________________________________________________________________________________


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                  FORM 10-KSB/A

                                (Amendment No. 1)



                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


     For the Fiscal Year Ended                  Commission File Number
         December 31, 2001                              0-32565


                             NUTRASTAR INCORPORATED


            California                                  87-0673375
------------------------------------      --------------------------------------
     (State of Incorporation)                (I.R.S. Employer Identification)

                          Principal Executive Offices:
                            1261 Hawk's Flight Court
                            El Dorado Hills, CA 95762
                            Telephone: (916) 933-7000

      Securities registered pursuant to Section 12(b) of the Exchange Act:

          Title of Each Class         Name of Each Exchange on Which Registered
                  None                                  None

    Securities registered pursuant to Section 12(g) of the Exchange Act: NONE

          Title of Each Class         Name of Each Exchange on Which Registered
              Common Stock                          No Par Value

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

Yes            X          No
           -----------             ------------

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  Registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

The issuer's  revenues for its most recent  fiscal year was  approximately  $1.6
million.

As of  March  15,  2002,  the  aggregate  value  of the  voting  stock  held  by
non-affiliates  of the  Registrant,  computed by reference to the average of the
bid and ask  price on such  date was  approximately  $8,185,000  based  upon the
average price of $1.01/share.

       ISSUER INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.

Yes            X          No
           -----------             ------------




As of March 15, 2002, the Registrant had outstanding 21,802,853 shares of common
stock (no par value).

Transitional Small Business Disclosure Format:    Yes  [   ]   No   [X]

                       Documents Incorporated by Reference

Certain exhibits required by Item 13 have been incorporated by reference from
the Company's previously filed Form 8-K's, Form 10-QSB and Form 10-KSB.



________________________________________________________________________________








                                     TABLE OF CONTENTS
                                                                                   Page of
                                                                                    Report
                                                                                    ------
                                                                                 
PART I...................................................................................1

        ITEM 1.DESCRIPTION OF BUSINESS...................................................1

        ITEM 2.DESCRIPTION OF PROPERTY..................................................12

        ITEM 3.LEGAL PROCEEDINGS........................................................12

        ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................13

PART II.................................................................................14

        ITEM 5.MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
               STOCKHOLDER MATTERS........... ..........................................14

        ITEM 6.MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION...............16

        ITEM 7.FINANCIAL STATEMENTS.....................................................22

        ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE.............. .......................22

PART III................................................................................23

        ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
               COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT .......................23

        ITEM 10.EXECUTIVE COMPENSATION..................................................25

        ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........28

        ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................29

        ITEM 13.EXHIBITS AND REPORTS ON FORM 8-K........................................30

SIGNATURES..............................................................................31




                                       i



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

General


NutraStar  Incorporated  (referred  to as  "NutraStar"  or the  "Company")  is a
California corporation formerly known as Alliance Consumer  International,  Inc.
As a result of the Exchange Transaction discussed below, NutraStar's business is
now the business previously carried on by NutraStar Technologies Incorporated, a
Nevada  corporation  ("NTI").  NutraStar is an emerging  growth health  sciences
company focused on becoming a leading nutraceutical company in the World through
the  development  and  distribution  of its "super  food"  products  and natural
arthritic relief products for both humans and animals. NutraStar also intends to
distribute "all natural" cosmetics and beauty aids. Most of NutraStar's products
offer the beneficial  elements of stabilized rice bran and specially  formulated
rice  bran  oil.  NutraStar's  "all  natural"   nutraceutical  products  deliver
biological effects without the deleterious side effects of many pharmaceuticals.
Accordingly,  NutraStar  believes  that  certain of its  products may be used in
place of, or as a  supplement  to some of the World's  most  widely  distributed
pharmaceuticals.  NutraStar  will  continue to  aggressively  support its claims
through  clinical  trials and third party analysis.  To date,  NutraStar and its
affiliates have conducted a number of limited  clinical trials on several of its
products,  including,  the  treatment of Type I and Type II  Diabetes,  high LDL
cholesterol,  triglycercides,  and  Apolipoprotien B, a treatment for joint pain
and joint  inflammation  in mammals,  a treatment for Irritable  Bowel  Syndrome
("IBS"), and a treatment for Inflammatory Bowel Disease ("IBD").


NutraStar has developed a number of product lines that are immediately available
for sale in the market  through  the  Company's  four  divisions:  TheraFoods(R)
(business  to  consumer),   NutraCea(TM)   (medical  foods),   NutraGlo  (animal
products),  and  NutraBeauticals(R)  (cosmetics and beauty aids). Because of the
efficacy and safety of its products,  NutraStar anticipates developing strategic
distribution  and  marketing  agreements  with  well-known  retail  product  and
pharmaceutical  companies  and medical  practices  and  institutions.  NutraStar
currently enjoys such a relationship with W.F. Young,  Inc., the distributors of
the  Absorbine(R)  line of human  and  animal  products,  including  NutraStar's
Absorbine  Flex+(TM)  equine  product line which NTI developed  for W.F.  Young,
Inc..  NutraStar and W.F.  Young,  Inc.  have recently  entered into a letter of
intent  to  pursue  a  joint  venture  to  market  and  distribute   NutraStar's
NutraFlex(TM)  product  line to  relieve  arthritic  and  joint  pain  under the
Absorbine(R) branding.

History

NutraStar  Incorporated  (referred  to as  "NutraStar"  or  the  "Company")  was
originally  incorporated  on March  18,  1998  under  the  laws of the  State of
California as Hickory Investments II, Inc. ("Hickory"). On June 2, 1998, Hickory
changed its name to  Alliance  Consumer  International,  Inc.  ("Alliance").  On
December  14,  2001,  Alliance  changed its name to  NutraStar  Incorporated  in
connection with the Exchange (see below).

                                       1


In mid-1998 and early 1999,  the Company  undertook two public  offerings of its
securities  pursuant to the Rule 504 exemption from registration of Regulation D
promulgated  under of the  Securities  Act of 1933, as amended (the  "Securities
Act").  During this same  period,  the  Company  was engaged in the  business of
manufacturing cosmetics, detergents and pharmaceuticals.  On September 17, 1998,
the Company was approved for quotation on the  Over-the-Counter  Bulletin  Board
("OTC-BB")  where it was quoted until June 3, 1999. On June 3, 1999, the Company
moved to the "Pink Sheets" published by the Pink Sheets LLC (previously National
Quotation Bureau,  LLC). During the second quarter of 2001, the Company's ticker
symbol was changed to "ACIN" and the Company again became listed on the OTC-BB.

On July 13, 1999, the Company filed a voluntary petition under Chapter 11 of the
U.S.  Bankruptcy Code. The case was filed in the Central District of California,
Los Angeles Division, Chapter 11 Case No. LA-99-36256-EC.  In November 1999, the
U.S.  Bankruptcy  Court  approved a Plan of  Reorganization  (referred to as the
"plan")  which  provided  for the  sale of  substantially  all of the  Company's
assets.  During the  pendency  of the  Chapter  11  bankruptcy  proceedings,  an
investor group led by Home Marketing Enterprises,  LLC, a Utah limited liability
company,  made an offer to  purchase  a  majority  of the  Company's  issued and
outstanding  shares.  This offer was accepted by the attorneys for the Debtor in
Possession  and  thereafter  formally  approved  by the  Bankruptcy  Court  at a
February 21, 2001 Sale Confirmation  Hearing. A formal Order reflecting the sale
was entered with the Clerk of the Court on March 12, 2001.

On March 12,  2001 the  Company  emerged  from  Chapter  11  bankruptcy  with no
remaining  material  assets or liabilities.  Among other things,  the Bankruptcy
Court approved (1) a change in officers and directors,  (2) the  cancellation of
all authorized and any outstanding  preferred shares, (3) a reverse common stock
split at a ratio of one share for every fifty shares that were  then-issued  and
outstanding,  (4) an  increase  in the  authorized  common  capital  shares from
15,000,000 to 50,000,000  shares,  and (5) the issuance of 3,500,000  post-split
common capital shares to the investor group.

As a result of the one-for-fifty shares reverse split, the Company, prior to the
Court-authorized  issuance of the 3,500,000 shares referenced above, had 132,377
common shares issued and  outstanding.  At the time of the  Bankruptcy  purchase
transaction,   the  Company  also  issued  17,133   post-split  shares  to  four
individuals involved in, or associated with, the pre-petition Company. The total
number of the post-split  issued and outstanding  shares,  following  Bankruptcy
Court approval of the purchase transaction was 3,649,520.

On March 28,  2001,  the Restated  Articles of  Incorporation  implementing  the
changes and amendments to the Company's Articles approved by the U.S. Bankruptcy
Court was filed with the  Secretary of State of the State of  California.  Since
its  emergence  from  Chapter 11  bankruptcy  and  concluding  with the Exchange
Transaction,  the Company has been seeking to engage in a business  combination.
The Common Stock and deficit  accumulated  during such stage have been  restated
with the statement of  operations to begin on March 12, 2001,  the date of entry
of the  Bankruptcy  Court Order  approving the purchase and sale by the investor
group.


                                       2


Fresh-Start Reporting

In  accordance  with the American  Institute of  Certified  Public  Accountants'
Statement of Position 90-7,  "Financial  Reporting by Entities in Reorganization
Under the  Bankruptcy  Code",  the  Company was  required  to adopt  fresh-start
accounting  as of March  12,  2001 at the time  the  Plan  was  approved  by the
Bankruptcy  Court.  The Company  was  required  to adopt  fresh-start  reporting
because the holders of the existing  voting shares  immediately  prior to filing
and  confirmation of the Plan received less than 50% of the voting shares of the
emerging  entity  and its  reorganization  value  was less than the total of its
post-petition liabilities and allowed claims.

In  accordance  with  fresh-start  accounting,  the  gain on  discharge  of debt
resulting  from the  bankruptcy  proceedings  as  reflected  on the  predecessor
Company's  financial  statements  for  the  period  ended  March  11,  2001  was
eliminated,  and,  at  March  12,  2001,  the  reorganized  Company's  financial
statements  reflected no beginning retained earnings or deficit.  Since November
7, 2000, the Company's  financial  statements have been prepared as if it were a
new reporting  entity and separate  column  headings  denote  pre-reorganization
operating results (the "Predecessor Company") from post-reorganization operating
results (the "Reorganized  Company") since they are not prepared on a comparable
basis.

Under fresh-start accounting, all assets and liabilities are restated to reflect
their  reorganization  value,  which  approximates  fair  value  at the  date of
reorganization. The Company's management determined that, based on the fact that
the Company has  historically  incurred losses from operations and has projected
minimal future operating profits,  the reorganization  value of the Company (the
fair value of the Company before considering  liabilities) was equivalent to the
fair value of the Company's  tangible  assets and that no other  intrinsic value
existed  above the amount paid for Common Stock by Home  Marketing  Enterprises,
LLC as  part  of the  Plan  of  Reorganization.  As a  result,  all  assets  and
liabilities have been stated at their fair value.

Exchange Transaction

On December 14, 2001,  the Company  issued  17,000,000  shares of the  Company's
Common Stock (the "Common Stock") to the shareholders of NutraStar  Technologies
Incorporated, a Nevada corporation ("NTI") in exchange for all of the issued and
outstanding  shares  of the  common  stock of NTI (the  "Exchange  Transaction")
pursuant to that certain Plan and Agreement of Exchange  dated  November 9, 2001
(the  "Exchange   Agreement")  between  the  Company,   NTI  and  the  principal
shareholders  of NTI.  As a result of the  Exchange  Transaction,  NTI  became a
wholly owned subsidiary of the Company and the former shareholders of NTI became
the owners of approximately 82% of the Company's then outstanding  common stock.
Upon the  Exchange  Transaction,  the sole  officer and  director of the Company
resigned and the officers and directors of NTI became the officers and directors
of the Company and the Company changed its ticker symbol to "NTRA".


On April 27,  2000,  prior to the  Exchange  Transaction,  NTI  formed  NutraGlo
Incorporated ("NutraGlo"), a Nevada corporation,  which was owned 80% by NTI and
20% by  NutraGlo  Investors  L.P.  During  fiscal  year 2001,  NutraGlo  started
marketing,  manufacturing  and  distributing one of NTI's products to the equine
market. In connection with the Exchange  Transaction,  NTI issued 250,001 shares





                                       3



of its common stock to the limited partnership in exchange for the remaining 20%
of the common  stock of  NutraGlo.  The value of the shares was  $250,001.  As a
result, NutraGlo is now a wholly-owned subsidiary of NTI.


Industry Overview

By  definition,  nutraceuticals  are food  constituents  that have  biologically
therapeutic  effects in humans and mammals.  These compounds  include  vitamins,
antioxidants,  polyphenols,  phytosterols,  as well as macro and trace minerals.
Rice  bran and  rice  bran oil are  good  sources  for some of these  compounds,
including  tocotrienols,  a newly  discovered  complex  of  vitamin E, and gamma
oryzanol, which is found only in rice bran. These compounds act as antioxidants.
Stabilized  rice bran and its  derivatives  and rice bran oil also  contain high
levels of  B-complex  vitamins,  beta-carotene  (a vitamin A  precursor),  other
carotenoids  and  phytosterols,  as well as both a balanced  amino acid  profile
(protein) as well as both soluble and insoluble fiber.

Rice  is one  of  the  world's  major  cereal  grains,  although  United  States
production  of  rice  is  only a  small  fraction  of  total  world  production.
Approximately  60% of the  nutritional  value of rice is  contained  in the rice
bran, the outer brown layer of the rice kernel. However,  unstabilized rice bran
deteriorates  rapidly,  within hours after milling. The RiceX Company ("RiceX"),
one of NutraStar's primary suppliers, has developed a method of stabilizing rice
bran that NutraStar believes is superior to other methods,  and provides a shelf
life of  approximately  two years,  which NutraStar  believes is longer than any
other   stabilized   rice  bran.   Certain   of   NutraStar's   core   products,
RiSolubles(TM),   RiceMucil(R),  NutraFlex(TM),  and  StaBran(R)  are  based  on
"stabilized rice bran" produced by RiceX.  NutraStar has an exclusive license to
distribute  RiceX's  value-added rice bran products in the United States and has
an  exclusive  worldwide  license for patents held by RiceX  covering  rice bran
treatments of diabetes and arteriosclerosis.

In 1999, the Alliance for Aging Research in Washington  D.C.  reported that when
Americans  reach their 50th  birthday,  their chance of being  diagnosed for the
first time with  hypertension,  arthritis,  or diabetes  will triple by the time
they  reach 60. As the  population  of the United  States  ages over the next 30
years, NutraStar believes demand for its products will grow dramatically.  Since
stabilized  rice  bran is a safe  food  product,  NutraStar  believes  that  its
beneficial  effects can be reached without any known  deleterious  side effects,
such as those that may be present in pharmaceuticals. If further clinical trials
support the beneficial effects of NutraStar's  stabilized rice bran products and
if the medical community widely endorses such use of NutraStar's products,  then
NutraStar  believes that its products may be used as the first treatment  either
prior to or as a compliment  to  traditional  pharmaceutical  therapies  for the
treatment of diabetes and coronary heart disease.

Many physicians have taken a keen interest in NutraStar's nutraceutical products
as a means of offering  alternative  or  complementary  modalities  for treating
serious health care problems.  Board Certified  gastroenterologists  have tested
NutraStar's  RiceMucil(R)  product in their local  practices,  as well as at the
University of California,  Davis Medical Center. It is now their fiber of choice
as it does not produce  methane in the intestines  and is much better  tolerated
than psyllium husk  (Metamucil(R),  Procter & Gamble) and soluble  fibers.  As a
result of these findings,  new products have been formulated by these physicians
that include NutraStar's RiSolubles(R) and RiceMucil(R) as base ingredients.


                                       4


Products

NutraStar has four primary divisions through which it sells its products:

1.   TheraFoods(TM).  NutraStar  distributes its consumer  products  through its
     TheraFoods(TM)  division.  The primary products currently sold through this
     division are RiSolubles(R),  RiceMucil(R),  NutraFlex(TM),  and StaBran(R).
     All four  products are  available  in capsule and powdered  form for use as
     food supplements.  The powdered form can also be used as a food additive in
     breads, cookies,  snacks,  beverages, and similar foods. NutraStar has also
     developed a topical, transdermal cream product for arthritic and joint pain
     in  connection  with the  Absorbine(R)  branded joint venture which will be
     marketed under either Absorbine Pro(TM) or Absorbine Sr.(R).

2.   NutraCea(TM).   NutraCea(TM)has  been  created  to  compliment  NutraStar's
     medical foods products through a newly created  distribution channel in the
     medical  community,  primarily  doctors and health care providers.  Current
     annual  expenditures  in the United States for the following  diseases have
     been estimated at $65 billion for arthritis;  $98 billion for diabetes; and
     $170  billion  for  heart  disease.  NutraStar  believes  it has  extremely
     efficacious  products  in each of  these  areas.  For  example,  a  limited
     clinical  trial  suggests  that certain of  NutraStar's  products may lower
     blood  glucose  levels  of  diabetes  mellitus   patients.   NutraStar  has
     consulting  relationships with several physicians who assist in formulating
     medical food  products.  Three such  products  have  already been  created:
     Synbiotics(TM)1  (for treatment of IBS),  Synbiotics(TM)2 (for treatment of
     IBD),  and  NutraBetics  (for  treatment  of  Diabetes,  Hyperglycemia  and
     Hypoglycemia).  In addition,  through its consulting physicians,  NutraStar
     has support from several  medical  institutions  and practices that are and
     will  continue to conduct  clinical  trials and beta work for the products.
     For example, UC Davis Medical Center is conducting a 50-subject, open label
     clinical trial for the  Synbiotics(TM)2  product on IBD patients,  the Aoki
     Institute at UC Davis Medical  Center is  conducting a 50-subject  clinical
     trial for the  NutraBetics(TM)product on the normalization of fasting blood
     glucose  levels in Type I and Type II  diabetes,  and a  private  physician
     group is  conducting  a  50-subject,  open  label  clinical  trial  for the
     Synbiotics(TM)product  on IBS  patients.  Additionally,  based on  clinical
     trials and a United States patent,  NutraStar  believes that certain of its
     products may be  beneficial  in reducing  high blood  cholesterol  and high
     blood lipid levels. NutraStar intends to conduct additional clinical trials
     to further investigate such effects.

