and Financial Statement Schedules
The following exhibits are included as part of this Form
S-1.
II-3
Exhibit No.
Description
2.1
Share Exchange
        Agreement, dated December 23, 2008, among the Company, New Zealand WAYNE's
        New Resources Development Co., Ltd., Heilongjiang Shuaiyi New Energy Development
        Co., Ltd., Daqing Shuaiyi Biotech Co., Ltd., Harbin Shuaiyi Green &
        Specialty Food Trading LLC and New Zealand WAYNE's Investments Holdings
        Co., Ltd. [Incorporated by reference to Exhibit 2.1 to the Company's
        Current Report on Form 8-K filed on December 31, 2008].
3.1
Amended and Restated
        Articles of Incorporation filed with the Nevada Secretary of State on
        May 19, 2009 [Incorporated by reference to Exhibit 3.1 to the Company's
        Current Report on Form 8-K filed on May 26, 2009].
3.2
Certificate of
        Amendment filed with the Nevada Secretary of State on January 11, 2010
        [Incorporated by reference to Exhibit 3.1 to the Company's Current
        Report on Form 8-K filed on January 14, 2010].
3.3
Certificate of
        Designation of Series A Preferred Stock, as filed with the Secretary of
        State of the State of Nevada, May 27, 2010 [Incorporated by reference
        to Exhibit 3.1 to the Company's Current Report on Form 8-K filed
        on June 3, 2010].
3.4
Bylaws, adopted
        December 27, 2003 [Incorporated by reference to Exhibit 3.2 to the Company's
        Registration Statement on Form SB-2, filed on January 2, 2004].
4.1
Form of Series
        A Warrant [Incorporated by reference to Exhibit 4.1 to the Company's
        Current Report on Form 8-K filed on December 21, 2009].
4.2
Form of Series
        B Warrant [Incorporated by reference to Exhibit 4.2 to the Company's
        Current Report on Form 8-K filed on December 21, 2009].
4.3
Form of Series
        C Warrant [Incorporated by reference to Exhibit 10.2 to the Company's
        Current Report on Form 8-K filed on June 3, 2010].
4.4
Form
        of Series D Warrant*
5
Opinion
        of Holland & Hart LLP as to the legality of the shares.*
10.1
Form of Securities
        Purchase Agreement, dated December 17, 2009 [Incorporated by reference
        to Exhibit 10.1 to the Company's Current Report on Form 8-K filed
        on December 21, 2009].
10.2
Subscription
        Agreement, dated December 23, 2008, between the Company and Allied China
        Investments, LLC. [Incorporated by reference to Exhibit 10.1 to the Company's
        Current Report on Form 8-K filed on December 31, 2008].
10.3
Amendment No.
        1 to Stock Purchase Agreement, dated December 23, 3008, by and among the
        Company, Allied China Investments, LLC and Belmont Partners LLC. [Incorporated
        by reference to Exhibit 10.2 to the Company's Current Report on Form
        8-K filed on December 31, 2008].
10.4
Subscription
        Agreement, dated December 23, 2008, between the Company and Tan Zhen Investment
        Limited. [incorporated by reference to Exhibit 10.3 to the Company's
        Current Report on Form 8-K filed on December 31, 2008].
10.5
Escrow Agreement,
        dated December 23, by and among the Company, Tan Zhen Investment Limited
        and Sichenzia Ross Friedman Ference LLP, as escrow agent. [incorporated
        by reference to Exhibit 10.4 to the Company's Current Report on Form
        8-K filed on December 31, 2008].
II-4
10.6
Real Property Purchase Agreement, dated October 22, 2007,
      between Daqing Shuaiyi Biotech Co., Ltd. and Heilongjiang Shuaiyi
      Technology Development Co., Ltd. (English Translation) [incorporated by
      reference to Exhibit 10.5 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.7
Land Lease Agreement, dated January 10, 2008, between
      Heilongjiang Shuaiyi Technology Development Co., Ltd. and Daqing Shuaiyi
      Biotech Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.6 to the Company's Current Report on Form 8-K filed on December
      31, 2008].
