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8-K - FORM 8-K - Nutrastar International Inc.form8k.htm

Exhibit 99.1

Nutrastar International Inc. Announces First Quarter 2014 Results

Revenue of $6.87 Million; Gross Margin at 76.3%; Company Maintains Forecasts for 2014 Revenue of Between $47 Million and $50 Million

Harbin, China, May 13, 2014-- Nutrastar International Inc. (OTCQB: NUIN; "Nutrastar" or the "Company"), a leading producer and supplier of premium branded consumer products, including commercially cultivated Cordyceps Militaris (“Cordyceps”), functional health beverages and organic and specialty foods, today announced its results for the three months ended March 31, 2014.

Financial Highlights

  • Net revenue was $6.87 million, a decrease of 0.54 million from $7.41 million from comparable 2013 period.
  • Gross profit was $5.24 million, representing a gross margin of 76.3%.
  • Net income was $3.23 million, representing a net margin of 47.1%.
  • Basic and diluted EPS were $0.19 and $0.18, respectively, with 16.66 million basic shares and 17.65 million diluted shares outstanding.

Management Commentary

Ms. Lianyun Han, CEO of Nutrastar, commented, “Increased demand for our 210ml and 310ml beverage offerings coupled with a decline in demand for 160ml beverage product forced us to realign the beverage product lines. This led to a temporary delay in finished goods deliveries to our beverage customers in Q1 2014 and a slightly higher inventory balance at March 31, 2014. In addition, it required us to reallocate a portion of finished Cordyceps goods towards production of beverages for the 210ml and the 310ml product lines. This resulted in a decrease in total sales of approximately $0.54 million or 7.3% in the first quarter of 2014. Consequently, and despite strong demand, our core product Cordyceps saw flat year-over-year sales of $6.06 million. Organic specialty foods, our third consumer product category, was unaffected by the product realignment and experienced sales growth of 5.3% . We do not expect further delays in the current and forthcoming quarters, assuming unforeseeable events do not adversely affect future production and delivery schedule. Going forward, we expect that demand increases for the 210ml and 310ml beverage product lines will outpace any demand shortfall from 160ml beverages.”

Ms. Han continued, “In the three months ended March 31, 2014, gross profit and net income, as a percentage of revenue, improved to 76.3% and 47.1%, respectively, from 76.1% and 46.0% in the same quarter of 2013. These improvements were mainly attributable to lower sales volume of our beverages, which have a relatively higher production cost than our other products.”


“We are the single largest provider of commercially cultivated Cordyceps Militaris and over the past few years, we have used that as leverage to expand into other synergistic premium consumer product categories. This strategy has resulted in the successful diversification of Nutrastar – both by product and revenue. We continue to capitalize on rising demand stemming from China’s young, increasing affluent, and aging populations, and are now working on expanding our reach – both domestically in China and internationally via new products such as our in-development Cordyceps capsules and tablets which will cater to health conscious, on-the-go customers. These new products, a continuation in our marketing measures, and an expansion in our geographical reach will allow us to grow and achieve key milestones set forth in our long-term growth plan. Working with members of our board of directors, we are beginning to identify strong and seasoned talent with international nutraceutical experience to supplement the Nutrastar team, particularly as we prepare for international expansion. We will keep the public and shareholders apprised of our development progress with these initiatives and in all other areas of our business,” added Ms. Han.

Nutrastar encourages any interested party to reach out directly for more information on the Company and its innovative, premium consumer product portfolio.

Outlook for the Year Ending December 31, 2014

Based on management’s current expectations, full year 2014 revenue should fall in the range of $47 million to $50 million, representing an approximate 8% to 15% year-over-year top line growth.

Request for Call with Management

Investors are invited to request a call with Nutrastar’s management team. For those investors who are interested in speaking with management, please contact American Capital Ventures at +1-305-918-7000 to schedule.

For more information regarding Nutrastar’s financial performance during the three months ended March 31, 2014, please refer to the Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on or about May 13, 2014.


About Nutrastar International Inc.

Nutrastar is a China based leading producer and supplier of premium branded consumer products including commercially cultivated Cordyceps Militaris, functional health beverages as well as specialty and organic foods. Cordyceps Militaris is one of the most highly regarded herbal nutrients in Traditional Chinese Medicine. The Company is headquartered in Harbin, capital of Heilongjiang Province, with 330 employees, including 21 in R&D, and 149 in sales and marketing. The products of Nutrastar are sold throughout China via a sales and distribution network that covers more than 10 provinces. More information may be found at http://www.nutrastarintl.com/ or e-mail: ir@nutrastarintl.com

Make sure you are first to receive timely up-to-date information on Nutrastar. Sign up for Nutrastar's email news alert system today at: http://www.nutrastarintl.com/alerts

Safe Harbor Statement

This news release contains “forward-looking statements” relating to the business of Nutrastar International Inc., its subsidiaries and other affiliate companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the Company with the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, the Company does not assume a duty to update any forward-looking statements to reflect events or circumstances after the date hereof.