3.   NutraBeauticals(R).  NutraBeauticals(R)  is  focused on  providing  natural
     products to improve  skin health.  NutraBeauticals(R)  Skin Cream is such a
     product,  and contains  rice bran oil and other  natural  ingredients  that
     support the health of the skin. NutraStar is also pursuing acquisitions and
     product development for natural cosmetic products.

4.   NutraGlo.  NutraStar developed a derivative of its  NutraFlex(TM)product to
     prevent  and  rehabilitate   debilitating  joint  degeneration  in  horses.
     NutraStar  and  W.F  Young  Company  (Absorbine(R)products)   sponsored  an


                                       5


     extensive 50 horse equine study that was monitored and conducted by leading
     equine   veterinarian  Gary  D.  Kaufman,   D.  V.  M.,  with  the  results
     statistically verified by an independent  organization,  which demonstrates
     that NutraStar's  product is clinically proven to be a superior product for
     treating horses.

Marketing

The  Company's  TheraFoods(TM)  products  are  currently  marketed  domestically
through  various  distribution  arrangements  and sold  through the  Internet at
http://www.nutrastar.com/products.html.
---------------------------------------

NutraStar's equine product is distributed under the name "Absorbine Flex+" by W.
F. Young, Inc. pursuant to a distribution agreement with NutraStar and will soon
be introduced  into the  international  market in 36 countries.  NutraStar has a
developed a number of other animal  products  which it is seeking to  distribute
through various  distribution  channels such as the Internet and strategic joint
ventures to the large animal, pet and veterinarian industries.

NutraStar  intends to distribute  many of its consumer  products  through direct
response marketing channels such as infomercials and catalogue sales.  NutraStar
expects its  Absorbine(R)  branded  NutraFlex(TM)  products to be sold initially
through television and radio infomercial campaigns.

Product Supply

NutraStar  has entered into an  agreement  with RiceX,  whereby  RiceX will sell
NutraStar  its  stabilized  rice  bran,  rice bran  solubles,  rice  bran  fiber
concentrates,  and other  rice  bran  products  at prices  equal to the lower of
RiceX's  standard  price or the price  negotiated  by other  customers  for like
quantities  and products.  The agreement  also provides that RiceX will not sell
any rice bran  solubles or rice bran fiber  concentrates  products in the United
States except to NutraStar.  To maintain this  exclusive  right,  NutraStar must
purchase  products  equal to $250,000  by April 15,  2002,  $500,000  during the
three-month period ending July 15, 2002,  $750,000 during the three-month period
ending October 15, 2002, $1,250,000 during the three-month period ending January
15, 2003,  $1,500,000 for the six month period ending July 15, 2003,  $2,250,000
for the six-month  period ending  January 15, 2004,  $6,000,000 for the one-year
period ending  January 15, 2005,  and  increasing  amounts each one-year  period
thereafter  at a 10% increase  per year.  NutraStar  has met its first  purchase
quota by April 15, 2002.

To  purchase  products  from  RiceX,  the  Company is  required to provide a 50%
deposit for all  purchase  orders in addition to the $135,000  security  deposit
already paid to RiceX. In consideration for this exclusive right, NutraStar will
pay RiceX a royalty  of 2% of  NutraStar's  gross  receipts  of all  NutraStar's
products that  incorporated  RiceX products,  exclusive of shipping  charges and
returned product.  The agreement has a 5-year term, and automatically renews for
2 additional 5-year terms unless NutraStar elects not to renew.

NutraStar believes that its agreement with RiceX will provide NutraStar with an
assured source of high quality rice bran products.

NutraStar believes that RiceX's processing facility in Dillon,  Montana does not
have sufficient capacity to produce NutraStar's  products in the quantities that


                                       6


NutraStar anticipates that it will be able to sell.  NutraStar's long-term plans
include  assisting RiceX in the expansion of its existing and future  processing
facilities,  so that NutraStar will have more control of both the production and
distribution of its products, and/or the establishment of a joint venture with a
significant  distributor  to  construct  a  processing  facility  to produce the
product to be sold to such distributor.  However, such undertakings will require
substantial additional funds beyond the amount of the Offering, and there are no
assurances  that RiceX will accept any offer from  NutraStar  or that  NutraStar
will establish a joint venture.

Competition

NutraStar  competes with other companies that offer stabilized rice bran as well
as other companies that offer other food ingredients and nutritional supplements
although  NutraStar  believes  its rice  bran has a longer  shelf  life than its
competitors.  NutraStar's leading competitors in the stabilized rice bran market
include  Producer's Rice Mill and Uncle Ben's Rice, Inc. NutraStar is unaware of
others who offer stabilized rice bran. In addition,  NutraStar faces competition
from  those  who  currently  offer oat bran and  wheat  bran in the  nutritional
supplement  market,  as NutraStar  believes that some consumers may consider the
differences  between different bran products to be minimal.  Many of NutraStar's
competitors  have  greater  marketing,  research,  and  capital  resources  than
NutraStar,  and may be able to compete more effectively,  especially with price.
There  are no  assurances  that  NutraStar's  products  will be able to  compete
successfully.  NutraStar's  inability  to generate  brand  demand and  establish
competitive  advantages in the marketplace  would have a material adverse effect
on NutraStar's operations and profits.

Government Regulation

The manufacturing,  packaging, labeling, advertising,  distribution, and sale of
the  Company's  products  are  subject to  extensive  regulation  by one or more
federal  agencies.  The primary  governmental  agency that overseas  NutraStar's
products is the Food and Drug Administration (the "FDA").

The Dietary  Supplement  Health Education Act of 1994 (the "DSHEA") provides the
basic  statutory  framework  governing the  composition  and labeling of dietary
supplements  which would include the Company's  TheraFoods(TM)  and NutraCea(TM)
product  lines.  A  seller  of  dietary  supplements,  which  include  vitamins,
minerals,  herbs, and other dietary substances for human  consumption,  may make
three  different  types of  claims in its  labeling:  nutrient  content  claims,
nutritional  support claims, and health benefit claims. In January 2000, the FDA
adopted regulations implementing the labeling provisions of the DSHEA.

Nutrient content claims are those claims that state the nutritional content of a
dietary supplement,  and further include claims such as "high in calcium" and "a
good  source  of  vitamin  C." The  DSHEA  prescribes  the form and  content  of
nutritional  labeling of dietary  supplements,  and requires the manufacturer to
list all  additional  ingredients.  A  manufacturer  is not required to file any
information  with the FDA regarding  nutrient  claims,  but should have adequate
data to support any such claims.



                                       7


There are two types of  nutritional  support  claims.  The first type are claims
about classical  nutritional  deficiency  diseases,  such as "vitamin C prevents
scurvy." A manufacturer may make such claims, as long as the statement discloses
the prevalence of the disease in the United  States.  The second type are called
structure/function  claims,  which are statements about the dietary supplement's
effect on the structure or function of the body, or the "well being" achieved by
using the dietary supplement, such as "calcium builds strong bones." In order to
make a structure/function  claim, the manufacturer must have substantiation that
the  claims  are  truthful  and not  misleading,  and the  label  must  bear the
prescribed  warning "This  statement has not been evaluated by the Food and Drug
Administration.  This  product is not  intended to  diagnose,  treat,  cure,  or
prevent any disease." A manufacturer  must notify the FDA of  structure/function
claims within 30 days after a product bearing such claim is first marketed.

Health benefit claims state a relationship between a nutrient and a disease or a
health related condition. Under the DSHEA, a manufacturer must notify the FDA of
the  intent  to use a health  benefit  claim at  least  120 days  prior to first
marketing a product bearing such a claim, and include  authoritative  statements
published  by a federal  scientific  body (such as the  National  Institutes  of
Health),  and  currently  in  effect,  that are based on the  scientific  body's
deliberative  view of the scientific  evidence.  To date, only 10 health benefit
claims have been approved, none of which directly relate to rice bran.

Any claim by a dietary supplement to diagnose, prevent, mitigate, treat, or cure
a specific  disease  will be treated by the FDA as a drug,  which must be proven
"safe and effective" prior to marketing.

Initially,    NutraStar    intends   to   make   only   nutrient   content   and
structure/function  claims with respect to its products.  However,  there are no
assurances that the FDA will accept NutraStar's  substantiation as to any of its
claims.  Further, there are no assurances that the FDA will not determine that a
claim made by NutraStar  is a health  benefit  claim or a drug claim,  either of
which would  require  NutraStar  to  undertake a  protracted  and  prohibitively
expensive procedure to prove its claims. In such circumstances, NutraStar may be
required to withdraw certain of its claims.

One limited  clinical study has been performed,  which suggests that NutraStar's
rice bran products may have a  significant  effect on reducing the blood glucose
levels in diabetes  mellitus  patients.  However,  further  clinical  trials are
necessary to substantiate  any health benefit claim.  Further,  an authoritative
statement published by a federal scientific body must support any health benefit
claim that NutraStar may desire to make. Even if further clinical trials support
the  beneficial  effects of NutraStar's  products,  it is a  time-consuming  and
expensive  process to receive such  authoritative  statement.  Even if NutraStar
receives  an  authoritative  statement  that is  favorable,  the FDA may require
further  substantiation  before  NutraStar may make any health  benefit  claims.
There are no  assurances  that  NutraStar  will ever be able to make any  health
benefit claims with respect to its products.


                                       8


The DSHEA provides that the manufacturer of any dietary supplement that contains
an ingredient  that was not marketed in the United States prior to October 1994,
must notify the FDA at least 75 days prior to marketing  such product,  and must
provide the FDA with  information  that supports the conclusion that the dietary
supplement with the new ingredient "will reasonably be expected to be safe."

The  DSHEA  also  provides  that  third  party  literature,  such as  scientific
literature,  may be used in  connection  with the sale of a dietary  supplement.
Such a publication must not be false or misleading, may not mention a particular
manufacturer or brand of dietary supplement,  must be presented so as to offer a
balanced  view of  available  scientific  information,  and  must be  physically
separated  from the products when used in a retail  establishment.  There are no
assurances that all pieces of third party literature that may be disseminated in
connection  with  NutraStar's  products,  including  by  distributors  for  whom
NutraStar  provides  private  label  products,  will be determined by the FDA to
satisfy these requirements.

The DSHEA requires that all dietary supplements be prepared,  packaged, and held
under conditions that satisfy the good manufacturing  practice  regulations that
the FDA may adopt.  The FDA proposed such  regulations in February 1997, but has
yet to adopt final  regulations.  Once  adopted,  there are no  assurances  that
NutraStar or RiceX will be able to meet such good manufacturing practices.

The FDA has broad  authority to enforce the provisions of federal law applicable
to dietary  supplements,  including the power to seize adulterated or misbranded
products or unapproved new drugs, to request  product recall,  to enjoin further
manufacture  or sale of a product,  to issue warning  letters,  and to institute
criminal proceedings. In the future, NutraStar may be subject to additional laws
or regulations  administered  by the FDA or other  regulatory  authorities,  the
repeal of laws or regulations that NutraStar might consider  favorable,  or more
stringent interpretations of current laws or regulations.  NutraStar is not able
to predict the nature of such laws or regulations, nor can it predict the effect
of such laws or  regulations  on its  operations.  NutraStar  may be required to
reformulate  certain of its  products,  recall or withdraw  those  products that
cannot  be  reformulated,   keep  additional   records,  or  undertake  expanded
scientific substantiation. Any or all of such requirements could have a material
adverse effect on NutraStar's operations and financial condition.

While the FDA  primarily  regulates  the  labeling of dietary  supplements,  the
Federal Trade Commission (the "FTC") regulates the advertising of such products.
The FTC's  primary  concern is that any  advertising  must be  truthful  and not
misleading, and that a company must have adequate substantiation for all product
claims.  In general,  the FTC gives deference to an FDA determination of whether
there is adequate support for health related claims.  However,  the FTC has been
very  active  in  enforcing   requirements   that  companies   possess  adequate
substantiation for product claims. FTC enforcement actions may result in consent
decrees,  cease and desist  orders,  judicial  injunctions,  and the  payment of
fines.  There  are no  assurances  that the FTC will  not  question  NutraStar's
advertising in the future.

In addition to the foregoing, NutraStar's operations will be subject to federal,
state, and local  government laws and  regulations,  including those relating to
zoning,  workplace safety, and accommodations for the disabled,  and NutraStar's


                                       9


relationship  with its employees are subject to regulations,  including  minimum
wage requirements,  anti-discrimination  laws,  overtime and working conditions,
and  citizenship  requirements.  NutraStar  believes  that it is in  substantial
compliance with all material governmental laws and regulations.



Intellectual Property


NutraStar has filed applications with the U.S. Patent & Trademark Office and has
successfully    registered   NutraStar's   logo,   StaBran(R),    RiSolubles(R),
RiceMucil(R),  and 21 other product names, as registered  federal trademarks and
servicemarks.  NutraStar has additional  trademark and servicemark  applications
pending. See "Risk Factors - Intellectual Property."


NutraStar  has an  exclusive  license  from  RiceX for Patent  Number  6,126,943
entitled  "A  Method  for  Treating  Hypercholesterolmia,   Hyperlipidemia,  and
Atherosclerosis,"  which was published  October 3, 2000, Patent Number 6,303,586
entitled "A Method for Treating Diabetes, Hyperglycemia and Hypoglycemia," which
was published  October 16, 2001, and Patent Number 6,350,473  entitled "A Method
for Treating  Diabetes,  Hyperglycemia  and  Hypoglycemia,"  which was published
February 26, 2002. This newly allowed diabetes patent grants claims for lowering
glycosylated hemoglobin levels and improving the synthesis of insulin. See "Risk
Factors - Intellectual  Property." The term of the exclusive  license is for the
same term as  NutraStar's  distribution  agreement  with RiceX.  See "Business -
Marketing and Product Supply."

NutraStar  recently filed its first patent  application for a method of treating
arthritis,  joint inflammation and joint pain. There are no assurances that this
patent  will be  issued  or that the  issued  patents  will  adequately  protect
NutraStar's  technology,  or that  another  company  may  develop a similar  but
non-infringing product.

Research and Development & Expenditures

During fiscal year 2001, NTI spent $83,444 on product  research and development.
It is expected that  expenditures  for research and development will increase in
the current year as the Company's product line expands.

Employees

The Company currently has 10 full-time  employees,  and anticipates that it will
add  approximately  three  executive  employees  and 10 full-time  non-executive
employees on the  expansion  of the  Company's  operations  which is expected to
occur during 2002.  If the  Company's  sales  increase as rapidly as  management
anticipates, the Company may hire an additional 5 to 15 employees, primarily for
marketing  services.   The  Company  anticipates  that  it  will  not  have  any
substantial  difficulty  locating and hiring qualified employees for its planned
expansion. None of the Company's employees are employed pursuant to a collective
bargaining or union agreement,  and the Company  considers that its relationship
with its employees is good.


                                       10


Factors Affecting NutraStar's Business

The Company will need additional funds to finance additional products as well as
fund its current operations.  It currently has limited cash reserves and limited
working capital to fund its operations,  and its ability to meet its obligations
in the  ordinary  course of  business  is  dependent  upon its  ability to raise
additional  financing  through  public or private equity  financings,  establish
increasing  cash  flow  from  operations,  enter  into  collaborative  or  other
arrangements  with  corporate  sources,  or secure other sources of financing to
fund operations.

NutraStar  has  developed  and is  marketing  a number  of  products,  both food
supplements  and  cosmetics,  which are derived  from  stabilized  rice bran and
specially  formulated  rice  bran  oil.  These  rice  bran  based  products  are
relatively new which will require NutraStar to successfully  introduce  products
to the  marketplace  and  create a  sustainable  and  expanding  market  for the
Company's  products.  The failure of the Company to effectively  create a market
and  demand  for its  products  would  have a  material  adverse  effect  on its
financial condition and results of operation.

The dietary  supplement  and  cosmetic  industries  are subject to  considerable
government  regulation both as to efficacy as well as labeling and  advertising.
There is no assurance that all of NutraStar's  products and marketing strategies
will satisfy all of the applicable regulations of the DSHEA, FDA and./or the FTA
and/or  the  FTC.  Failure  to meet any  applicable  regulations  would  require
NutraStar to limit the production or marketing of any non-compliant  products or
advertising.

