DESCRIPTION OF BUSINESS AND ORGANIZATION

6 Months Ended

Jun. 30, 2013

DESCRIPTION OF BUSINESS AND ORGANIZATION [Text Block]

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 and affiliates as described below are referred to as the “Company”.

On May 19, 2009, the Company filed Amended and Restated Articles of Incorporation with the State of Nevada to amend the Company’s 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.

On January 11, 2010, the Company filed a Certificate of Amendment to its Articles of Incorporation with the State of Nevada, pursuant to which the Company further changed its name from "Shuaiyi International New Resources Development Inc." to "Nutrastar International Inc."

On October 22, 2010, New Resources, a wholly-owned British Virgin Islands subsidiary of the Company, entered into an equity transfer agreement with the original founders of Heilongjiang Shuaiyi (the “Shuaiyi Founders”), pursuant to which New Resources transferred all of its equity interests in Heilongjiang Shuaiyi New Energy Development Co., Ltd. (“Heilongjiang Shuaiyi”), a then wholly-owned Chinese subsidiary of New Resources, to the Shuaiyi Founders (the “Equity Transfer”).

In connection with the Equity Transfer, the Shuaiyi Founders, the Company’s indirectly wholly-owned Chinese subsidiary incorporated on July 13, 2010, Harbin Baixin Biotech Development Co., Ltd. (“Harbin Baixin”) and Heilongjiang Shuaiyi entered into the following commercial arrangements (the “Contractual Arrangement” and together with the Equity Transfer, the “Restructuring”), pursuant to which the Company has contractual rights to control and operate the businesses of Heilongjiang Shuaiyi and Heilongjiang Shuaiyi’s two wholly-owned Chinese subsidiaries, Daqing Shuaiyi Biotech Co., Ltd. (“Daqing Shuaiyi”) and Harbin Shuaiyi Green & Specialty Food Trading LLC (“Harbin Shuaiyi” and together with Heilongjiang Shuaiyi and Daqing Shuaiyi, the “VIEs”):

Service Agreement

Pursuant to a technical service agreement, entered into by and between Harbin Baixin and Heilongjiang Shuaiyi, Harbin Baixin will provide certain exclusive technical services to Heilongjiang Shuaiyi in exchange for the payment by Heilongjiang Shuaiyi of a service fee that is calculated based on the market price in light of the particulars of the service and the time of such service provided by Harbin Baixin (the “Service Agreement”);

Option Agreement

Pursuant to an exclusive purchase option agreement, entered into by and among Harbin Baixin, the Shuaiyi Founders and Heilongjiang Shuaiyi, the Shuaiyi Founders granted to Harbin Baixin an option to purchase at any time during the term of this agreement, all or part of the equity interests in Heilongjiang Shuaiyi (the “Equity Interests”), at the exercise price equal to the lowest possible price permitted by Chinese laws (the “Option Agreement”); and

Voting Rights Agreement

Pursuant to a voting rights proxy agreement, entered into by and among Harbin Baixin, the Shuaiyi Founders and Heilongjiang Shuaiyi, each of the Shuaiyi Founders irrevocably entrusted Harbin Baixin and any entities or individuals designated by Harbin Baixin to, among others, exercise its voting rights and other rights as a shareholder of Heilongjiang Shuaiyi (the “Voting Rights Agreement”);

Pledge agreement

Pursuant to an equity pledge agreement, entered into by and among Harbin Baixin, the Shuaiyi Founders and Heilongjiang Shuaiyi, the Founders pledged all of the Equity Interests to Harbin Baixin to secure the full and complete performance of the obligations and liabilities on the part of the Shuaiyi Founders and Heilongjiang Shuaiyi under this and above contractual arrangements (the “Pledge Agreement” and together with the Service Agreement, the Option Agreement, the Voting Rights Agreement and the Equity Transfer Agreement, the “Restructuring Documents”).

As a result of the Restructuring, the Company transferred all of its indirect equity interests in Heilongjiang Shuaiyi back to the Shuaiyi Founders, among whom, Ms. Lianyun Han became a majority shareholder of Heilongjiang Shuaiyi by owning a 68.3% equity interest in Heilongjiang Shuaiyi. At the same time, through the above contractual agreement, the Company maintains substantial control over the VIEs’ daily operations and financial affairs, election of their senior executives and all matters requiring shareholder approval. As the primary beneficiary of the VIEs, the Company is entitled to consolidate the financial results of the VIEs in its own consolidated financial statements under Financial Accounting Standards Board Accounting Standard Codification (ASC) Topic 810 and related subtopics related to the consolidation of variable interest entities (collectively, “ASC Topic 810”).

As of June 30, 2013, details of the subsidiaries and affiliates of the Company are as follows:

				Percentage
	Domicile and date			of effective
Names	of incorporation		Paid-up capital	ownership	Principal activities
Subsidiaries
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”)
Oriental Global Holdings	Hong Kong,		HK$1	100%	Holding company of
Limited	May 28, 2010				Harbin Baixin
(“Oriental Global”)
Harbin Baixin Biotech	People’s Republic of	$	3,000,000	100%	Cordyceps Militaris (aka
Development Co., Ltd	China (“PRC”),				Chinese Golden Grass)
(“Harbin Baixin”)	July 13, 2010				cultivation technology
					research and
					development, services
					and Cordyceps Militaris
					products wholesale
VIEs
Heilongjiang Shuaiyi New	PRC,		RMB60,000,000	100%	Principally engaged in
Energy Development Co.,	July 11, 2006				investment and property
Ltd					holding
(“Heilongjiang Shuaiyi”)
Daqing Shuaiyi Biotech Co.	PRC,		RMB50,000,000	100%	Growing and sales of
Ltd.	August 8, 2005				Cordyceps Militaris,
(“Daqing Shuaiyi”)					which is widely used for
					Chinese medicine, and
					functional health
					beverages
Harbin Shuaiyi Green and	PRC,		RMB1,500,000	100%	Sales of organic and
Specialty Food Trading	May 18, 2001				specialty food products
LLC. (“Harbin Shuaiyi”)