10.8
Lease Agreement, dated December 28, 2005, between Liye
      Qian and Harbin Shuaiyi Green & Specialty Food Trading LLC. (English
      Translation) [incorporated by reference to Exhibit 10.7 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
10.9
Lease Agreement, dated April 23, 2008, between Harbin
      Jinhua Keji Qiye Fuhuaqi Co., Ltd. and Harbin Shuaiyi Green &
      Specialty Food Trading LLC. (English Translation) [incorporated by
      reference to Exhibit 10.8 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.10
Exclusive Licensing Agreement, dated April 10, 2006,
      between Runjiao Wang and Daqing Shuaiyi Biotech Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.9 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
10.11
Equity Transfer Agreement, dated July 28, 2008, by and
      among Heilongjiang Shuaiyi New Energy Development Co., Ltd., Lianyun Han,
      Lianxue Han, Lianju Han, Weihan Zhang, Yuehong Luan, Chunming Zhang,
      Xunjun Li, Nana Jiang, Fengxi Lang and New Zealand WAYNE'S New Resources
      Development Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.10 to the Company's Current Report on Form 8-K filed on
      December 31, 2008].
10.12
Form of Earn-In Agreement, dated September 12, 2008.
      [incorporated by reference to Exhibit 10.11 to the Company's Current
      Report on Form 8-K filed on December 31, 2008].
10.13
Form of First Amendment to Earn-In Agreement, dated
      February 12, 2009. [incorporated by reference to Exhibit 10.16 to the
      Company's Current Report on Form 8-K/A filed on February 23,
  2009].
10.14
Loan Agreement, dated October 15, 2007, between
      Heilongjiang Shuaiyi New Energy Development Co., Ltd. and Daqing Shuaiyi
      Biotech Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.12 to the Company's Current Report on Form 8-K filed on
      December 31, 2008].
10.15
Form of Loan Agreement and Promissory Note, dated
      December 8, 2008. [incorporated by reference to Exhibit 10.13 to the
      Company's Current Report on Form 8-K filed on December 31,
2008].
10.16
Form of First Amendment to Loan Agreement and Promissory
      Note, dated February 12, 2009. [incorporated by reference to Exhibit 10.15
      to the Company's Current Report on Form 8-K/A filed on February 23,
      2009].
10.17
Form of Heilongjiang Shuaiyi New Energy Development Co.,
      Ltd. Employment Agreement. (English Translation) [incorporated by
      reference to Exhibit 10.14 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.18
English Translation of Employment Agreement, dated August
      18, 2009, between Heilongjiang Shuaiyi New Energy Development Co., Ltd.
      and Hongbing Hua [Incorporated by reference to Exhibit 10.1 to the
      Company's Current Report on Form 8-K filed on August 21,
  2009].
II-5
10.19
2009 Equity Incentive Plan [Incorporated
        by reference to Appendix A to the Company's Information Statement
        on Schedule 14C filed on July 2, 2009].
10.20
Stock Option Agreement, dated January
        1, 2010, by and between the Company and Daniel K. Lee [Incorporated by
        reference to Exhibit 10.1 to the Company's Current Report on Form
        8-K filed on January 7, 2010].
10.21
Restricted Shares Grant Agreement,
        dated January 1, 2010, by and between the Company and Daniel K. Lee [Incorporated
        by reference to Exhibit 10.2 to the Company's Current Report on Form
        8-K filed on January 7, 2010].
10.22
Employment Agreement, dated November
        16, 2009, by and among the Company, Heilongjiang Shuaiyi New Energy Development
        Co., Ltd. and Daniel K. Lee [Incorporated by reference to Exhibit 10.1
        to the Company's Current Report on Form 8-K filed on November 18,
        2009].
10.23
Form of Securities Purchase Agreement,
        dated May 27, 2010, by and among the Company and the investors named therein
        [Incorporated by reference to Exhibit 10.1 to the Company's Current
        Report on Form 8-K filed on June 3, 2010].
10.24
Escrow Agreement, by and among the
        Company, ARC China, Inc., Gilford Securities Incorporated, Corporate Stock
        Transfer, Inc. and United Western Bank, dated May 27, 2010 [Incorporated
        by reference to Exhibit 10.3 to the Company's Current Report on Form
        8-K filed on June 3, 2010].