The Company's  prospects for financial success are difficult to forecast because
the Company has a limited  operating  history.  The Company's  current  business
commenced in February 2000, when its wholly-owned subsidiary, NTI, first started
its operations. Consequently, both the Company and its operating subsidiary have
a limited  operating  history upon which an evaluation of their prospects can be
based.  Neither the Company nor its  subsidiary,  NTI, has ever made a profit in
any fiscal  quarter.  The  Company's  prospects  for  financial  success must be
considered  in  light  of  the  risks,  expenses  and  difficulties   frequently
encountered  by companies  in new,  unproven and rapidly  evolving  markets.  To
address these risks,  NutraStar  must,  among other things,  expand its customer
base, increase its cash flow from operations, respond effectively to competitive
developments,  and continue to attract, retain and motivate qualified employees.
The  Company's  inability  to further  develop and expand its  operations  would
materially  adversely  affect the  Company's  business  financial  condition and
results of operations.

The  audit  report  of the  Company's  independent  auditors  includes  a "going
concern"  qualification.   In  the  auditor's  opinion,  the  Company's  limited
operating history and the accumulated net deficit as of December 31, 2001, raise
substantial doubt about its ability to continue as a going concern.

The  Company  operates in a rapidly  changing  and  growing  industry,  which is
characterized  by  vigorous  competition  from both  established  companies  and
potential  new  companies.  The markets for food  supplements  and cosmetics are
extremely competitive both as to price and quality.


                                       11


In summary,  the  Company's net sales and  operating  results in any  particular
quarter may fluctuate as a result of a number of factors,  including competition
in the markets in which the  Company's  products  compete,  delays in  achieving
production targets,  establishing markets for its products, the current economic
conditions  as  well as the  overall  performance  of the  food  supplement  and
cosmetic  industries as discussed above. The Company's future operating  results
will depend,  to a large extent,  on its ability to anticipate and  successfully
react to these and other factors and successfully implement its growth strategy.

ITEM 2. DESCRIPTION OF PROPERTY

The Company subleases its executive offices,  warehouse and laboratory,  located
at 1261 Hawk's Flight Court, El Dorado Hills,  California,  for a monthly rental
of $5,228  plus its share of common  area  expenses.  The  monthly  rental  will
increase by 2.5% on each October 1 in 2002 and 2004. The Company  subleases this
5,500 square foot facility through September 30, 2006. The Company believes that
this facility will be adequate for current operations. The Company subleases its
office space from RiceX.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved from time to time in various  lawsuits that arise in the
course of its business.

NutraStar has initiated one lawsuit  against a former officer citing a number of
causes  of  action   resulting  from  his  various  breaches  of  his  fiduciary
responsibility to NTI while an officer. The lawsuit was filed in Superior Court,
El Dorado  County,  on  November  2,  2001  (Case  No.  PC20010624).  NTI had an
understanding  with the former  officer and  director  of NTI,  whereby he would
introduce  investors  to NTI  resulting  in at least $2  million  in  funding in
exchange for receiving a salary and 1,240,000  shares of NTI's common stock.  He
was  terminated for cause as an officer of NTI on April 4, 2001 and removed as a
director of NTI by NTI's  shareholders on September 25, 2001. The former officer
did not successfully introduce investors to NTI resulting in at least $2 million
in  funding.  Accordingly,  he was not paid a  salary  and did not  receive  the
1,240,000  shares of NTI's common stock. In addition,  NTI also had an agreement
in  principle  with a company of which the former  officer  was the  controlling
shareholder  to purchase such company for an additional  124,000 shares of NTI's
common stock.  The transaction  never took place and the offer was terminated by
NTI as a result of  material  misrepresentations  by the former  officer and his
failure  to  deliver a number  of  documents  requested  by NTI  during  its due
diligence investigation.  Accordingly,  NTI has notified the former officer that
he is not  entitled to any  compensation,  including  any shares of  NutraStar's
common stock. NutraStar believes that it has no further obligation to him or any
entity with which he is  affiliated,  but the former  officer had not  confirmed
such to  NutraStar.  NutraStar  has not  reserved  any amount for any  potential
liability  or shares of Common  Stock to him or to his  company.  NutraStar  has
commenced  litigation against the former officer on a number of causes of action
resulting from his various breaches of his fiduciary responsibility to NTI while
an officer and director.



                                       12


NTI had an  understanding  with an individual  and his company  whereby he would
introduce a  strategic  partner to NTI in  exchange  for a fee if the  strategic
partner made an  investment  in NTI. The  introduction  was made,  but NTI never
consummated a transaction with the strategic partner. In addition,  he solicited
certain funds from prospective investors.  NTI agreed to issue 372,000 shares of
its common stock to him in exchange for the  above-described  investment banking
services. Upon investigation, NTI determined that neither he nor his company had
the proper license to be providing these services. Accordingly, NTI has notified
him that he was not entitled to any compensation,  including any shares of NTI's
common  stock.  NTI  believes  that it has no further  obligation  to him or his
company, but he had not confirmed such to NutraStar.  NutraStar has not reserved
any amount for any  potential  liability or shares of its common stock to him or
to his company.

Subsequent  to the  fiscal  year  end,  a  Complaint  was filed  against  NTI by
Millennium  Integrated  Services,  Inc.  ("MISI") in Superior Court,  Sacramento
County, on April 4, 2002 (Case No. 02A502006). MISI provided website development
services to NTI, at a cost of $204,405. MISI is seeking payment of $204,405 plus
interest  of  $32,031.  On  April 9,  2002,  MISI  filed a Motion  for a Writ of
Attachment  which would allow MISI to seize and hold NTI assets  worth  $236,436
pending the  resolution of the lawsuit.  On April 10, 2002, a Writ of Attachment
was granted by the Court.  NTI believes it has valid defenses and offsets to the
payment for these services and will attempt to settle this matter. Settlement of
this case could have a material  affect on the Company's  cash flow depending on
how quickly any settlement would need to be paid.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


                                       13



                                     PART II

ITEM 5.  MARKET  FOR THE  REGISTRANT'S  COMMON  STOCK  AND  RELATED  STOCKHOLDER
         MATTERS.

Commencing in May 2001, the Company's  common stock was listed and traded on the
NASDAQ  Electronic  Bulletin  Board  under the symbol  "ACIL".  Effective  as of
December 17, 2001, the Company's trading symbol was changed to "NTRA" to reflect
the Exchange Transaction with NTI. The following chart sets forth the known high
and low price on a bid and ask basis for the  Company's  stock for each  quarter
during the previous two years. Except for the most recent quarter reported,  all
prices are as reported in the "Pink  Sheets"  published  by the Pink Sheets LLC.
The  quotations  set forth below reflect  inter-dealer  prices,  without  retail
mark-up, mark-down or commissions and may not represent actual transactions.

           ------------------------------------ -------------- -----------
           Year Ended December 31, 2001              Low           High
           ------------------------------------ -------------- -----------

           Fourth Quarter                             $0.30**     $2.77**
           ------------------------------------ -------------- -----------
           Third Quarter                              $0.41*      $2.29*
           ------------------------------------ -------------- -----------
           Second Quarter                             $ .001*     $0.41*
           ------------------------------------ -------------- -----------
           First Quarter                              $ .001      $ .01
           ------------------------------------ -------------- -----------

           ------------------------------------ -------------- -----------
           Year Ended December 31, 2000               Low         High
           ------------------------------------ -------------- -----------

           Fourth Quarter                             $ .001      $ .005
           ------------------------------------ -------------- -----------
           Third Quarter                                .005        .01
           ------------------------------------ -------------- -----------
           Second Quarter                               .01         .04
           ------------------------------------ -------------- -----------
           First Quarter                                .001        .04
           ------------------------------------ -------------- -----------

----------------------------
*    Reflects post-reverse stock split of 1 for 50.
**   Represents post-share exchange transaction.

As of March 1,  2002,  there  were  approximately  82  holders  of record of the
Company's Common Stock. This amount does not include shares held in street name.

Dividend Policy

The Company has never paid any cash  dividends on its common stock.  The Company
currently  anticipates  that it will retain all future  earnings  for use in its
business.  Consequently, it does not anticipate paying any cash dividends in the
foreseeable future.



                                       14


Recent Sales of Unregistered Securities

During the  Company's  last fiscal year ended  December 31, 2001,  it issued the
following equity securities  pursuant to exemptions from registration  under the
Securities Act of 1933 (the "1933 Act").

On December 14, 2001, the Company issued  17,000,000  shares of its common stock
to the 38 NTI shareholders in exchange for all of the outstanding  shares of NTI
common stock. The Company shares were issued without any public solicitation and
were acquired for investment  purposes only and without a view to  distribution.
The shares were issued pursuant to the private placement  exemption  provided by
Section  4(2) and Rule 506 of  Regulation  D of the 1933 Act.  These  shares are
deemed to be  "restricted  securities" as defined in Rule 144 under the 1933 Act
and  the   certificates   evidencing  the  shares  bear  a  legend  stating  the
restrictions on resale.


During the fiscal year 2001, the Company issued shares of its Series A Preferred
Stock which are classified as convertible,  redeemable  Series A Preferred Stock
to conform with SEC accounting requirements, in the following transactions:

(i)  100,000 shares were issued as settlement of certain  litigation.  The stock
     was valued at $1.00 per share;

(ii) 130,000  shares  were issued to The RiceX  Company as payment for  accounts
     payable totaling $130,000; on January 15, 2002, RiceX and NutraStar entered
     into  a  Put/Call  Agreement  whereby  RiceX  could  require  NutraStar  to
     repurchase  the 130,000  shares of Series A Preferred  Stock after July 15,
     2002 in exchange for $130,000.  NutraStar may also  voluntarily  repurchase
     the  130,000 of Series A  Preferred  Stock for  $130,000  plus any  accrued
     dividends thereon if NutraStar desires and is financially able to do so;


(iii)13,000 shares were issued to one  individual  for services  rendered to the
     Company. The services were valued at $13,000;

(iv) 56,000 shares were issued for  conversion of $50,000 of debt plus interest.
     These shares were issued to two individuals and valued at $1.00 per share;

(v)  1,775,707 shares were issued in exchange for short-term promissory notes or
     pursuant to the conversion of  outstanding  convertible  notes  aggregating
     $1,705,707 of principal and related  interest due thereon.  The shares were
     issued to thirteen creditors.

All of the above  issuances  were made  without  any public  solicitation,  to a
limited  number of  individuals  or entities and were  acquired  for  investment
purposes  only.  The  shares  were  issued  pursuant  to the  private  placement
exemption  provided  by  Section  4(2) of the 1933 Act.  These are  deemed to be
"restricted  securities"  as  defined  in Rule  144  under  the 1933 Act and the
certificates  evidencing  the shares bear a legend stating the  restrictions  on
resale.

On December 27, 2001, the Company closed a private placement of 1 million shares
of common stock  pursuant to which it raised $1 million.  The shares were valued
at $1.00 per share. The shares were issued without any public solicitation, were


                                       15


sold to a  limited  number  of  accredited  investors  and  were  acquired  with
investment  intent and  without a view to  distribution.  The shares were issued
pursuant to the exemptions provided by Rule 506 of Regulation D and Section 4(6)
of the 1933 Act.  These  shares  are  deemed to be  "restricted  securities"  as
defined  in Rule 144  under  the 1933 Act and the  certificates  evidencing  the
shares bear a legal stating the restrictions on resale.

In addition to the Exchange Transaction and private placement referred to above,
the Company issued shares of its common stock in the following transactions:

(i)  A  total  of  20,000  shares  were  issued  to  two  individuals  for  cash
     investments totaling $28,546;

(ii) 21,409  shares were issued to acquire the rights to a registered  trademark
     valued at $21,409;

(iii)356,824  shares were issued to one  individual to extend the term of a note
     payable and payment of  principal  and  interest  thereon.  The shares were
     valued at $249,314;

(iv) A total of  249,314  shares  were  issued to one  individual  for  services
     rendered to the Company. The services were valued at $249,314.

All of the above  issuances  were made  without  any public  solicitation,  to a
limited  number of  individuals  or entities and were  acquired  for  investment
purposes  only.  The  shares  were  issued  pursuant  to the  private  placement
exemption  provided  by  Section  4(2) of the 1933 Act.  These are  deemed to be
"restricted  securities"  as  defined  in Rule  144  under  the 1933 Act and the
certificates  evidencing  the shares bear a legend stating the  restrictions  on
resale.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

For more detailed  financial  information,  please refer to the audited December
31, 2001 Financial Statements included in this Form 10-KSB.

Caution about forward-looking statements

This Form 10-KSB includes  "forward-looking"  statements  about future financial
results, future business changes and other events that haven't yet occurred. For
example,  statements  like we "expect,"  we  "anticipate"  or we  "believe"  are
forward-looking  statements.  Investors  should be aware that actual results may
differ  materially  from  our  expressed   expectations  because  of  risks  and
uncertainties about the future. We do not undertake to update the information in
this  Form  10-KSB  if  any  forward-looking  statement  later  turns  out to be
inaccurate.  Details  about risks  affecting  various  aspects of the  Company's
business  are  discussed  throughout  this Form 10-KSB and should be  considered
carefully.



                                       16


Plan of Operation for the Next Twelve Months

NTI was formed on February  4, 2000 and became the  wholly-owned  subsidiary  of
NutraStar  on  December  14,  2001.  To  date,  NutraStar  has  focused  on  its
relationship  with the  producer of its raw  materials,  RiceX,  and to a lesser
extent  on  its  strategic  alliances.   NutraStar  has  commenced  the  limited
distribution  of its stabilized rice bran and rice bran products on the Internet
and through direct-to-consumer  response advertising campaigns. In the very near
future,  NutraStar  intends to commence the full distribution of its products as
private label brands through strategic distributors on the occurrence of certain
events,  including the raising of additional  capital  required to implement its
business plan. NutraStar's fiscal year is the calendar year.

NutraStar  anticipates  that  in the  next  12 to 24  months,  it  will  need an
additional $10 to $20 million in financing.  NutraStar  anticipates that it will
need $5 to $15 million to make  certain  acquisitions,  $2.5  million to further
increase production  capacity,  and $2.5 million for additional working capital,
including the purchase of inventory  for  anticipated  sales  growth.  NutraStar
expects  to obtain  this  additional  funding  from  private  placements  of the
Company's debt and/or equity  securities,  or through the public offering of its
Common Stock.

Results of Operation

Year Ended December 31, 2001 versus 2000
----------------------------------------

During  the  fiscal  year  2001,  NutraStar  generated  net sales of  $1,610,222
compared to $127,954 for the eleven month period ended  December 31, 2000.  This
substantial  increase reflects the Company's  progress from a start-up entity in
fiscal year 2000 to a more fully operational business during fiscal year 2001.

The cost of goods  sold  for the year  ended  December  31,  2001  increased  to
$945,633  compared to $157,170 in fiscal year 2000.  This increase  reflects the
significant increase in production of products for resale. Operating expenses of
approximately  $3,357,000 in fiscal year 2001 more than doubled over fiscal year
2000 operating expenses of approximately  $1,513,000.  This increase  represents
the Company's expansion of operations during fiscal year 2001.

NutraStar  incurred an  operating  loss of  $2,692,315  during  fiscal year 2001
compared to an operating  loss of $1,542,237  during fiscal year 2000.  This 74%
increase in operating  loss  reflects the  significant  increases in the cost of
goods sold and operating  expenses  relating to the Company's  expanded business
operations during fiscal year 2001.

Operating  expenses in fiscal year 2001  included the expansion of the Company's
inspection,  quality  control,  clinical  trials and research and development as
well as the Company's  expansion of its distribution  channels for its products.
Operating  expenses in fiscal year 2001  include  approximately  $890,470  which
related to employee expenses.

During the fiscal year 2001, NutraStar recognized interest expense of $1,080,602
which  reflects  interest paid on short-term  promissory  notes and  convertible
promissory notes outstanding during all or part of the fiscal year. This expense


                                       17


increased NutraStar's overall net loss to $3,771,474 compared to a total loss of
$1,556,700 recorded in fiscal year 2000.

Due to the  December  14, 2001 share  exchange  with  Alliance,  for  accounting
purposes,  the acquisition has been treated as a  recapitalization  of NutraStar
(formerly   Alliance)   with  NTI  as  the   acquirer   (reverse   acquisition).
Consequently,  the  financial  statements  of NTI are  presented as those of the
Company.  As a result,  a  comparison  of the current  financial  statements  as
compared to those of Alliance as  previously  reported in its Form 10-SB may not
be deemed relevant.

Capital Financing

As a part of the  exchange  transaction  with NTI,  Alliance  issued  17,000,000
shares of its common stock to the shareholders of NTI in exchange for all of the
outstanding  shares of NTI. This transaction has been accounted for as a reverse
acquisition,  whereby NTI is considered  the acquiring  company and Alliance the
acquired company.

In connection with the exchange agreement, Alliance obtained $1,000,000 from the
sale of its common stock which was issued at $1.00 per share. The Company issued
an additional 569,348 shares of common stock for $398,900.


The  Company  issued  21,409  shares of  common  stock to  acquire a  registered
trademark  valued at  $21,409  and  issued  306,078  shares of common  stock for
services rendered valued at $253,291.


The Company  issued  356,824 shares of common stock to extend the term of a note
payable and recorded an interest expense of $356,824.

Liquidity and Capital Resources

NutraStar  has incurred  significant  operating  losses for its first two fiscal
years  since its  inception,  and,  as of December  31,  2001  NutraStar  has an
accumulated  deficit of  $5,328,174.  At December 31, 2001, the Company had cash
and cash equivalents of $405,502 and a net working capital deficit of $52,760.


