Nutrastar second-quarter revenues increase 63.4% to $5.46 million

Nutrastar International Inc. (OTC Bulletin Board: NUIN; "Nutrastar" or the "Company"), a leading nutraceutical company which produces and distributes Chinese Golden Grass ("Cordyceps Militaris") and other specialty food products, today announced financial results for their three and six months ended June 30, 2010.

Three Months Ended June 30, 2010

Revenues reached $5.46 million, an increase of approximately $2.12 million, or 63.4% from the same period in 2009. The increase was mainly attributable to the increase in sales of the company's core product, Chinese Golden Grass, as well as an increase in selling prices for their packaged Chinese Golden Grass products.

Gross profit was $4.57 million, an increase of approximately $2.41 million, or 112.0% as compared to the same period in 2009. Gross margin was 83.7%, an increase of 19.1% from 64.6% during the same period in 2009. The increase in gross margin was mainly due to continued product mix shift towards Chinese Golden Grass and increased sales of their higher margin small package Chinese Golden Grass products.

Operating income was approximately $3.79 million, an increase of $2.07 million, or up 120.3% from the comparable period of 2009. Operating margin was 69.4% for the second quarter 2010, an increase of 17.9% from 51.5% during the comparable 2009 period.

Net income was $3.42 million, an increase of $1.92 million, or 127.7% from the same period of 2009. Basic and diluted earnings per share for both quarters ended June 30, 2010 and 2009 was $0.12.

Six Months Ended June 30, 2010

Revenues were $10.23 million, an increase of 28.1% from approximately $7.98 million recorded for the same six month period in 2009. The increase was primarily as a result of an increase in sales of their Chinese Golden Grass, as well as an increase in selling prices for their packaged Chinese Golden Grass products.

Gross profit was recorded as $8.28 million, an increase of 64.2% from approximately $5.04 million during the same period in 2009. Gross margin was 81.0% for the six months ended June 30, 2010, an increase of 17.8% from 63.2% during the same period in 2009. As mentioned above, the increase was a result of continued product mix shift towards Chinese Golden Grass and the increased sales of their higher margin products.

Operating income was approximately $6.90 million, up 64.6% from $4.19 million recorded in the same six month period of 2009. Operating margin was 67.5% for the first six months of 2010, an increase of 15.0% from 52.5% recorded in the same six month period of 2009.

Net income was $6.14 million, up 67.2% from $3.67 million recorded in the first six months of 2009. Earnings per basic share was $0.31 and per diluted share was $0.30 as compared to $0.29 for the comparable 2009 period on a basic and diluted basis.

As of June 30, 2010, the Company had cash and cash equivalents in the amount of $32.26 million and total liabilities in the amount of $11.92 million.

Ms. Lianyun Han, President and Chief Executive Officer of Nutrastar commented, "Nutrastar's performance in the second quarter was exceptional. We saw heightened consumer demand for our Golden Grass products, especially our high margin, small packaged products. This significant increase in sales suggests that consumer knowledge of the medicinal benefits of Chinese Golden Grass is gaining traction and the nutraceutical market in China is growing at a healthy rate. On a quarterly basis, revenues increased by roughly 63.4% and EPS reached $0.12, outstanding growth given the current volatile economic environment."

Ms. Han continued, "Since the second quarter ended, we announced a few important measures that will prepare the company for significant expansion and growth in the time ahead. We plan to expand our manufacturing capabilities by over 30%, increasing our production capacity to 72 tons by the end of 2010. In addition to expanding our production capacity, we are also continuously seeking to further our geographical footprint and diversify our Golden Grass product pipeline. We announced in July 2010 the signing of a product purchase agreement with Century Brighton Holdings, which will further expand our customer base and penetration into the lucrative Hong Kong market. We also announced the patent application of our Golden Grass wine and oral liquids which we anticipate will be in trial production in Q1 2011. It's expected that with our increased production capabilities, continued efforts on the R&D side, as well as further expansion of distribution network, Nutrastar will show consistent growth on both the revenue side and product side going forward."