For more information, please contact:

Howard Gostfrand
American Capital Ventures
Tel: +1-305-918-7000
Email: info@amcapventures.com



NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(AMOUNTS EXPRESSED IN US DOLLARS)

 

  For the Three Months Ended  

 

  March 31,  

 

  2014     2013  

 

           

REVENUE

$  6,866,681   $  7,411,136  

 

           

Cost of goods sold

  (1,628,254 )   (1,772,288 )

 

           

GROSS PROFIT

  5,238,427     5,638,848  

 

           

Selling expenses

  (247,063 )   (430,463 )

General and administrative expenses

  (673,015 )   (592,515 )

 

           

Income from operations

  4,318,349     4,615,870  

 

           

Other income (expenses):

           

 

           

   Interest income

  91,858     83,741  

   Foreign exchange differences

  (18,089 )   (5,187 )

   Total other income

  73,769     78,554  

 

           

Income before income taxes

  4,392,118     4,694,424  

 

           

Provision for income taxes

  (1,158,544 )   (1,279,740 )

 

           

NET INCOME

  3,233,574     3,414,684  

 

           

OTHER COMPREHENSIVE INCOME:

           

Foreign currency translation adjustments

  (1,052,829 )   239,747  

 

           

COMPREHENSIVE INCOME

$  2,180,745   $  3,654,431  

 

           

Earnings per share

           

   Basic

$  0.19   $  0.21  

   Diluted

$  0.18   $  0.20  

 

           

Weighted average number of shares outstanding

           

   Basic

  16,657,418     15,863,826  

   Diluted

  17,645,322     16,995,928  



NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US DOLLARS)

 

  March 31,     December  

 

  2014     31, 2013  

 

  (Unaudited)        

ASSETS

           

CURRENT ASSETS

           

Cash and cash equivalents

$  103,134,535   $  102,599,186  

Accounts receivable

  96,526     56,922  

Inventories

  1,726,646     691,847  

Prepayments and other receivables

  764,451     1,300,012  

   Total current assets

  105,722,158     104,647,967  

OTHER ASSETS

           

Intangible assets, net

  975,852     1,107,737  

Property, plant and equipment, net

  15,093,577     15,481,249  

   Total assets

$  121,791,587   $  121,236,953  

 

           

LIABILITIES AND STOCKHOLDERS' EQUITY

           

CURRENT LIABILITIES

           

Other payables and accruals

$  1,055,400   $  1,167,957  

Taxes payable

  1,158,360     2,879,172  

Due to a related party

  412,689     265,223  

Preferred stock dividend payable

  563,093     738,903  

   Total current liabilities

  3,189,542     5,051,255  

   Total liabilities

  3,189,542     5,051,255  

COMMITMENTS AND CONTINGENCIES

           

STOCKHOLDERS' EQUITY

           

Preferred Stock, $0.001 par value, 1,000,000 shares authorized, 77,776 shares and 110,066 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively; aggregate liquidation preference amount: $2,177,728 and $ 3,081,848, plus accrued but unpaid dividend of $563,093 and $738,903, at March 31, 2014 and December 31, 2013, respectively

  1,773,772     2,510,183  

 

           

Common stock, $0.001 par value, 190,000,000 shares authorized, 16,858,541 shares issued and 16,814,986 shares outstanding at March 31, 2014; 16,421,161 shares issued and 16,377,606 shares outstanding at December 31, 2013

  16,859     16,422  

 

           

Additional paid-in capital

  20,952,803     19,934,551  

Statutory reserves

  4,989,054     4,983,935  

Treasury stock, at cost, 43,555 shares as of March 31, 2014 and December 31,2013

  (78,767 )   (78,767 )

Retained earnings

  83,424,656     80,242,877  

Accumulated other comprehensive income

  7,523,668     8,576,497  

   Total stockholders' equity

  118,602,045     116,185,698  

 

           

   Total liabilities and stockholders' equity

$  121,791,587   $  121,236,953  



NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(AMOUNTS EXPRESSED IN US DOLLARS)

 

  For the Three Months Ended  

 

  March 31,  

 

  2014     2013  

CASH FLOWS FROM OPERATING ACTIVITIES:

           

Net income

$  3,233,574   $  3,414,684  

Adjustments to reconcile net income to cash provided by operating activities:

           

   Consultant restricted stock expense

  14,558     -  

   Depreciation and amortization

  372,777     362,996  

   Share-based compensation expense

  45,234     54,006  

(Increase) decrease in assets:

           

      Accounts receivable

  (40,338 )   (584 )

      Inventories

  (1,046,809 )   (754,380 )

      Prepayments and other receivables

  526,815     445,232  

Increase (decrease) in liabilities:

           

      Other payables and accruals

  (75,594 )   83,749  

      Advance from related party

  139,989     -  

      Taxes payable

  (1,704,426 )   (1,452,440 )

   Net cash provided by operating activities

  1,465,780     2,153,263  

 

           

Foreign currency translation adjustment

  (930,431 )   262,317  

 

           

INCREASE IN CASH AND CASH EQUIVALENTS

  535,349     2,415,580  

CASH AND CASH EQUIVALENTS, at the beginning of the period

  102,599,186     75,526,533  

 

           

CASH AND CASH EQUIVALENTS, at the end of the period

$  103,134,535   $  77,942,113  

NON-CASH TRANSACTIONS

           

Preferred stock and dividend converted into common stock

$  958,897   $  -  

Preferred stock dividend payable

  46,676     55,392  

Share-based payment to officers and directors under equity incentive plan

  45,234     54,006  

Share-based payment – IR warrants

  14,558     -  

SUPPLEMENTAL DISCLOSURE INFORMATION

           

Income taxes paid

$  2, 355,699   $  2,168,693