To date, NutraStar has funded its operations through a combination of short term
debt and the  issuance of common and  preferred  stock.  As of December 31, 2000
NutraStar  had raised  approximately  $383,000 from the sale of its common stock
through private placement channels. During December 2001 NutraStar completed two
private placements; the first raised $1,000,000 from the sale of common stock at
$1.00 per share;  and the second  raised  approximately  $1,841,707  through the
conversion of debt into preferred stock that was priced at $1.00 per share which
is classified as  convertible,  redeemable  Series A Preferred  Stock to conform
with SEC accounting requirements.


The Company is dependent on the proceeds from future debt or equity  investments
to expand NutraStar's  operations and fully implement NutraStar's business plan.
If the  Company  is unable to raise  sufficient  capital,  the  Company  will be
required to delay or forego some portion of its business plan,  which may have a


                                       18


material adverse effect on the Company's anticipated results from operations and
financial  condition.  Alternatively,  the Company may seek interim financing in
the form of bank loans, private placement of debt or equity securities,  or some
combination thereof.  Such interim financing may not be available in the amounts
or at the times  when the  Company  requires,  and will  likely  not be on terms
favorable to the Company.

Dependence on Key Supplier

NutraStar has entered into an agreement  with The RiceX  Company,  whereby RiceX
will sell NutraStar its rice bran solubles and rice bran fiber  concentrates  at
prices equal to the lower of RiceX's  standard price or the price  negotiated by
other  customers for like  quantities and products.  The agreement also provides
that RiceX will not sell any rice bran solubles or rice bran fiber  concentrates
products in the United States except to  NutraStar.  To maintain this  exclusive
right,  NutraStar  must  purchase  products  equal to $250,000 by April 15, 2002
(which quota has been met),  $500,000 during the three-month  period ending July
15,  2002,  $750,000  during the  three-month  period  ending  October 15, 2002,
$1,250,000 during the three-month period ending January 15, 2003, $1,500,000 for
the six month period ending July 15, 2003,  $2,250,000 for the six-month  period
ending January 15, 2004,  $6,000,000 for the one-year  period ending January 15,
2005, and increasing  amounts each one-year period  thereafter at a 10% increase
per year. In consideration for this exclusive right,  NutraStar will pay RiceX a
royalty of 2% of  NutraStar's  gross receipts of all  NutraStar's  products that
incorporated RiceX products, exclusive of shipping charges and returned product.
To purchase  products  from RiceX,  the NTI is required to provide a 50% deposit
for all purchase  orders in addition to the $135,000  security  deposit  already
paid to RiceX. The agreement has a 5-year term, and  automatically  renews for 2
additional 5-year terms unless NutraStar elects not to renew.

In addition to the risks associated with the potential  termination of the RiceX
Agreement,  the  inability  of RiceX to  deliver  the  amount  of  product  that
NutraStar requires,  any interruption in product delivery for any reason, or the
inability of RiceX to fulfill its contractual  obligations would have a material
adverse effect on NutraStar's business,  results from operations,  and financial
condition,  as  NutraStar  could  not  readily  find and  implement  alternative
suppliers  and likely not on  advantageous  terms.  NutraStar  has the exclusive
right to  distribute  certain of RiceX's  products  in the  United  States,  but
NutraStar  may lose  this  exclusive  right if it does not  purchase  increasing
amounts of product from RiceX each year. RiceX's ability to manufacture  certain
of NutraStar's core products is currently  limited to the production  capability
of RiceX's Dillon,  Montana plant (the "Dillon  Plant").  Currently,  the Dillon
Plant is capable of producing only a limited  quantity of NutraStar's  products,
which will not be sufficient to meet NutraStar's  short-term and long-term sales
goals.  The Company  and/or  RiceX plan to add  production  capacity  during the
current year.

Critical Accounting Policies


Our  discussion  and  analysis  of  our  financial  conditions  and  results  of
operations are based upon our consolidated financial statements, which have been
prepared in accordance  with  generally  accepted  accounting  principles in the
United States. The preparation of financial  statements require managers to make
estimates  and  disclosures  on the  date  of the  financial  statements.  On an
on-going basis, we evaluate our estimates,  including, but not limited to, those


                                       19


related to revenue recognition. We use authoritative pronouncements,  historical
experience  and other  assumptions  as the basis for  making  judgments.  Actual
results  could  differ  from  those  estimates.  We believe  that the  following
critical accounting policies affect our more significant judgments and estimates
in the preparation of our consolidated financial statements.

Revenue recognition
-------------------

We are required to make  judgments  based on  historical  experience  and future
expectations,  as to the realizability of shipments made to our customers. These
judgments  are required to assess the  propriety of the  recognition  of revenue
based on Staff Accounting  Bulletin ("SAB") No. 101, "Revenue  Recognition," and
related guidance.  We make these assessments based on the following factors:  i)
customer-specific   information,   ii)  return  policies,  and  iii)  historical
experience for issues not yet identified.

Valuation of long-lived assets
------------------------------

Long-lived assets,  consisting primarily of property and equipment,  patents and
trademarks, and goodwill,  comprise a significant portion of the Company's total
assets. Long-lived assets are reviewed for impairment whenever events or changes
in  circumstances  indicate that their carrying  values may not be  recoverable.
Recoverability of assets is measured by a comparison of the carrying value of an
asset to the future net cash flows expected to be generated by those assets. The
cash flow projections are based on historical  experience,  management's view of
growth  rates  within  the  industry,   and  the  anticipated   future  economic
environment.

Factors we consider important that could trigger a review for impairment include
the following:

(a) significant  underperformance  relative to expected  historical or projected
future operating results,

(b)  significant  changes in the manner of our use of the acquired assets or the
strategy of our overall business, and

(c) significant negative industry or economic trends.

When we determine that the carrying value of patents and trademarks,  long-lived
assets and related goodwill and enterprise-level goodwill may not be recoverable
based upon the existence of one or more of the above  indicators of  impairment,
we measure any impairment based on a projected discounted cash flow method using
a discount rate  determined by our management to be  commensurate  with the risk
inherent in our current business model.



Recently Issued Accounting Pronouncements

In June 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141, "Business  Combinations." This statement addresses financial accounting and
reporting for business combinations and supersedes APB Opinion No. 16, "Business
Combinations," and SFAS No. 38, "Accounting for Pre-Acquisition Contingencies of


                                       20


Purchased Enterprises." All business combinations in the scope of this statement
are to be accounted for using one method, the purchase method. The provisions of
this statement apply to all business combinations initiated after June 30, 2001.
Use of the  pooling-of-interests  method  for  those  business  combinations  is
prohibited.  This statement also applies to all business combinations  accounted
for using the purchase  method for which the date of acquisition is July 1, 2001
or  later.  The  Company  does not  expect  adoption  of SFAS No.  141 to have a
material impact, if any, on its financial position or results of operations.

In June 2001,  the FASB  issued  SFAS No. 142,  "Goodwill  and Other  Intangible
Assets."  This  statement  addresses  financial  accounting  and  reporting  for
acquired goodwill and other intangible assets and supersedes APB Opinion No. 17,
"Intangible  Assets." It  addresses  how  intangible  assets  that are  acquired
individually  or with a group  of other  assets  (but not  those  acquired  in a
business combination) should be accounted for in financial statements upon their
acquisition.  This statement  also  addresses how goodwill and other  intangible
assets should be accounted for after they have been initially  recognized in the
financial statements.  It is effective for fiscal years beginning after December
15,  2001.  Early  application  is  permitted  for  entities  with fiscal  years
beginning  after  March 15,  2001,  provided  that the first  interim  financial
statements have not been issued previously. The Company does not expect adoption
of SFAS No. 142 to have a material impact, if any, on its financial  position or
results of operations.

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations."  This statement applies to legal  obligations  associated with the
retirement of long-lived assets that result from the acquisition,  construction,
development,  and/or the  normal  operation  of  long-lived  assets,  except for
certain obligations of lessees. This statement is not applicable to the Company.

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement  addresses  financial  accounting
and  reporting  for the  impairment  or  disposal  of  long-lived  assets.  This
statement  replaces SFAS No. 121,  "Accounting  for the Impairment of Long-Lived
Assets  and for  Long-Lived  Assets  to be  Disposed  of,"  the  accounting  and
reporting  provisions  of APB No. 30,  "Reporting  the Results of  Operations  -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual,  and Infrequently  Occurring Events and Transactions," for the disposal
of a segment of a business,  and amends  Accounting  Research  Bulletin  No. 51,
"Financial  Statements,"  to  eliminate  the  exception to  consolidation  for a
subsidiary  for which  control is likely to be  temporary.  The Company does not
expect  adoption  of SFAS No.  144 to have a  material  impact,  if any,  on its
financial position or results of operations.


                                       21


ITEM 7. FINANCIAL STATEMENTS



    The financial statements filed with this item are listed below:
                                                                                
             Independent Auditors' Report ...............................................F-2

                Former Independent Auditors' Report .....................................F-3

    Consolidated Financial Statements:

             Consolidated Balance Sheet as of December 31, 2001 .................. F-4 - F-5

             Consolidated Statements of Operations and Comprehensive Loss
              for the Years ended December 31, 2001 and 2000                             F-6

             Consolidated Statements of Stockholders' Equity (Deficit)
             for the Years-ended December 31, 2001 and 2000 ...................... F-7 - F-8

             Consolidated Statements of Cash Flows for the Years ended
             December 31, 2001 and 2000 ......................................... F-9 - F-11


             Notes to Consolidated Financial Statements .........................  F-12 - F-28


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

After  the  exchange  transaction  with  NTI,  the  newly  constituted  board of
directors of the Company by resolution adopted March 7, 2002,  Andersen Andersen
& Strong L.L.C. ("AA&S"),  the independent  accountants for Alliance, and Hood &
Strong,  LLP ("H&S"),  the independent  accountants for NTI were dismissed.  The
Board retained the accounting firm of Singer Lewak Greenbaum & Goldstein, LLP as
the independent accountants for NutraStar and its subsidiaries,  commencing with
the fiscal year ended December 31, 2001. These changes were previously  reported
in the  Company's  Form 8-K filed March 14, 2002 and the Amended  Form 8-K filed
March 25, 2002.



                                       22



                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

The  following  table sets forth  information  about the directors and executive
officers of the Company who assumed their respective  positions upon the closing
of the exchange transaction with NTI on December 14, 2001:




  ------------------------- --- ------------------------------------------------------ ------------------
  Name of Person            Age Position and Office Presently Held With the Company    Director Since
  ------------------------- --- ------------------------------------------------------ ------------------
                                                                              
  ------------------------- --- ------------------------------------------------------ ------------------
  Radd C. Barrett*          38  Chairman, CEO and President                                     ----
  ------------------------- --- ------------------------------------------------------ ------------------
  Patricia McPeak           60  Chairman, CEO and President                            December 14, 2001
  ------------------------- --- ------------------------------------------------------ ------------------
  Edward G. Newton          65  Vice President, Secretary and Director                 December 14, 2001
  ------------------------- --- ------------------------------------------------------ ------------------
  James W. Kluber           51  Chief Financial Officer                                         ----
  ------------------------- --- ------------------------------------------------------ ------------------
  Dr. Rukmini Cheruvanky    66  Chief Science Officer of NTI                                    ----
  ------------------------- --- ------------------------------------------------------ ------------------
----------------------
* Mr. Barrett served as the CEO and sole Director of the Company until his
resignation on December 14, 2001 in conjunction with the exchange transaction
with NTI.


Patricia  McPeak  has been  the  Company's  Chairman,  CEO and  President  since
December 14, 2001. She was the founder of NTI, and has been the Chief  Executive
Officer,  President, and a director of NTI since its formation in February 2000,
and was the Secretary of NTI from  February to October  2000.  She has extensive
experience in the field of protein and ingredient  production,  having served as
an executive in this  industry for 24 years.  Ms. McPeak was a co-founder of The
RiceX  Company,  and was the  President and a director of that company since its
formation in May 1989,  until she resigned as President of that company to found
NutraStar.  See "Certain  Transactions - The RiceX Company." In 1981, Ms. McPeak
co-founded  Brady  International,  Inc.,  and was an  executive  officer of that
company from 1981 to May 1989.

Edward G.  Newton  has been  Company's  Secretary,  Vice  President-Sales  and a
Director  since  December  14,  2001.  He was the Vice  President,  Sales  and a
director of NTI since its formation in February  2000, has been the Secretary of
NTI since October  2000.  Mr. Newton has more than 32 years of experience in the
food industry.  For the last 20 years, he worked in various sales and management
capacities  for General Mills,  an  international  consumer  foods company.  His
positions at General Mills  included  Director of Personnel and Sales  Training,
Manager of Military Sales,  and Purchasing  Director of Ingredients.  Mr. Newton
received his  bachelor's  degree in economics and business  administration  from
Whitman College.

James W.  Kluber  has been the Chief  Financial  Officer  of the  Company  since
December  2001.  Mr.  Kluber has  served as a senior  financial  executive  in a
variety of service and technology environments with special focus on high growth
companies and restructuring  operations.  He has successfully raised capital for


                                       23


companies in a variety of markets,  utilizing  public and private equity as well
as securitized and unsecured debt to accomplish funding requirements. Mr. Kluber
is  also a  partner  in  Concord  Ventures  LLC,  a  private  firm  focusing  on
operational  and  financial  services for growth  oriented  companies  requiring
assistance in developing and executing their business strategies.  Additionally,
he was the Senior Vice President and CFO from 1996 to 1999 for RealPage,  Inc. a
leading provider of software and services to the real estate industry. From 1993
to 1996 he served as Vice  President  of  Financial  Operations  for two  public
companies  sponsored by Security Capital Group,  ProLogis Trust (NYSE:  PLD) and
Archstone Communities (NYSE: ASN).

Dr. Rukmini  Cheruvanky,  is a leading researcher in the therapeutic  effects of
rice bran and rice  bran oil for over 30 years,  has been  NTI's  Chief  Science
Officer  since March 2000.  Prior to joining  NTI, she served as the Director of
Research  and  Development  of The RiceX  Company from April 1996 to March 2000.
From January to April 1996, Dr.  Cheruvanky  was the  Laboratory  Supervisor for
Certified  Analytical  Laboratories  in New York, a company that  specializes in
food analysis.  From November 1994 to December 1995, she was Research Chemist in
the Research and Development  Department of DuPont Merck Pharmaceutical  Company
in New York. From May 1967 to February 1994, Dr.  Cheruvanky served the National
Institute  of  Nutrition  located in  Hyderabad,  India,  a premier  nutritional
institute,  under the Indian Council of Medical Research. Dr. Cheruvanky retired
in 1994 as a Deputy  Director  heading  the Food  Toxicology  and  Environmental
Carcinogenic  Division  of  the  Institute.  From  May  1965  to May  1967,  Dr.
Cheruvanky worked as a Research Officer,  investigating the active principles of
the Indian Medicinal plants,  under Indian Council of Medical Research scheme at
the Chemistry  Department,  Andhra  University,  Waltair,  India. Dr. Cheruvanky
received her master's  degree in Organic  Chemistry  from Andhra  University  in
India in 1959 and  doctorate  degree  in  Organic  Chemistry  of  Natural  Plant
Products  from  Andhra  University  in 1965.  Dr.  Cheruvanky  has more  than 80
peer-reviewed scientific publications to her credit. She was a mentor to several
Ph.D.  and  Master of  Science  students.  Dr.  Cheruvanky  traveled  widely for
exchange of scientific knowledge and study of food regulatory aspects in several
countries, on a prestigious World Health Organization program. Dr. Cheruvanky is
a Fellow of the American College of Nutrition.

The  current  directors  will  serve  and hold  office  until  the  next  annual
shareholders'  meeting  or until  their  respective  successors  have  been duly
elected and  qualified.  The Company's  executive  officers are appointed by the
Board of Directors and serve at the discretion of the Board.

Board Meetings and Committees

The Board of  Directors  of the Company  held no meetings and acted by unanimous
consent on five  occasions  during the year ended  December 31, 2001.  The Board
does not currently have an Audit, Executive or Compensation Committee.

Family Relationships

There are no family relationships between any director or executive officer.


                                       24


Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's executive officers and directors, and persons who own more than 10% of
the Company's common stock to file reports of ownership on Form 3 and changes in
ownership on Form 4 with the  Securities  and Exchange  Commission  (the "SEC").
Such executive officers, directors and 10% stockholders are also required by SEC
rules to furnish the Company  with copies of all Section  16(a) forms they file.
Based  solely  upon its  review of copies of such  forms  received  by it, or on
written  representations  from certain  reporting  persons that no other filings
were required for such persons, the Company believes that, during the year ended
December 31, 2001,  its executive  officers and  directors and 10%  stockholders
complied with all applicable Section 16(a) filing  requirements  except that one
Form 5 for  Patricia  McPeak  was not filed by the due date but will be filed in
the near future.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth the compensation of the Company's Chief Executive
Officer during the last three complete fiscal years.  One other officer received
annual compensation in excess of $100,000 during the last completed fiscal year.