10.25
Employment Agreement, by and between
        the Company and Robert Tick, dated July 16, 2010 [Incorporated by reference
        to Exhibit 10.1 to the Company's Current Report on Form 8-K filed
        on July 20, 2010]
10.26
Stock Option Agreement, by and between
        the Company and Robert Tick, dated July 16, 2010 [Incorporated by reference
        to Exhibit 10.2 to the Company's Current Report on Form 8-K filed
        on July 20, 2010]
10.27
Restricted Shares Grant Agreement,
        by and between the Company and Robert Tick, dated July 16, 2010 [Incorporated
        by reference to Exhibit 10.3 to the Company's Current Report on Form
        8-K filed on July 20, 2010]
21
Subsidiaries
        of the registrant*
23.1
Consent of
        AGCA, Inc.*
23.2
Consent of Holland
        & Hart LLP (included in Exhibit 5)*
24
Power of Attorney (included on the signature
        page of this registration statement)
________________
* Filed herewith.
Item 17.
Undertakings
(A)        The undersigned
Registrant hereby undertakes:
(1)        To file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement:
(a)        To include any
prospectus required by Section 10(a)(3) of the Securities Act;
II-6
(b)        To reflect in the
prospectus any facts or events arising after the effective date of this
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in 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 and of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(c)        To include any
additional or changed material information with respect to the plan of
distribution not previously disclosed in this Registration Statement;
(2)        That, for the
purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial
bona fide
offering
thereof.
(3)        To remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
(4)        If the registrant is
subject to Rule 430C (§230.430C of this chapter), 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 (§230.430A of this chapter), 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.
(B)        Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant 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 Registrant 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 and will be governed by the final adjudication of such issue.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Harbin, China, on the 11
th
day of August,
2010.
Nutrastar International Inc.
By
/s/ Lianyun Han
Lianyun Han, CEO and President
POWER OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature to this
Registration Statement on Form S-1 appears below hereby constitutes and appoints
Lianyun Han and Robert Tick, and each or any of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to sign any registration statement for the
same offering covered by this Registration Statement that is to be effective on
filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and
all post-effective amendments thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities indicated on August
11, 2010.
SIGNATURE
TITLE
/s/ Lianyun Han
Chief Executive Officer, President and Chairman
Lianyun Han
(Principal Executive Officer)
/s/ Robert Tick
Chief Financial Officer and Treasurer
Robert Tick
(Principal Financial Officer and Principal
      Accounting
Officer)
/s/ Hongbing Hua
Chief Marketing Officer
Hongbing Hua
/s/ Nana Jiang
Director
Nana Jiang
/s/ Chunming Zhang
Director
Chunming Zhang
/s/ John Jing Zhang
Director
John Jing Zhang
/s/ Xi Zhu
Director
Xi Zhu
EXHIBIT INDEX
Exhibit No.
Description
2.1
Share Exchange
        Agreement, dated December 23, 2008, among the Company, New Zealand WAYNE's
        New Resources Development Co., Ltd., Heilongjiang Shuaiyi New Energy Development
        Co., Ltd., Daqing Shuaiyi Biotech Co., Ltd., Harbin Shuaiyi Green &
        Specialty Food Trading LLC and New Zealand WAYNE's Investments Holdings
        Co., Ltd. [Incorporated by reference to Exhibit 2.1 to the Company's
        Current Report on Form 8-K filed on December 31, 2008].
3.1
Amended and
        Restated Articles of Incorporation filed with the Nevada Secretary of
        State on May 19, 2009 [Incorporated by reference to Exhibit 3.1 to the
        Company's Current Report on Form 8-K filed on May 26, 2009].
3.2
Certificate
        of Amendment filed with the Nevada Secretary of State on January 11, 2010
        [Incorporated by reference to Exhibit 3.1 to the Company's Current
        Report on Form 8-K filed on January 14, 2010].
3.3
Certificate
        of Designation of Series A Preferred Stock, as filed with the Secretary
        of State of the State of Nevada, May 27, 2010 [Incorporated by reference
        to Exhibit 3.1 to the Company's Current Report on Form 8-K filed
        on June 3, 2010].