                                                     SUMMARY COMPENSATION TABLE

                                        Annual Compensation                         Long Term Compensation
                             ------------------------------------------    ------------------------------------------
                                                                                     Awards                 Payout
                                                                           ---------------------------     ----------
                                                                                         Securities
                                                                           Restricted    Underlying           LTIP      All Other
                                                         Other Annual         Stock        Options           Payout    Compensation
                   Year         Salary      Bonus ($)  Compensation ($)     Award(s) ($)      (#)              ($)         ($)
               ------------- ------------- ---------- -----------------    ------------- -------------     ---------- --------------
                                                                                              
Radd Barrett    2/21/01 to
(CEO)            12/14/01        -0-          -0-           -0-                -0-           -0-              -0-           -0-
                 2000(1)
                 1999(1)

Patricia           2001      $241.667(2)    $8,333       $12,000(3)            -0-          28,820            -0-           (4)
McPeak
(CEO)
                   2000      $182,692(2)      -0-        $12,000(3)            -0-           -0-              -0-           -0-
Edward             2001      $100,000(2)      -0-           -0-                -0-         304,124            -0-           (4)
Newton (VP)

____________________________________

(1)  From July, 1999 through February 21, 2001, the Company was in bankruptcy.
(2)  Amount includes payments received from both NTI and NutraStar.
(3)  Includes a monthly car allowance of $1,000.
(4)  Ms. McPeak and Mr. Newton are provided with Company paid disability insurance benefits.



                                       25


Stock Option Plan

The Company does not have a formal stock option plan currently in place. Options
to date have been granted on an individual basis pursuant to individual option
agreements. The Company expects to adopt a formal stock option plan during this
current fiscal year.

Options/SAR Grants in Last Fiscal Year
--------------------------------------

The following table sets forth certain information with respect to option or SAR
grants in NutraStar during the fiscal year ended December 31, 2001 to the Named
Executive Officers.




---------------------- ---------------------- -------------------- ------------------- ------------------
                                              Percent of Total
                       Number of Securities   Options Granted to   Exercise or Base
                       Underlying Options     Employees in         Price
Name                   Granted                Fiscal Year          ($ Per Share)       Expiration Date
---------------------- ---------------------- -------------------- ------------------- ------------------
                                                                           
Patricia M. McPeak     28,820                 3.08%                $0.28                December 3, 2011
---------------------- ---------------------- -------------------- ------------------- ------------------
Edward G. Newton       304,124                32.51%               $0.25                December 3, 2011
---------------------- ---------------------- -------------------- ------------------- ------------------



Aggregated Option/SAR Exercises Year-End Table.
-----------------------------------------------

During the fiscal year ended  December  31,  2001,  none of the Named  Executive
Officers  exercised any  options/SARs  issued by NutraStar.  The following table
sets forth information  regarding the stock options held as of December 31, 2001
by the Named Executive Officers.



------------------------ ------------------------------------------- --------------------------------------
Name                     Number of Securities Underlying             Value of Unexercised
                         Unexercised Options at                      In-the-Money Options at
                         Fiscal Year End                             Fiscal Year End
------------------------ ------------------------------------------- --------------------------------------
                         Exercisable           Unexercisable         Exercisable          Unexercisable
------------------------ --------------------- --------------------- -------------------- -----------------
                                                                              
Patricia McPeak (1)                            28,820                                     $70,300(3)
------------------------ --------------------- --------------------- -------------------- -----------------
Edward G. Newton (2)                           304,124                                    $760,310(3)
------------------------ --------------------- --------------------- -------------------- -----------------
________________________________________________
(1)   As of December 31, 2001 5,764 options were vested.
(2)   As of December 31, 2001 152,062 options were vested.
(3)   Based on closing price of $2.50 per common share as of December 31, 2001.


Compensation of Directors

The Company's  directors are also officers of the Company and do not receive any
additional compensation for their services as members of the Board of Directors.

The Company intends to appoint additional directors in the future who may or may
not be  non-employees.  For the  non-employee  directors  the  Company  may seek
shareholder  approval  for a  "Director  Option  Plan"  which would serve as the
compensation plan for such directors.  No specific plan has been developed as of
the date of this filing.



                                       26


Employment/Consulting Contracts


Patricia M. McPeak  ("McPeak") has an employment  contract with the Company (the
"McPeak Employment  Agreement").  The McPeak Employment  Agreement provides that
McPeak  receive an annual base salary of $150,000 which annual base salary shall
increase to $500,000 when the Company achieves $25 million in annual gross sales
or the Common Stock is publicly traded and has a sales price of at least $25 per
share for 90  consecutive  days, and the annual base salary shall increase to $1
million when the Company  achieves $50 million in annual gross sales. Ms. McPeak
will be entitled to calendar  quarterly  bonuses of $25,000 upon achievements of
certain  benchmarks  that will be set and  determined by the Company's  Board of
Directors. The agreement provides that McPeak shall participate in the Company's
stock bonus plans, and that the Company shall provide McPeak with medical, life,
and disability insurance benefits,  additional executive level benefits,  and an
annual automobile  allowance of $12,000. The Company may terminate the agreement
on 30-days prior notice, but will remain liable for all base salary,  bonus, and
benefits obligations throughout the remaining term of the agreement. The Company
is renegotiating its employment  agreement with McPeak. The Company  anticipates
that the compensation  arrangement will remain  substantially the same, but that
the Company's  obligations  on  termination  of the new agreement or a change in
control will increase.

Edward  Newton  ("Newton")  has an  employment  contract  with the Company  (the
"Newton Employment  Agreement").  The Newton Employment  Agreement provides that
Newton  receive an annual base salary of $100,000.  The Agreement  provides that
Newton  shall  participate  in the  Company's  stock bonus  plans,  and that the
Company  shall  provide  Newton  with  medical,  life and  disability  insurance
benefits.

Limitation of Liability and Indemnification Matters

     The  Company's  Restated  Articles of  Incorporation  provide  that it will
indemnify its officers and directors,  employees and agents and former officers,
directors,  employees  and agents unless such person shall have been adjudged to
be liable to the  corporation  in the  performance  of that person's duty to the
corporation  or  its  shareholders.   This  indemnification   includes  expenses
(including  attorneys' fees),  judgments,  fines, and amounts paid in settlement
actually and reasonably  incurred by these  individuals in connection  with such
action,  suit,  or  proceeding,  including  any appeal  thereof,  subject to the
qualifications contained in California law as it now exists. Expenses (including
attorneys'  fees)  incurred in defending a civil or criminal  action,  suit,  or
proceeding  will be paid by the Company in advance of the final  disposition  of
such action,  suit, or proceeding upon receipt of an undertaking by or on behalf
of the director,  officer,  employee or agent to repay such amount,  if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
Company.  This indemnification will continue as to a person who has ceased to be
a director, officer, employee or agent, and will benefit their heirs, executors,
and administrators. These indemnification rights are not deemed exclusive of any
other rights to which any such person may  otherwise be entitled  apart from the
bylaws.  California  law generally  provides  that a corporation  shall have the
power to  indemnify  persons if they acted in good faith in a manner  reasonably
believed to be in the best interests of the corporation and, with respect to any
criminal  action or proceeding,  had no reasonable  cause to believe the conduct
was unlawful.  In the event any such person is judged liable to the  corporation
or its  shareholders,  this  indemnification  will apply only if approved by the



                                       27


court in which the action was pending. Any other  indemnification  shall be made
only after the determination by the Company's Board of Directors  (excluding any
directors  who were party to such  action),  by  independent  legal counsel in a
written  opinion,  or  by  a  majority  vote  of  stockholders   (excluding  any
stockholders who were parties to such action) to provide such indemnification.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the number of shares of the Company's Common
Stock  beneficially owned as of March 1, 2002 by, (i) each executive officer and
director of the  Company;  (ii) all  executive  officers  and  directors  of the
Company as a group;  and (iii)  owners of more than 5% of the  Company's  Common
Stock.




  --------------------------------- ------------------------ ------------------------- ---------------
  Name and Address of                     Position              Number of Shares           Percent
  Beneficial Owner                                            Beneficially Owned
  --------------------------------- ------------------------ ------------------------- ---------------
                                                                              
  Officers and Directors
  --------------------------------- ------------------------ ------------------------- ---------------
  Patricia McPeak                      Chairman and CEO           14,005,101(1)              63.3%
  1261 Hawk's Flight Court
  El Dorado Hills, CA 95762
  --------------------------------- ------------------------ ------------------------- ---------------
  Edward Newton
  1261 Hawk's Flight Court              Vice President,             304,124(2)                1.4%
  El Dorado Hills, CA 95762         Secretary and Director
  --------------------------------- ------------------------ ------------------------- ---------------
  James Kluber
  1261 Hawk's Flight Court                    CFO                      -0-                     *
  El Dorado Hills, CA 95762
  --------------------------------- ------------------------ ------------------------- ---------------
  All officers and directors as a                                  14,309,225                64.9%
  group (3 individuals)
  --------------------------------- ------------------------ ------------------------- ---------------

____________________________________________
(1)  Amount includes 5,764 shares issuable under stock options  exercisable  within 60 days of March
     1, 2002 and 300,000 shares of Series A Preferred Stock.
(2)  Amount  represents shares issuable under stock options  exercisable  within 60 days of March 1,
     2002.




ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Distribution Agreement with The RiceX Company

On December 12, 2001, the Company entered into a revised 15-year  agreement with
RiceX to be the  exclusive  distributor  of rice  solubles  and rice bran  fiber
concentrate in the United States of America and to have the exclusive  rights to
various  patents  and  trademarks  owned  by  RiceX.  Under  the  terms  of this
agreement,  RiceX has agreed to cancel  certain  indebtedness  by the Company in
exchange for 130,000  shares of Series A preferred  stock and payment of $41,335


                                       28


in interest, has agreed to new minimum purchase requirements,  and has agreed to
extend the term of the agreement  for five years,  with two  additional  renewal
periods of five years each.  On January 15, 2002,  RiceX and  NutraStar  entered
into a Put/Call  Agreement  whereby RiceX could require  NutraStar to repurchase
the 130,000  shares of Series A Preferred  Stock after July 15, 2002 in exchange
for $130,000.  NutraStar may also  voluntarily  repurchase the 130,000 shares of
Series A Preferred  Stock for  $130,000  plus any accrued  dividends  thereon if
NutraStar  desires  and is  financially  able to do so.  Daniel L.  McPeak,  Ms.
McPeak's husband, is the President of RiceX.

During the year ended  December  31,  2001,  the  Company  recorded  commissions
revenue totaling $317,668 from RiceX related to sales made by RiceX to customers
of the Company.

During the year ended  December 31, 2001,  the Company  issued  300,000 Series A
preferred  stock to Patricia M. McPeak,  Chair of the Board and Chief  Executive
Officer in exchange for the  cancellation of $300,000 of convertible  promissory
notes owed to her.

During  the  year  ended  December  31,  2001,   the  Company   entered  into  a
non-interest-bearing  loan agreement with Patricia M. McPeak, Chair of the Board
and the Chief Executive Officer of the Company.  Related to this agreement,  the
Company recorded a Due to Officer in the amount of $32,029 at December 31, 2001.

During the year ended  December  31,  2001,  certain  operating  expenses of the
Company  totaling  $111,313  were paid by RiceX.  The Company  reimbursed  these
expenses, and at December 31, 2001, there were no amounts owed to RiceX.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

            Exhibit 2(1)     Plan and Agreement of Exchange.
            Exhibit 3.1(2)   Restated Articles of Incorporation filed March 28,
                             2001.
            Exhibit 3.2(2)   Bylaws
            Exhibit 3.3(5)   Restated and Amended Articles of Incorporation
                             dated December 11, 2001.
            Exhibit 10.1(5)  Executive Employment Agreement between NutraStar
                             Incorporated and Patricia McPeak.
            Exhibit 10.2(5)  Executive Employment Agreement for Edward Newton.
            Exhibit 16.1(3)  Letter on change in certifying accountant dated
                             March 13, 2002.
            Exhibit 16.2(4)  Updated letter on change in certifying accountant
                             dated March 25, 2002.
            Exhibit 16.3(4)  Letter on change in certifying accountant dated
                             March 21, 2002.
__________________________
(1)  Incorporated by reference to exhibits previously filed on Form 8-K filed on
     November 19, 2001.
(2)  Incorporated by reference to exhibits  previously filed on Form 10-SB filed
     on April 19, 2001.
(3)  Incorporated by reference to exhibits previously filed on Form 8-K filed on
     March 14, 2002.
(4)  Incorporated by reference to exhibits  previously filed on Form 8-K/A filed
     on March 25, 2001.
(5)  Incorporated by reference to exhibits previously filed on Form 10-KSB filed
     on April 16, 2002.


                                       29


     (b) Reports on Form 8-K filed during the quarter ended December 31, 2001:

The Company  filed a Form 8-K for  November  19, 2002  reporting an Item 5 event
regarding the Company's entering into a Plan and Agreement of Exchange with NTI.

     The Company filed a Form 8-K for December 14, 2001  reporting on Item 1 and
Item 2 event  regarding the  consummation  of an exchange  transaction  with NTI
whereby  the  former   shareholders  of  NTI  were  issued  shares  representing
approximately  82% ownership of the Company's then outstanding  common stock and
the Company assumed the business operations of NTI.

                                   SIGNATURES

     In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                             NUTRASTAR INCORPORATED


                              By   /s/ Patricia McPeak
                                   --------------------------------------------
                                   Patricia McPeak
                                   President and Chief Executive Officer

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.


Signature                              Title                        Date
---------                              -----                        ----

\s\ Patricia McPeak
---------------------------
Patricia McPeak                Chairman of the Board and        June 5, 2002
                               President

\s\ Edward G Newton
---------------------------
Edward G. Newton               Secretary and Director           June 5, 2002


\s\ James W Kluber
---------------------------
James W. Kluber                Chief Financial Officer          June 5, 2002
                               (Principal Financial and
                                Accounting Officer)




                                       30



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                                                        CONTENTS
                                                               December 31, 2001
________________________________________________________________________________


                                                                       Page

INDEPENDENT AUDITOR'S REPORTS                                        F-2 - F-3

CONSOLIDATED FINANCIAL STATEMENTS

       Consolidated Balance Sheet                                    F-4 - F-5

       Consolidated Statements of Operations                            F-6

       Consolidated Statements of Shareholders' Deficit              F-7 - F-8

       Consolidated Statements of Cash Flows                        F-9 - F-11

       Notes to Consolidated Financial Statements                   F-12 - F-30





                                      F-1



                          INDEPENDENT AUDITOR'S REPORT

Board of Directors and Shareholders
NutraStar Incorporated and subsidiaries


We have audited the  accompanying  consolidated  balance sheet, as restated (see
Note 2) of NutraStar  Incorporated and subsidiaries as of December 31, 2001, and
the related consolidated  statements of operations,  shareholders'  deficit, and
cash flows,  as restated (see Note 2) for the year then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the 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  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the restated,  consolidated  financial  statements  referred to
above  present  fairly,  in all material  respects,  the  financial  position of
NutraStar  Incorporated  and  subsidiaries  as of  December  31,  2001,  and the
consolidated  results of their operations and their cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial  statements,  during the year ended  December  31,  2001,  the Company
incurred a net loss of $3,771,474 and had negative cash flows from operations of
$855,316.  In addition,  the Company had an accumulated deficit of $5,328,174 at
December 31, 2001.  These factors,  among others,  as discussed in Note 2 to the
financial  statements,  raise  substantial  doubt about the Company's ability to
continue as a going concern.  Management's  plans in regard to these matters are
also described in Note 2. The consolidated  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.




SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
March 17, 2002



                                      F-2



Independent Auditors' Report


Board of Directors
Nutrastar, Incorporated
El Dorado Hills, California


We have audited the accompanying statements of operations, stockholders' deficit
and cash flows of  NUTRASTAR,  INCORPORATED  (the  Company)  for the period from
February  4,  2000  (inception)  through  December  31,  2000.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatements. An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the 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  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the results of NutraStar,  Incorporated's  operations and
its cash  flows for the  period  ended  December  31,  2000 in  conformity  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial   statements,   the  Company  has  incurred  losses  since  inception,
anticipates  continuing  losses  for the  foreseeable  future  and will  require
substantial additional capital in order to complete its operational  objectives.
This raises substantial doubt about the Company's ability to continue as a going
concern.  Management plans in regard to these matters are also described in Note
2. The  financial  statements do not include any  adjustments  that might result
from the outcome of this uncertainty.



/s/ Hood & Strong LLP

December 19, 2001



                                      F-3


                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                                      CONSOLIDATED BALANCE SHEET
                                                               December 31, 2001
________________________________________________________________________________



                                     ASSETS
                                   (restated)



Current assets
     Cash                                                             $  405,502
     Accounts receivable                                                   1,593
     Inventory                                                            93,886
     Prepaid expenses                                                      8,788
                                                                      ----------

              Total current assets                                       509,769

Property and equipment, net                                              210,955
Patents and trademarks, net                                              109,505
Goodwill                                                                 250,001
Deposits                                                                 181,071
                                                                      ----------

                  Total assets                                        $1,261,301
                                                                      ==========







   The accompanying notes are an integral part of these financial statements.

                                       F-4




                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                                      CONSOLIDATED BALANCE SHEET
                                                               December 31, 2001
________________________________________________________________________________


                      LIABILITIES AND SHAREHOLDERS' DEFICIT
                                   (restated)

Current liabilities
     Accounts payable                                               $   382,117
     Accrued salaries and benefits                                       61,014
     Accrued expenses                                                    87,369
     Due to officer                                                      32,029
                                                                    -----------

         Total current liabilities                                      562,529

Put option                                                              130,000
                                                                    -----------

              Total liabilities                                         692,529
                                                                    -----------

Commitments and contingencies

Convertible, redeemable series A preferred stock,
     no par value, $1 stated value
         3,000,000 shares authorized
         2,084,707 shares issued and outstanding                      1,850,802
                                                                    -----------

Shareholders' deficit
     Common stock, no par value
         50,000,000 shares authorized
         21,649,520 shares issued and outstanding                     4,572,845
     Common stock committed                                             399,174
     Deferred compensation                                             (925,875)
     Accumulated deficit                                             (5,328,174)
                                                                    -----------

              Total shareholders' deficit                            (1,282,030)
                                                                    -----------

                   Total liabilities and shareholders' deficit      $ 1,261,301
                                                                    ===========




   The accompanying notes are an integral part of these financial statements.

                                       F-5





                                              NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                                     For the Years Ended December 31,
_____________________________________________________________________________________




                                                            2001            2000
                                                        ------------    ------------
                                                         (restated)


                                                                  
Net sales                                               $  1,610,222    $    127,954

Cost of goods sold                                           945,633         157,170
                                                        ------------    ------------

Gross profit (loss)                                          664,589         (29,216)

Operating expenses                                         3,356,904       1,513,021
                                                        ------------    ------------

Loss from operations                                      (2,692,315)     (1,542,237)
                                                        ------------    ------------

Other income (expense)
     Interest income                                           1,443           2,304
     Interest expense                                     (1,080,602)        (16,767)
                                                        ------------    ------------

         Total other income (expense)                     (1,079,159)        (14,463)
                                                        ------------    ------------

Net loss                                                $ (3,771,474)   $ (1,556,700)
                                                        ============    ============

Basic and diluted loss per share                        $      (0.20)   $      (0.10)
                                                        ============    ============

Basic and diluted weighted-average shares outstanding     18,686,078      15,651,442
                                                        ============    ============




      The accompanying notes are an integral part of these financial statements.

                                         F-6







                                                                                             NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                                                                    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                                                                                    For the Years Ended December 31,
____________________________________________________________________________________________________________________________________



                              Convertible, Redeemable
                              Series A Preferred Stock          Common Stock        Committed   Deferred
                             --------------------------   ------------------------   Common      Compen-    Accumulated
                               Shares        Amount         Shares        Amount      Stock      sation       Deficit      Total
                             ----------   ------------    -----------  -----------  ---------  ----------   ----------- ------------

                                                                                                
Balance, February 4,
   2000 (inception)                  -    $       -                 -    $     -    $       -    $    -     $        -  $         -
Common stock
   issued
     for services                    -            -            56,764        3,977          -         -              -        3,977
     for cash                        -            -           540,802      378,900          -         -              -      378,900
Common stock split                   -            -        15,346,340            -          -         -              -            -
Net loss                             -            -                 -            -          -         -     (1,556,700)  (1,556,700)
                             ----------   ------------    -----------  -----------  ---------  ----------   ----------- ------------

Balance, December
   31, 2000                          -            -        15,943,906      382,877          -         -     (1,556,700)  (1,173,823)
Common stock
   issued
     for cash                        -            -            28,546       20,000          -         -              -       20,000
     for acquisition
       of registered trademark       -            -            21,409       21,409          -         -              -       21,409
     to extend note
       payable                       -            -           356,824      356,824          -         -              -      356,824
     services rendered               -            -           249,314      249,314          -         -              -      249,314
     acquisition of
       NutraGlo                      -            -           250,001      250,001          -         -              -      250,001
     for settlement of
       litigation                    -            -           150,000      150,000          -         -              -      150,000
     for cash in conjunction
       with acquisition
       by Alliance                   -            -         4,649,520    1,000,000          -         -              -    1,000,000
Committed stock for
   conversion of
   notes payable                     -            -                 -            -    399,174         -              -      399,174



                             The accompanying notes are an integral part of these financial statements.



                                                                 F-7





                                                                                             NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                                                                    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                                                                                    For the Years Ended December 31,
____________________________________________________________________________________________________________________________________

                              Convertible, Redeemable
                              Series A Preferred Stock          Common Stock     Committed  Deferred
                             --------------------------   ----------------------  Common     Compen-      Accumulated
                               Shares        Amount         Shares      Amount    Stock      sation         Deficit        Total
                             ----------   ------------    ---------  ----------- --------  ----------     -----------  ------------
                                                                                               

Preferred stock
   issued during 2001
     as settlement of
       litigation              100,000    $   100,000             -  $        -   $      -   $     -       $        -  $         -
     for payment for
       accounts payable        130,000        130,000             -           -          -         -                -            -
     for conversion of
       notes payable
       and accrued
       interest              1,775,707      1,671,802             -           -          -         -                -            -
     for services
       rendered                 13,000         13,000             -           -          -         -                -            -
     for deposits
       payable                  56,000         56,000             -           -          -         -                -            -
     as interest
       expense                  10,000         10,000             -           -          -         -                -            -
Stock options
   issued for
     compensation                    -              -             -      647,429         -     (449,515)            -       197,914
     services rendered               -              -             -    1,273,861         -     (476,360)            -       797,501
     settlement of
       litigation                    -              -             -      107,047         -         -                -       107,047
Warrants issued
   with convertible
   debt                              -              -             -      114,083         -         -                -       114,083
Put option                           -       (130,000)            -            -         -         -                -             -
Net loss                             -              -             -            -         -         -        (3,771,474)  (3,771,474)
                             ----------   ------------    ---------  ----------- --------  ----------     -----------  ------------

Balance, December
   31, 2001 (restated)       2,084,707    $ 1,850,802    21,649,520  $ 4,572,845  $ 399,174  $ (925,875)  $ (5,328,174) $(1,282,030)
                         =============    ===========   ===========  ===========  =========  ===========  ============= ============


                             The accompanying notes are an integral part of these financial statements.



                                                                F-8





                                                       NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                              For the Years Ended December 31,
_____________________________________________________________________________________________



                                                                     2001            2000
                                                                  -----------    -----------
                                                                  (restated)
                                                                           


Cash flows from operating activities
     Net loss                                                     $(3,771,474)   $(1,556,700)
     Adjustments to reconcile net loss to net cash
         used in operating activities
              Depreciation and amortization                            94,397          7,172
              Non-cash issuances of common stock                      756,138          3,977
              Non-cash issuances of preferred stock                   468,511           --
              Non-cash issuances of stock options                   1,102,462           --
              Non-cash issuances of warrants                           10,178           --
              Non-cash issuances of committed stock                   130,487           --
              (Increase) decrease in
                  Accounts receivable                                 114,043       (115,636)
                  Inventory                                           421,886       (515,772)
                  Prepaid expenses                                      6,597        (15,385)
                  Deposits                                            (80,546)      (100,525)
              Increase (decrease) in
                  Accounts payable                                   (333,773)       904,407
                  Accrued salaries and benefits                        36,079           --
                  Accrued expenses                                    157,670           --
                  Due to officer                                       32,029           --
                                                                  -----------    -----------

                      Net cash used in operating activities          (855,316)    (1,388,462)
                                                                  -----------    -----------

Cash flows from investing activities
     Purchase of property and equipment                              (234,348)       (70,692)
     Purchase of patents and trademarks                               (30,199)       (65,381)
                                                                  -----------    -----------

                      Net cash used in investing activities          (264,547)      (136,073)
                                                                  -----------    -----------

Cash flows from financing activities
     Proceeds from the issuance of common stock                     1,020,000        378,900
     Proceeds from deposits payable                                      --          896,500
     Refunds of deposits payable                                     (240,500)          --
     Principal payments on convertible notes payable                 (490,000)          --
     Proceeds from convertible note payable                         1,230,000        255,000
                                                                  -----------    -----------

                      Net cash provided by financing activities     1,519,500      1,530,400
                                                                  -----------    -----------

                           Net increase in cash                       399,637          5,865

Cash, beginning of year                                                 5,865           --
                                                                  -----------    -----------

Cash, end of year                                                 $   405,502    $     5,865
                                                                  ===========    ===========


          The accompanying notes are an integral part of these financial statements.



                                              F-9



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                For the Years Ended December 31,
________________________________________________________________________________



                                                        2001             2000
                                                    ------------    ------------
                                                     (restated)

Supplemental disclosures of cash flow information

     Interest paid                                  $        --     $       --
                                                    =============   ============

     Income taxes paid                              $        --     $       --
                                                    =============   ============


Supplemental  schedule of non-cash investing and financing activities During the
year ended December 31, 2001,  notes with a principal  balance of $1,340,000 and
accrued  interest of $90,196 had been  converted  into  1,430,196  shares of the
Company's Series A preferred stock.  Related to these  conversions,  the Company
issued an additional  345,511  shares of Series A preferred  stock to certain of
the note  holders  and  recorded  related  interest  charges  of  $345,511.  The
remaining  notes with a principal  balance of $250,000  and accrued  interest of
$18,687  had  been  converted  into  committed  common  stock.  Related  to  the
conversion,  the Company  recorded  interest  charges of $130,487 for additional
shares that will be issued.

During the year ended  December  31, 2001,  the Company  entered into a 12-month
consulting  agreement,  issued  144,676  shares of common  stock,  and  recorded
consulting expense totaling $144,676.

During the year ended  December 31, 2001,  the Company  issued 100,000 shares of
Series A preferred stock as a settlement of certain litigation. Related to this,
the Company recorded expense of $100,000.


During the year ended  December 31, 2001,  the Company  issued 130,000 shares of
Series A  preferred  stock to a related  party as  payment of  accounts  payable
totaling  $130,000 and subsequently  executed a put/call option with the related
party (see Note 8).


During the year ended  December 31, 2001,  the Company  issued  13,000 shares of
Series A preferred stock for services rendered valued at $13,000.

During the year ended  December 31, 2001,  the Company  issued  56,000 shares of
Series A preferred stock for deposits payable totaling  $56,000.  In relation to
one of these  transactions,  the Company issued 10,000 shares of preferred stock
as interest expense totaling $10,000.

During the year ended  December 31, 2001,  the Company  issued  21,409 shares of
common stock to acquire a registered trademark valued at $21,409.

During the year ended  December 31, 2001,  the Company  issued 356,824 shares of
common stock to extend the term of a note payable and recorded  interest expense
totaling $356,824.



   The accompanying notes are an integral part of these financial statements.



                                      F-10



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                For the Years Ended December 31,
________________________________________________________________________________

Supplemental schedule of non-cash investing and financing activities (Continued)
During the year ended  December 31, 2001,  the Company  issued 249,314 shares of
common stock for services rendered valued at $249,314.

During the year ended  December 31, 2001, the Company issued options to purchase
935,564 shares of common stock to employees of the Company. In relation to these
issuances,  the Company  recorded  compensation  expense  totaling  $197,914 and
deferred compensation expense totaling $449,515.

During the year ended  December 31, 2001, the Company issued options to purchase
1,498,660  shares of common stock. In relation to these  issuances,  the Company
recorded consulting expenses totaling $797,501 and deferred compensation expense
totaling $476,360.

During the year ended  December 31, 2001, the Company issued options to purchase
142,730 shares of common stock in settlement of certain disputes. In relation to
these issuances, the Company recorded settlement expenses totaling $107,047.







   The accompanying notes are an integral part of these financial statements.

                                      F-11



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________


NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

          General
          -------
          NutraStar  Incorporated   ('NutraStar"),   a  California  corporation,
          markets  proprietary  whole  food  dietary  supplements  derived  from
          nutrient-dense  stabilized rice bran (a nutraceutical)  produced by an
          affiliated company, The RiceX Company ("RiceX"), a current shareholder
          and a publicly traded company. The Company has a license to distribute
          certain  derivatives  of  RiceX's  stabilized  rice  bran,  as well as
          valued-added rice bran products in the United States of America.

          On  December  14,  2001,   Alliance   Consumer   International,   Inc.
          ("Alliance")   acquired  all  of  the  outstanding   common  stock  of
          NutraStar.  For accounting purposes,  the acquisition has been treated
          as a  recapitalization  of  NutraStar  with  NutraStar as the acquirer
          (reverse acquisition).

          Effective  April 27, 2000,  NutraStar  became an 80% owner of NutraGlo
          Incorporated   ("NutraGlo"),   a  Nevada  corporation.   NutraGlo  was
          non-operative  during 2000.  During the year ended  December 31, 2001,
          NutraGlo   started   marketing,    manufacturing,   and   distributing
          NutraStar's  stabilized  rice  bran and  other  nutraceuticals  to the
          equine market. In connection with NutraStar's acquisition of Alliance,
          NutraStar  issued  250,001  shares of common stock in exchange for the
          remaining 20% of the common stock of NutraGlo. The value of the shares
          was $250,001,  which has been recorded as goodwill in the accompanying
          consolidated balance sheet.


NOTE 2 - RESTATEMENT

          During the year ended  December 31, 2001,  the Company  issued 130,000
          shares of Series A  preferred  stock to a related  party as payment of
          accounts payable  totaling  $130,000.  Related to these issuances,  on
          January 15, 2002, these holders executed a put/call agreement with the
          Company (see Note 8). The Company  previously had not recorded the put
          option on its financial statements.  The Company has also reclassified
          its convertible  Series A preferred  stock to convertible,  redeemable
          Series A preferred  stock to conform with the accounting  requirements
          of the United States Securities and Exchange Commission.

          This  restatement  does not have any effect on the Company's  reported
          earnings.  Its impact on the previously reported total liabilities and
          convertible,  redeemable  Series A preferred  stock as of December 31,
          2001 are as follows:



                                                As Previously
                                                  Reported    Restatement  As Restated
                                                ------------  -----------  -----------
                                                                  
          Total liabilities                      $  562,529   $  130,000   $  692,529
          Total convertible, redeemable Series
            A preferred stock                    $1,980,802   $ (130,000)  $1,850,802


                                      F-12


                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


          Principles of Consolidation

          The  consolidated   financial   statements  include  the  accounts  of
          NutraStar and its wholly owned subsidiaries,  NutraStar  Technologies,
          Inc. and  NutraGlo  (collectively,  the  "Company").  All  significant
          inter-company    accounts   and   transactions   are   eliminated   in
          consolidation.

          Basis of Presentation
          ---------------------
          The accompanying financial statements have been prepared in conformity
          with United States  generally  accepted  accounting  principles  which
          contemplate continuation of the Company as a going concern. During the
          year ended  December  31,  2001,  the  Company  incurred a net loss of
          $3,771,474,  and  it  had  negative  cash  flows  from  operations  of
          $855,316.  In  addition,  the  Company had an  accumulated  deficit of
          $5,328,174 at December 31, 2001. These factors raise substantial doubt
          about the Company's ability to continue as a going concern.

          Recovery of the Company's assets is dependent upon future events,  the
          outcome  of  which is  indeterminable.  Successful  transition  of the
          Company to the  attainment of profitable  operations is dependent upon
          the  Company  achieving  a level  of sales  adequate  to  support  the
          Company's cost structure.  The financial statements do not include any
          adjustments  relating  to the  recoverability  and  classification  of
          recorded  asset amounts or amounts and  classification  of liabilities
          that might be  necessary  should the  Company be unable to continue in
          existence.

          Management's  plans  to  alleviate   substantial   concern  about  the
          Company's   ability  to  continue  as  a  going  concern  include  the
          following:

          o    The Company  anticipates that it will be able to raise additional
               equity that will be  sufficient  for it to continue to  implement
               its current business strategy. It plans on registering all common
               stock with the Securities and Exchange  Commission not previously
               registered as well as any future common stock issued. This should
               result  in  more  market   liquidity  for  the  Company's  common
               shareholders.

          o    The  Company  plans  on  implementing  an  aggressive   marketing
               strategy  that will enhance  consumer  awareness of its products.
               The strategy  includes  establishing  and/or  expanding  existing
               strategic      relationships;      completing     an     Internet
               business-to-business  and business-to-consumer Web site that will
               handle  increased  product  demand if its  marketing  strategy is
               successful;  creating a direct response marketing  campaign;  and
               advertising in targeted, industry specific magazines.

          o    The Company is reducing its fixed overhead  expenses and plans to
               continue to control such items for the foreseeable future.


                                      F-13



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


          Revenue Recognition
          -------------------
          Revenue is  generally  recognized  upon  shipment  of  product  with a
          provision for estimated returns and allowances  recorded at that time,
          if applicable.

          Comprehensive Income
          --------------------
          The Company  utilizes  Statement  of  Financial  Accounting  Standards
          ("SFAS") No. 130,  "Reporting  Comprehensive  Income." This  statement
          establishes  standards  for  reporting  comprehensive  income  and its
          components in a financial  statement.  Comprehensive income as defined
          includes  all  changes in equity  (net  assets)  during a period  from
          non-owner  sources.  Examples of items to be included in comprehensive
          income,  which are excluded from net income,  include foreign currency
          translation  adjustments,  minimum pension liability adjustments,  and
          unrealized   gains  and  losses  on   available-for-sale   securities.
          Comprehensive  income  is not  presented  in the  Company's  financial
          statements  since the  Company did not have any changes in equity from
          non-owner sources.

          Accounts Receivable
          -------------------
          The Company  provides for the possible  inability to collect  accounts
          receivable  by  recording  an allowance  for  doubtful  accounts.  The
          Company   writes  off  an  account  when  it  is   considered   to  be
          uncollectible.  As of December  31, 2001,  an  allowance  for doubtful
          accounts was not deemed necessary.

          Inventory
          ---------
          Inventory  is  stated at the lower of cost  (first-in,  first-out)  or
          market and  consists  of  nutraceutical  products  manufactured  by an
          affiliated  company,  RiceX,  which  the  Company  enhances  for final
          distribution  to its customers.  While the Company has an inventory of
          these  products,  which  contain  ingredients  supplied by RiceX,  any
          significant prolonged shortage of these ingredients or of the supplies
          used to enhance these  ingredients  could materially  adversely affect
          the Company's results of operations.