3.4
Bylaws, adopted
        December 27, 2003 [Incorporated by reference to Exhibit 3.2 to the Company's
        Registration Statement on Form SB-2, filed on January 2, 2004].
4.1
Form of Series
        A Warrant [Incorporated by reference to Exhibit 4.1 to the Company's
        Current Report on Form 8-K filed on December 21, 2009].
4.2
Form of Series
        B Warrant [Incorporated by reference to Exhibit 4.2 to the Company's
        Current Report on Form 8-K filed on December 21, 2009].
4.3
Form of Series
        C Warrant [Incorporated by reference to Exhibit 10.2 to the Company's
        Current Report on Form 8-K filed on June 3, 2010].
4.4
Form
        of Series D Warrant*
5
Opinion
        of Holland & Hart LLP as to the legality of the shares.*
10.1
Form of Securities
        Purchase Agreement, dated December 17, 2009 [Incorporated by reference
        to Exhibit 10.1 to the Company's Current Report on Form 8-K filed
        on December 21, 2009].
10.2
Subscription
        Agreement, dated December 23, 2008, between the Company and Allied China
        Investments, LLC. [Incorporated by reference to Exhibit 10.1 to the Company's
        Current Report on Form 8-K filed on December 31, 2008].
10.3
Amendment No.
        1 to Stock Purchase Agreement, dated December 23, 3008, by and among the
        Company, Allied China Investments, LLC and Belmont Partners LLC. [Incorporated
        by reference to Exhibit 10.2 to the Company's Current Report on Form
        8-K filed on December 31, 2008].
10.4
Subscription
        Agreement, dated December 23, 2008, between the Company and Tan Zhen Investment
        Limited. [incorporated by reference to Exhibit 10.3 to the Company's
        Current Report on Form 8-K filed on December 31, 2008].
10.5
Escrow Agreement,
        dated December 23, by and among the Company, Tan Zhen Investment
Limited and Sichenzia Ross Friedman Ference LLP, as
      escrow agent. [incorporated by reference to Exhibit 10.4 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
10.6
Real Property Purchase Agreement, dated October 22, 2007,
      between Daqing Shuaiyi Biotech Co., Ltd. and Heilongjiang Shuaiyi
      Technology Development Co., Ltd. (English Translation) [incorporated by
      reference to Exhibit 10.5 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.7
Land Lease Agreement, dated January 10, 2008, between
      Heilongjiang Shuaiyi Technology Development Co., Ltd. and Daqing Shuaiyi
      Biotech Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.6 to the Company's Current Report on Form 8-K filed on December
      31, 2008].
10.8
Lease Agreement, dated December 28, 2005, between Liye
      Qian and Harbin Shuaiyi Green & Specialty Food Trading LLC. (English
      Translation) [incorporated by reference to Exhibit 10.7 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
10.9
Lease Agreement, dated April 23, 2008, between Harbin
      Jinhua Keji Qiye Fuhuaqi Co., Ltd. and Harbin Shuaiyi Green &
      Specialty Food Trading LLC. (English Translation) [incorporated by
      reference to Exhibit 10.8 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.10
Exclusive Licensing Agreement, dated April 10, 2006,
      between Runjiao Wang and Daqing Shuaiyi Biotech Co., Ltd. (English
      Translation) [incorporated by reference to Exhibit 10.9 to the Company's
      Current Report on Form 8-K filed on December 31, 2008].
10.11
Equity Transfer Agreement, dated July 28, 2008, by and
      among Heilongjiang Shuaiyi New Energy Development Co., Ltd., Lianyun Han,
      Lianxue Han, Lianju Han, Weihan Zhang, Yuehong Luan, Chunming Zhang,
      Xunjun Li, Nana Jiang, Fengxi Lang and New Zealand WAYNE'S New Resources
      Development Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.10 to the Company's Current Report on Form 8-K filed on
      December 31, 2008].
10.12
Form of Earn-In Agreement, dated September 12, 2008.
      [incorporated by reference to Exhibit 10.11 to the Company's Current
      Report on Form 8-K filed on December 31, 2008].