          Patents and Trademarks
          ----------------------
          The Company has  exclusive  licenses  for several  patents.  All costs
          associated with the patents are capitalized.  Amortization is computed
          on the  straight-line  method based on an estimated  useful life of 20
          years.  The Company also has several  registered  trademarks which are
          amortized over an estimated useful life of 10 years.

          Property and Equipment
          ----------------------
          Property and  equipment are stated at cost.  The Company  provides for
          depreciation using the straight-line  method over the estimated useful
          lives as follows:

                  Furniture and equipment                    7 years
                  Software                                   3 years


                                      F-14



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


          Property and Equipment (Continued)
          ----------------------
          Expenditures  for maintenance and repairs are charged to operations as
          incurred  while renewals and  betterments  are  capitalized.  Gains or
          losses on the sale of property  and  equipment  are  reflected  in the
          statements of operations.

          Fair Value of Financial Instruments
          -----------------------------------
          The  Company   measures  its  financial   assets  and  liabilities  in
          accordance with generally accepted accounting principles.  For certain
          of the  Company's  financial  instruments,  including  cash,  accounts
          receivable,  accounts  payable,  accrued  salaries and  benefits,  and
          accrued expenses,  the carrying amounts  approximate fair value due to
          their short maturities.

          Stock Split
          -----------
          During  the year ended  December  31,  2000,  the  Company  effected a
          300-for-one  split of its common  stock.  All share and per share data
          have been retroactively restated to reflect this reverse stock split.

          Stock-Based Compensation
          ------------------------
          SFAS No. 123,  "Accounting  for Stock-Based  Compensation,"  defines a
          fair value based method of accounting  for  stock-based  compensation.
          However,  SFAS No.  123  allows  an  entity  to  continue  to  measure
          compensation  cost  related  to stock  and  stock  options  issued  to
          employees  using the  intrinsic  method of  accounting  prescribed  by
          Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting for
          Stock  Issued to  Employees."  Entities  electing  to remain  with the
          accounting method of APB No. 25 must make pro forma disclosures of net
          income  and  earnings  per  share  as if  the  fair  value  method  of
          accounting  defined in SFAS No. 123 had been applied.  The Company has
          elected to account for its stock-based compensation to employees under
          APB No. 25.

          Advertising Expense
          ------------------
          The Company expenses all advertising costs,  including direct response
          advertising,  as they are incurred.  Advertising expense for the years
          ended   December   31,  2001  and  2000  was   $24,369  and   $17,640,
          respectively.

          Income Taxes
          ------------
          The Company  accounts  for income  taxes under the  liability  method,
          which requires the  recognition of deferred tax assets and liabilities
          for the  expected  future tax  consequences  of events  that have been
          included  in the  financial  statements  or tax  returns.  Under  this
          method,  deferred income taxes are recognized for the tax consequences
          in future  years of  differences  between  the tax bases of assets and
          liabilities and their financial  reporting  amounts at each period end
          based on enacted tax laws and  statutory  tax rates  applicable to the
          periods  in which the  differences  are  expected  to  affect  taxable
          income.  Valuation  allowances are  established,  when  necessary,  to
          reduce deferred tax assets to the amount expected to be realized.



                                      F-15



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


          Loss Per Share
          --------------
          The Company  utilizes  SFAS No. 128,  "Earnings per Share." Basic loss
          per  share  is  computed  by  dividing   loss   available   to  common
          shareholders   by  the   weighted-average   number  of  common  shares
          outstanding.  Diluted loss per share is computed similar to basic loss
          per share  except that the  denominator  is  increased  to include the
          number of additional common shares that would have been outstanding if
          the  potential  common  shares had been  issued and if the  additional
          common shares were  dilutive.  Common  equivalent  shares are excluded
          from the computation if their effect is anti-dilutive.  As such, basic
          and diluted loss per share are the same.

          Estimates
          ---------
          The preparation of financial  statements  requires  management to make
          estimates and assumptions  that affect the reported  amounts of assets
          and liabilities and disclosure of contingent assets and liabilities at
          the date of the  financial  statements  and the  reported  amounts  of
          revenue and expenses during the reporting period. Actual results could
          differ from those estimates.

          Concentrations of Credit Risk
          -----------------------------
          The Company sells its services  throughout the United States,  extends
          credit to its customers,  and performs  ongoing credit  evaluations of
          such  customers.  The Company  evaluates its accounts  receivable on a
          regular  basis for  collectability  and provides for an allowance  for
          potential credit losses as deemed necessary.

          On May 1, 2001,  the Company  entered into an  exclusive  distribution
          agreement  with a  customer,  in which the  customer  is  required  to
          purchase a minimum  of 90,000  pounds of the  Company's  product on or
          before July 1, 2001,  120,000 pounds before September 1, 2002, 275,000
          pounds  between  September  1, 2002 and August 31,  2003,  and 350,000
          pounds between  September 1, 2003 and August 31, 2004. At December 31,
          2001,  sales to this customer  totaled  $596,627 (46% to total sales).
          There were not any  amounts due from this  customer  at  December  31,
          2001.

          In addition to the above,  for the year ended  December 31, 2001,  one
          customer  accounted for 19% of the Company's sales. There were not any
          amounts due from this customer at December 31, 2001.


                                      F-16



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________




NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


          Recently Issued Accounting Pronouncements
          -----------------------------------------
          In June 2001, the Financial Accounting Standards Board ("FASB") issued
          SFAS  No.  141,  "Business  Combinations."  This  statement  addresses
          financial  accounting  and  reporting  for business  combinations  and
          supersedes APB Opinion No. 16, "Business  Combinations,"  and SFAS No.
          38,  "Accounting  for   Pre-Acquisition   Contingencies  of  Purchased
          Enterprises." All business combinations in the scope of this statement
          are to be accounted  for using one method,  the purchase  method.  The
          provisions  of  this  statement  apply  to all  business  combinations
          initiated after June 30, 2001. Use of the pooling-of-interests  method
          for those business  combinations  is  prohibited.  This statement also
          applies to all business combinations  accounted for using the purchase
          method for which the date of acquisition is July 1, 2001 or later. The
          Company  does not expect  adoption  of SFAS No. 141 to have a material
          impact, if any, on its financial position or results of operations.

          In June  2001,  the FASB  issued  SFAS No.  142,  "Goodwill  and Other
          Intangible Assets." This statement addresses financial  accounting and
          reporting  for  acquired  goodwill  and other  intangible  assets  and
          supersedes APB Opinion No. 17,  "Intangible  Assets." It addresses how
          intangible  assets that are acquired  individually  or with a group of
          other assets (but not those acquired in a business combination) should
          be accounted for in financial statements upon their acquisition.  This
          statement  also  addresses  how goodwill and other  intangible  assets
          should be accounted for after they have been  initially  recognized in
          the financial  statements.  It is effective for fiscal years beginning
          after December 15, 2001.  Early  application is permitted for entities
          with fiscal years  beginning  after March 15, 2001,  provided that the
          first interim  financial  statements have not been issued  previously.
          The  Company  does  not  expect  adoption  of SFAS  No.  142 to have a
          material  impact,  if any,  on its  financial  position  or results of
          operations.

          In June 2001,  the FASB  issued SFAS No.  143,  "Accounting  for Asset
          Retirement  Obligations."  This statement applies to legal obligations
          associated  with the retirement of long-lived  assets that result from
          the  acquisition,   construction,   development,   and/or  the  normal
          operation of  long-lived  assets,  except for certain  obligations  of
          lessees. This statement is not applicable to the Company.


                                      F-17



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


          Recently Issued Accounting Pronouncements (Continued)
          -----------------------------------------
          In August  2001,  the FASB issued SFAS No.  144,  "Accounting  for the
          Impairment or Disposal of Long-Lived Assets." This statement addresses
          financial  accounting  and reporting for the impairment or disposal of
          long-lived assets.  This statement replaces SFAS No. 121,  "Accounting
          for the Impairment of Long-Lived  Assets and for Long-Lived  Assets to
          be Disposed of," the  accounting  and reporting  provisions of APB No.
          30,  "Reporting  the Results of  Operations - Reporting the Effects of
          Disposal of a Segment of a Business,  and Extraordinary,  Unusual, and
          Infrequently Occurring Events and Transactions," for the disposal of a
          segment of a business, and amends Accounting Research Bulletin No. 51,
          "Financial  Statements,"  to eliminate the exception to  consolidation
          for a  subsidiary  for which  control is likely to be  temporary.  The
          Company  does not expect  adoption  of SFAS No. 144 to have a material
          impact, if any, on its financial position or results of operations.



NOTE 4 - CASH


          The  Company  maintains  its  cash  balances  at one bank  located  in
          California.  The  balances  at the bank  are  insured  by the  Federal
          Deposit Insurance  Corporation up to $100,000. At times, cash balances
          are in excess of the insured limit.



NOTE 5 - PROPERTY AND EQUIPMENT


          Property  and  equipment  at  December  31,  2001   consisted  of  the
          following:

                  Furniture and equipment                    $         16,714
                  Software                                            288,326
                                                             ----------------

                                                                      305,040
                  Less accumulated depreciation                        94,085
                                                             ----------------

                      Total                                  $        210,955
                                                             ================

          Depreciation  expense  was  $89,026  and  $5,059  for the years  ended
          December 31, 2001 and 2000, respectively.



                                      F-18



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________


NOTE 6 - PATENTS AND TRADEMARKS


         Patents and trademarks at December 31, 2001 consisted of the following:

                  Patents                              $         84,439
                  Trademarks                                     32,550
                                                       ----------------

                                                                116,989
                  Less accumulated amortization                   7,484
                                                       ----------------

                      Total                            $        109,505
                                                       ================

          Amortization  expense  was  $5,371  and  $2,113  for the  years  ended
          December 31, 2001 and 2000, respectively.



NOTE 7 - PROMISSORY NOTES PAYABLE


          During the years ended  December 31, 2001 and 2000, the Company raised
          an  aggregate  of  $2,080,000   through  the  issuance  of  short-term
          promissory notes and convertible promissory notes.

          Activities related to the promissory notes are as follows:

          o    The  promissory  notes,  with an aggregate  principal  balance of
               $1,180,000, bore interest ranging from 8% to 12% per annum. As of
               December 31, 2001, all of the promissory notes had been retired.

          o    The convertible  notes,  with an aggregate  principal  balance of
               $900,000, were immediately converted into shares of the Company's
               preferred stock at $1 per share and bore interest ranging from 8%
               to 15% per annum.  As the convertible  notes were  convertible at
               rates that  approximated  market value,  no discount was recorded
               relative to a beneficial conversion feature.

          o    As of December 31, 2001, the Company had paid notes in the amount
               of $490,000 in cash. Notes with a principal balance of $1,340,000
               and accrued interest of $90,196 had been converted into 1,430,196
               shares of the  Company's  Series A  preferred  stock.  Related to
               these  conversions,  the  Company  issued an  additional  345,511
               shares of Series A preferred stock to certain of the note holders
               and recorded related interest charges of $345,511.  The remaining
               notes with a principal  balance of $250,000 and accrued  interest
               of  $18,687  had been  converted  into  committed  common  stock.
               Related to the conversion,  the Company recorded interest charges
               of $130,487 for additional shares that will be issued.




                                      F-19



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________


NOTE 7 - PROMISSORY NOTES PAYABLE (Continued)

          o    In  connection  with  certain of the notes,  the  Company  issued
               warrants to purchase 350,000 shares of the Company's common stock
               at an exercise price of $1 per share. The warrants expire on June
               25, 2006 and are immediately exercisable.  The Company recorded a
               discount  related to the detachable  warrants of $114,083,  which
               represented the portion of the proceeds allocated to the warrants
               based on the relative  fair values of the debt and  warrants.  At
               the  date  of  conversion,  $103,905  of  the  discount  remained
               unamortized  and  has  been  debited  to  convertible   Series  A
               preferred stock as part of the  conversion.  In relation to these
               issuances, interest expense of $10,178 was recorded.


NOTE 8 - PUT OPTION

          During the year ended  December 31, 2001,  the Company  issued 130,000
          shares of Series A  preferred  stock to a related  party as payment of
          accounts payable totaling $130,000. On January 15, 2002, these holders
          of the Series A preferred stock executed a put/call agreement. The put
          allows for the holder to sell to the  Company  all,  but not less than
          all, of the 130,000 shares of the Company's  Series A preferred stock,
          or common stock if any of the Series A preferred stock were converted,
          for $130,000, plus all accumulated,  but unpaid dividends, at any time
          after six months from January 15, 2002.  Related to the put option and
          the related  conversion of debt,  the Company has recorded a liability
          of $130,000.

          In addition,  the Company  maintains  the right to call the option and
          purchase back the shares of the Series A preferred stock for $130,000,
          plus any unpaid and accrued dividends at any time,  subject to certain
          provisions.





                                      F-20



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________


NOTE 9 - COMMITMENTS AND CONTINGENCIES

          Lease
          -----
          The Company leases its office space under a  non-cancelable  operating
          lease with RiceX that expires in September  2006 and requires  monthly
          payments of $5,230. Future minimum payments under this lease agreement
          at December 31, 2001 were as follows:

                   Year Ending
                  December 31,
                  ------------
                      2002                                       $  63,123
                      2003                                          64,298
                      2004                                          64,700
                      2005                                          65,906
                      2006                                          49,429
                                                                  --------

                           Total                                 $ 307,456
                                                                 =========

          Rent expense was $66,799 and $74,550 for the years ended  December 31,
          2001 and 2000, respectively.

          Employment Agreements
          ---------------------
          The Company has entered into several  employment  agreements  with key
          employees  with terms ranging from three to 10 years.  Minimum  future
          payments under these agreements at December 31, 2001 were as follows:

                  Year Ending
                  December 31,
                  ------------
                      2002                                     $   625,000
                      2003                                         508,750
                      2004                                         380,000
                      2005                                         283,333
                      2006                                         250,000
                      Thereafter                                   708,333
                                                               -----------

                           Total                               $ 2,755,416
                                                               ===========

          Generally, if the Company terminates these agreements without cause or
          the employee  resigns with good reason,  as defined,  the Company will
          pay the employees'  salaries,  bonuses,  and benefits  payable for the
          remainder of the term of the agreements.


                                      F-21



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 9 - COMMITMENTS AND CONTINGENCIES


          Employment Agreements (Continued)
          ---------------------

          On November 14, 2001, the Company entered into a magazine  advertising
          agreement for services in the amount of $29,160 to be rendered  during
          the year ended December 31, 2002.

          On December 14, 2001, the Company  entered into a 12-month  consulting
          services  agreement,  whereby  a  $15,000  retainer  fee was  paid for
          financial and accounting services.

          On December 14, 2001, the Company  entered into a 12-month  consulting
          services agreement, whereby it agreed to pay a $5,000 retainer fee for
          financial and accounting services.  In connection with this agreement,
          the Company issued 144,676 shares of common stock.  Consulting expense
          totaling $144,676 was recorded as of December 31, 2001.

          Legal Proceedings
          -----------------
          The  Company  was  involved  in  litigation  with  several   potential
          investors.  The  plaintiffs  requested  a return of  $750,000 in funds
          deposited   with  the  Company,   representing   potential   permanent
          investments.  These matters have been resolved in connection  with the
          acquisition of Alliance during December 2001. As of December 31, 2001,
          there were not any additional liabilities related to these matters.

          There are various other claims that have been made against the Company
          by certain of its vendors.  Management  expects that the settlement of
          these  claims  will not have a  significant  effect  on the  Company's
          financial position and results of operations.


          From  February  through  July 2000, a third party  solicited  funds on
          behalf of an  undetermined  public  shell  company,  into which it was
          contemplated that the Company might merge. In this regard, the Company
          received  approximately  $320,000  in  deposits  to be used  for  such
          purpose.  As a result  of these  solicitations,  there  may have  been
          violations  of  federal  and/or  state  securities  laws by such third
          party.  The Company  never  proceeded  with the  contemplated  merger.
          Instead,  the  Company  applied  such  funds to a  subsequent  private
          placement that the Company conducted, in which shares of the Company's
          common stock were issued for the $320,000 investment.  The Company has
          offered full refunds to all people who provided monies to the Company.
          There are not any  assurances  that federal  and/or  state  securities
          authorities  will not investigate and possibly bring an action against
          the third party who solicited the funds and the Company.




                                      F-22



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________


NOTE 10 - SHAREHOLDERS' DEFICIT

          Convertible, Redeemable Series A Preferred Stock
          ------------------------------------------------
          In December  2001,  the Company  approved  the  issuance of  3,000,000
          shares  of  convertible,  redeemable  Series  A  preferred  stock  and
          executed a certificate of designation of the rights, preferences,  and
          privileges  of the Series A  preferred  stock.  Each share of Series A
          preferred stock is entitled to receive a 7% cumulative dividend, which
          is only payable in the case of liquidation or redemption. The Series A
          preferred  stock has a $1 per  share  stated  value  and will  receive
          certain  liquidation  preferences  after  satisfaction  of  claims  of
          creditors,  but before payment or  distributions of assets and surplus
          funds.


          Furthermore, the Series A preferred stock is convertible at the option
          of the holder at $1 per share into the Company's common stock, subject
          to  certain  anti-dilution  provisions.  In  addition,  the  Series  A
          preferred  stock will  automatically  convert into common stock in the
          event of a qualified public trading benchmark, which is defined as (i)
          the  common  stock is  listed  on a  national  exchange  at twice  its
          conversion   price  or  (ii)  the  common   stock  is  quoted  on  the
          over-the-counter  bulletin  board at an average  bid price of at least
          $1.25 per share over any 30-day trading period.