10.13
Form of First Amendment to Earn-In Agreement, dated
      February 12, 2009. [incorporated by reference to Exhibit 10.16 to the
      Company's Current Report on Form 8-K/A filed on February 23,
  2009].
10.14
Loan Agreement, dated October 15, 2007, between
      Heilongjiang Shuaiyi New Energy Development Co., Ltd. and Daqing Shuaiyi
      Biotech Co., Ltd. (English Translation) [incorporated by reference to
      Exhibit 10.12 to the Company's Current Report on Form 8-K filed on
      December 31, 2008].
10.15
Form of Loan Agreement and Promissory Note, dated
      December 8, 2008. [incorporated by reference to Exhibit 10.13 to the
      Company's Current Report on Form 8-K filed on December 31,
2008].
10.16
Form of First Amendment to Loan Agreement and Promissory
      Note, dated February 12, 2009. [incorporated by reference to Exhibit 10.15
      to the Company's Current Report on Form 8-K/A filed on February 23,
      2009].
10.17
Form of Heilongjiang Shuaiyi New Energy Development Co.,
      Ltd. Employment Agreement. (English Translation) [incorporated by
      reference to Exhibit 10.14 to the Company's Current Report on Form 8-K
      filed on December 31, 2008].
10.18
English Translation
        of Employment Agreement, dated August 18, 2009, between Heilongjiang Shuaiyi
        New Energy Development Co., Ltd. and Hongbing Hua [Incorporated by reference
        to Exhibit 10.1 to the Company's Current Report on Form 8-K filed
        on August 21, 2009].
10.19
2009 Equity
        Incentive Plan [Incorporated by reference to Appendix A to the Company's
        Information Statement on Schedule 14C filed on July 2, 2009].
10.20
Stock Option
        Agreement, dated January 1, 2010, by and between the Company and Daniel
        K. Lee [Incorporated by reference to Exhibit 10.1 to the Company's
        Current Report on Form 8-K filed on January 7, 2010].
10.21
Restricted Shares
        Grant Agreement, dated January 1, 2010, by and between the Company and
        Daniel K. Lee [Incorporated by reference to Exhibit 10.2 to the Company's
        Current Report on Form 8-K filed on January 7, 2010].
10.22
Employment Agreement,
        dated November 16, 2009, by and among the Company, Heilongjiang Shuaiyi
        New Energy Development Co., Ltd. and Daniel K. Lee [Incorporated by reference
        to Exhibit 10.1 to the Company's Current Report on Form 8-K filed
        on November 18, 2009].
10.23
Form of Securities
        Purchase Agreement, dated May 27, 2010, by and among the Company and the
        investors named therein [Incorporated by reference to Exhibit 10.1 to
        the Company's Current Report on Form 8-K filed on June 3, 2010].
10.24
Escrow Agreement,
        by and among the Company, ARC China, Inc., Gilford Securities Incorporated,
        Corporate Stock Transfer, Inc. and United Western Bank, dated May 27,
        2010 [Incorporated by reference to Exhibit 10.3 to the Company's
        Current Report on Form 8-K filed on June 3, 2010].
10.25
Employment Agreement,
        by and between the Company and Robert Tick, dated July 16, 2010 [Incorporated
        by reference to Exhibit 10.1 to the Company's Current Report on Form
        8-K filed on July 20, 2010]
10.26
Stock Option
        Agreement, by and between the Company and Robert Tick, dated July 16,
        2010 [Incorporated by reference to Exhibit 10.2 to the Company's
        Current Report on Form 8-K filed on July 20, 2010]
10.27
Restricted Shares
        Grant Agreement, by and between the Company and Robert Tick, dated July
        16, 2010 [Incorporated by reference to Exhibit 10.3 to the Company's
        Current Report on Form 8-K filed on July 20, 2010]
21
Subsidiaries
        of the registrant*
23.1
Consent
        of AGCA, Inc.*
23.2
Consent
        of Holland & Hart LLP (included in Exhibit 5)*
24
Power of Attorney (included on the signature
        page of this registration statement)
_______________________
* Filed herewith