          The  Company  may  redeem any and all  outstanding  shares of Series A
          preferred  stock.  Upon  the  five-year  anniversary  of the  date  of
          issuance,  the Company is  required  to redeem all of its  outstanding
          shares of Series A preferred  stock at $1 per share,  plus all accrued
          and unpaid dividends declared.


          During the year ended  December 31, 2001,  the Company  issued 100,000
          shares  of  Series  A  preferred  stock  as a  settlement  of  certain
          litigation. Related to this, the Company recorded expense of $100,000.


          During the year ended  December 31, 2001,  the Company  issued 130,000
          shares of Series A  preferred  stock to a related  party as payment of
          accounts  payable  totaling  $130,000  and  subsequently   executed  a
          put/call option with the related party (see Note 8).


          During the year ended  December 31, 2001,  the Company  issued  13,000
          shares of Series A preferred  stock for  services  rendered  valued at
          $13,000.

          During the year ended  December 31, 2001,  the Company  issued  56,000
          shares  of Series A  preferred  stock for  deposits  payable  totaling
          $56,000. In relation to one of these transactions,  the Company issued
          10,000 shares of preferred stock as interest expense totaling $10,000.



                                      F-23



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 10 - SHAREHOLDERS' DEFICIT (Continued)


          Common Stock
          ------------
          Effective  December 14, 2001,  the Company was combined with Alliance,
          whereby the Company became a wholly owned  subsidiary of Alliance.  In
          connection  with the  acquisition,  the Company  issued an  additional
          249,770 shares of common stock for services rendered.  Under the terms
          of the  agreement,  all of the  issued and  outstanding  shares of the
          Company's  common  stock  were  exchanged  for  17,000,000  shares  of
          Alliance's common stock.

          The  transaction  has been  accounted  for as a  reverse  acquisition,
          whereby NutraStar is considered the acquiring company and Alliance the
          acquired  company.  The equity section of NutraStar has been restated,
          similar to a  recapitalization,  to  reflect  the  pro-rata  shares it
          received  in the  acquisition.  The  ratio  of  shares  issued  in the
          share-exchange  was  approximately  1.43 shares of  Alliance's  common
          stock to every one share of NutraStar's  outstanding common stock. All
          share and per share data prior to the  acquisition  have been restated
          to reflect this ratio.

          Outstanding  unexercised options and warrants of the Company were also
          converted  into options and warrants to acquire  shares of  Alliance's
          common  stock  at a  ratio  of  1  to  1.43.  Alliance  also  obtained
          $1,000,000  from the sale of its common stock in  connection  with the
          acquisition  agreement.  These  shares of stock were issued for $1 per
          share.  There were 3,649,520 shares  outstanding as of the date of the
          acquisition.  Prior to the acquisition,  NutraStar changed its name to
          NutraStar  Technologies  Incorporated.  Subsequent to the acquisition,
          Alliance changed its name to NutraStar Incorporated.

          During the year ended  December 31, 2001,  the Company  issued  28,546
          shares of common stock for cash totaling $20,000.


          During the year ended  December 31, 2001,  the Company  issued  21,409
          shares of common  stock to acquire a  registered  trademark  valued at
          $21,409.


          During the year ended  December 31, 2001,  the Company  issued 356,824
          shares  of  common  stock to  extend  the term of a note  payable  and
          recorded interest expense totaling $356,824.

          During the year ended  December 31, 2001,  the Company  issued 249,314
          shares of common stock for services rendered valued at $249,314.

          During the year ended  December 31, 2001,  the Company  issued 150,000
          shares  of  common  stock  as  settlement  for the  cancellation  of a
          consulting   agreement  and  recorded   consulting   expense  totaling
          $150,000.

          During the year ended  December 31, 2000,  the Company  issued  56,764
          shares of common stock for services rendered valued at $3,977.

          During the year ended  December 31, 2000,  the Company  issued 540,802
          shares of common stock for cash totaling $378,900.



                                      F-24



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 10 - SHAREHOLDERS' DEFICIT (Continued)


          Common Stock Warrants
          A summary of the Company's warrant activity is listed below:



                                                                         Weighted-    Weighted-
                                                         Weighted-       Average      Average
                                                          Average        Exercise     Exercise
                              Stock       Stock          Remaining       Price of     Price of
             Exercise       Warrants    Warrants        Contractual      Warrants     Warrants
              Price       Outstanding  Exercisable         Life         Outstanding   Exercisable
         ---------------  ----------- --------------  ----------------  -----------  ------------
                                                                      
               $1.00        300,000     300,000         5 years         $  1.00         $ 1.00


          Options
          -------
          During the year ended December 31, 2001, the Company issued options to
          purchase  935,564  shares of common stock to employees of the Company.
          In relation to these  issuances,  the  Company  recorded  compensation
          expense totaling $197,914 and deferred  compensation  expense totaling
          $449,515.

          During the year ended December 31, 2001, the Company issued options to
          purchase  1,498,660  shares  of common  stock.  In  relation  to these
          issuances,  the Company recorded consulting expenses totaling $797,501
          and deferred compensation expense totaling $476,360.

          During the year ended December 31, 2001, the Company issued options to
          purchase  142,730  shares of common  stock in  settlement  of  certain
          disputes.  In  relation  to  these  issuances,  the  Company  recorded
          settlement expenses totaling $107,047.

          The  following  table  summarizes  all of the  Company's  stock option
          transactions:




                                               Employee Options                  Consultant Options
                                       ---------------------------------  -------------------------------
                                                          Weighted-                          Weighted-
                                                           Average                            Average
                                         Stock Options     Exercise         Stock Options    Exercise
                                           Outstanding      Price            Outstanding       Price
                                       ---------------  ----------------  ---------------  --------------
                                                                               
          Outstanding, February 4,
            2000 (inception) and
            December 31, 2000                        -         $       -                -      $ -
              Granted                          935,564         $    0.31        1,641,390      $  0.51
                                       ----------------                   ---------------

          Outstanding,
            December 31, 2001                  935,564         $    0.31        1,641,390      $ 0.51
                                       ===============                    ===============

          Exercisable,
            December 31, 2001                  278,350         $    0.29          977,698      $ 0.59
                                       ===============                    ===============



                                      F-25




                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 10 - SHAREHOLDERS' DEFICIT (Continued)


         Options (Continued)
         -------
         The weighted-average remaining contractual life of the options
         outstanding at December 31, 2001 was 9.93 years. The exercise prices of
         the options outstanding at December 31, 2001 ranged from $0.25 to $1,
         and information relating to these options is as follows:



                                                                                   Weighted-      Weighted-
                                                                  Weighted-        Average        Average
                                                                   Average         Exercise       Exercise
             Range of           Stock              Stock          Remaining         Price of      Price of
             Exercise          Options            Options         Contractual       Options       Options
             Prices          Outstanding        Exercisable          Life         Outstanding    Exercisable
         ------------------  -----------       ---------------  ----------------  -----------   ------------
                                                                                 
         $      0.25 - 0.28        1,934,671           799,313        9.93 years  $     0.25    $      0.25
         $      0.29 - 1.00          642,283           456,735        9.93 years  $     1.00    $      1.00
                             ---------------   ---------------

                                   2,576,954         1,256,048
                             ===============   ===============


          The Company has adopted  the  disclosure-only  provisions  of SFAS No.
          123. Accordingly,  no compensation cost other than that required to be
          recognized by APB 25 for the difference  between the fair value of the
          Company's common stock at the grant date and the exercise price of the
          options has been recognized.

          Had  compensation  cost  for the  Company's  stock  option  plan  been
          determined  based  on the  fair  value at the  grant  date for  awards
          consistent with the provisions of SFAS No. 123, the Company's net loss
          and loss per share  for the years  ended  December  31,  2001 and 2000
          would have been increased to the pro forma amounts indicated below:

                                                  2001               2000
                                            ---------------    ----------------
           Net loss
               As reported                  $    (3,771,474)   $     (1,556,700)
               Pro forma                    $    (4,099,194)   $     (1,556,700)
           Basic loss per common share
               As reported                  $         (0.20)   $          (0.10)
               Pro forma                    $         (0.22)   $          (0.10)

          The fair value of these  options  was  estimated  at the date of grant
          using the minimum  value  method with the  following  weighted-average
          assumptions  for the year ended  December 31, 2001:  dividend yield of
          0%, risk-free interest rate of 3.12%, and expected life of 2.85 years.
          The weighted-average exercise price was $0.44 at December 31, 2001.

          The weighted-average  fair value of the options issued during the year
          ended December 31, 2001 was $0.88.

                                      F-26



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________



NOTE 11 - INCOME TAXES


          Significant  components of the Company's deferred tax asset for income
          taxes consisted of the following at December 31, 2001:

          Deferred tax asset
              Net operating loss carryforwards              $2,124,660
          Less valuation allowance                           2,124,660
                                                            ----------

                   Net deferred tax asset                   $     --
                                                            ==========

          A reconciliation of the expected income tax computed using the federal
          statutory  income rate to the Company's  effective  rate for the years
          ended December 31, 2001 and 2000 was as follows:



                                                                 2001         2000
                                                             -----------   -----------
                                                                     
           Income tax computed at federal statutory tax rate       34.0%         34.0%
           State taxes, net of federal benefit                      5.8           5.8
           Change in valuation allowance                          (39.8)        (39.8)
                                                             ----------    ----------

               Total                                                -   %         -  %
                                                             ===========   ==========


          Realization of the future tax benefits  related to the deferred assets
          is dependent  on many  factors,  including  the  Company's  ability to
          generate  taxable  income within the net operating  loss  carryforward
          period.  Management  has  considered  these  factors in  reaching  its
          conclusion  as to the  valuation  allowance  for  financial  reporting
          purposes.

          At December 31, 2001, the Company had net operating loss carryforwards
          for  federal   and  state   income  tax   purposes  of   approximately
          $10,109,000,  which  being  to  expire  in  2020.  Certain  of the net
          operating  loss  carryforwards  are limited to each year in accordance
          with the Internal Revenue Code.



NOTE 12 - RELATED PARTY TRANSACTIONS


          On December 12,  2001,  the Company  entered into a 15-year  agreement
          with RiceX to be the exclusive  distributor  of rice solubles and rice
          bran fiber concentrate in the United States of America and to have the
          exclusive  rights to various  patents and  trademarks  owned by RiceX.
          Under the terms of this agreement,  RiceX has agreed to cancel certain
          indebtedness by the Company in exchange for 130,000 shares of Series A
          preferred stock and payment of $41,335 in interest,  has agreed to new
          minimum  purchase  requirements,  and has agreed to extend the term of
          the agreement for five years,  with two additional  renewal periods of
          five years each.



                                      F-27



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________

NOTE 12 - RELATED PARTY TRANSACTIONS (Continued)

          The sales price to the Company will be the lower of RiceX's  published
          standard  price or the price  negotiated  by other  customers for like
          quantities and products.  Under this agreement, the Company maintained
          a $150,000  advance payment with RiceX,  which is included in deposits
          as of December  31, 2001.  In January  2002,  the Company  revised the
          15-year  agreement  with RiceX,  which reduced the advance  payment to
          $135,000.

          To maintain  rights  under this  revised  agreement,  the Company must
          purchase  $250,000 of product  from RiceX by April  2002,  $500,000 by
          July 2002,  $750,000  by October  2002,  $1,250,000  by January  2003,
          $1,500,000 by July 2003,  $2,250,000  by January  2004,  $6,000,000 by
          January 2005, and  increasing  thereafter by 10% per annum through the
          remaining  term of the  agreement.  Purchases from RiceX were $471,126
          (20% to total purchased) and $620,000 (96% to total purchased) for the
          years ended December 31, 2001 and 2000, respectively.

          In connection with this agreement,  the Company was granted  exclusive
          patent and  licensing  rights by RiceX for which the Company  will pay
          RiceX a royalty equal to 2% of gross receipts  received by the Company
          from  the  sale of the  Company's  products  that  incorporate  any of
          RiceX's products, less certain selling expenses. At December 31, 2001,
          the Company  recorded  patents  and  licenses in the amount of $84,439
          related to these exclusive rights.

          During  the  year  ended  December  31,  2001,  the  Company  recorded
          commissions revenue totaling $317,668 from RiceX related to sales made
          by RiceX to customers of the Company.

          During the year ended  December 31, 2001,  the Company  issued 300,000
          Series A preferred stock to the Chief Executive Officer in exchange to
          cancel $300,000 of convertible promissory notes.

          During the year ended  December 31, 2001,  the Company  entered into a
          non-interest-bearing  loan agreement with the Chief Executive  Officer
          of the Company.  Related to this agreement, the Company recorded a Due
          to Officer in the amount of $32,029 at December 31, 2001.

          During the year ended December 31, 2001, certain operating expenses of
          the Company totaling $111,313 were paid by RiceX.  These expenses were
          reimbursed  by the Company,  and at December 31, 2001,  there were not
          any amounts owed to RiceX.




                                      F-28



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________


NOTE 13 - 401(K) PROFIT SHARING PLAN


          Effective April 2000, the Company adopted a 401(k) profit sharing plan
          (the "Plan") for the exclusive benefit of eligible employees and their
          beneficiaries. Substantially all employees are eligible to participate
          in  the  Plan.  Matching  contributions  to  the  Plan  are  3% of the
          employees' gross salary, not to exceed a certain  percentage.  For the
          years ended  December  31, 2001 and 2000,  the Company  made  matching
          contributions of $18,620 and $14,157, respectively.



NOTE 14 - SUBSEQUENT EVENTS


          On January 10, 2002,  the Company  entered into a consulting  services
          agreement  for  marketing  services  in  return  for a  non-refundable
          retainer  fee of $3,000 per month,  plus  expenses for a period of six
          months.  In addition  to the cash  compensation,  the  Company  issued
          10-year  stock  options  to  purchase  25,000  common  shares  with an
          exercise price of $1 per share.


          On January 15, 2002, the Company  entered into a put/call  option (see
          Note 8).


          On February 4, 2002, the Company entered into a three-month  marketing
          services  agreement  for public  relations and  advertising  services.
          Related to this  transaction,  the Company  paid a retainer of $35,000
          upon  execution of the agreement and issued 35,000  restricted  common
          shares and 50,000 stock options.

          On February 21, 2002,  the Company  entered into a financial  advisory
          services  agreement.  In  consideration  of  such  financial  advisory
          services,  the Company agreed to pay a non-refundable  retainer fee of
          $20,000,  issue 200,000  restricted  shares of common stock, and issue
          300,000 options to purchase restricted shares at $1, $2.50, and $4 per
          share. In addition,  if the financial services provider introduces the
          Company to another party or entity  during the term of this  agreement
          previously   unknown  to  the  Company,   and  as  a  result  of  such
          introduction,  a financing  transaction is consummated during the term
          of this agreement or during the 12-month period  following the term of
          this agreement, the Company will pay the financial services provider a
          fee equal to 5% of the gross proceeds raised in such  transaction.  In
          addition,  if an acquisition  transaction is consummated  with a third
          party  introduced  by the  financial  services  provider,  the Company
          agreed  to  pay a fee  equal  to 5% of  the  first  $1,000,000  of the
          consideration and 3% for the balance of the consideration.

          On February  26,  2002,  the Company  entered  into a master  services
          agreement for certain e-commerce services in the amount of $9,975.

          On March 15, 2002,  the Company  issued 153,333 shares of common stock
          with a  detachable  purchase  warrant to  purchase  153,333  shares of
          common  stock at an exercise  price of $1.20 per share in exchange for
          $100,000.



                                      F-29



                                         NUTRASTAR INCORPORATED AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               December 31, 2001
________________________________________________________________________________


NOTE 14 - SUBSEQUENT EVENTS (Continued)

          On April 12,  2002,  the  Company  entered  into a two-year  marketing
          agreement,  whereby the Company is to pay a commission of 10% of gross
          receipts  on sales from  customers  introduced  to the  Company by the
          consultant,  subject  to certain  requirements.  In  relation  to this
          agreement, the Company granted to the consultants five-year options to
          purchase  up to 150,000  shares of the  Company's  common  stock at an
          exercise  price  of  $0.75  per  share,   vesting   according  to  the
          achievement  of  certain  levels  of  gross  receipts.  The  agreement
          automatically renews after the initial two-year term.

          On May 6, 2002,  the  Company  entered  into a one-year  finder's  and
          advisory agreement,  whereby the finder is to seek businesses that are
          consistent  with the  Company's  business  and  strategic  plans or to
          introduce  the Company to  investors.  The fees paid to the finder for
          finding   investors  to  fund  the  Company  are  based  upon  certain
          percentages,  ranging  from 2% to 10%,  plus  unaccountable  expenses,
          depending on the amount funded by the investors.  In addition,  10% of
          the transaction value will be paid in cashless warrants. If the finder
          arranges a credit line or other types of debt placement, the fees paid
          to the finder  will be 2% of the total debt  placement.  If the finder
          introduces  a  business  or  entity  and  the  Company  engages  in  a
          merge-type transaction or other similar transactions, the fees paid to
          the finder are based upon certain percentages,  ranging from 3% to 7%,
          depending  on  the  transaction   value.  In  addition,   10%  of  the
          transaction value will be paid in cashless warrants. This agreement is
          automatically renewed after the initial one-year term.



                                      F-30