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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10−Q

(Mark One)

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2011

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

For the transition period from ____________to _____________

Commission File Number: 000-53905

TSINGYUAN BREWERY LTD.(Exact
Name of Registrant as Specified in Its Charter)

|Delaware                        | 65-1714523                          
|------------------------------- | ------------------------------------
|(State or other jurisdiction of | (I.R.S. Employer Identification No.)
|incorporation or organization)  |                                     

Linpan Industrial ParkLinyi County, Shandong
Province251500Peoples Republic of China(Address of principal executive offices, Zip Code)

(+86) 534-505-4799(Registrants telephone number,
including area code)

_______________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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 [  ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).

Yes [  ]         No [  ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [  ]                                                  | Accelerated filer [  ]       
|----------------------------------------------------------------------------- | -----------------------------
|                                                                              |                              
|Non-accelerated filer [  ](Do not check if a
      smaller reporting company) | Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]         No [X]

The number of shares outstanding of each of the issuers
classes of common stock, as of March 31, 2011 is as follows:

| | Class of Securities            |  | Shares Outstanding | 
| | ------------------------------ |  | ------------------ | 
| | Common Stock, $0.001 par value |  | 126,857,289        | 

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|TSINGYUAN BREWERY LTD.
|----------------------

TABLE OF CONTENTS

PART IFINANCIAL INFORMATION

|Item 1. | Financial Statements                                                                        | 1 
|------- | ------------------------------------------------------------------------------------------- | --
|Item 2. | Managements Discussion and Analysis of
      Financial Condition and Results of Operations | 15
|Item 3. | Quantitative and Qualitative
      Disclosures About Market Risk                            | 23
|Item 4. | Controls and Procedures                                                                     | 23

PART IIOTHER INFORMATION

|Item 1.  | Legal Proceedings                                                 | 24
|-------- | ----------------------------------------------------------------- | --
|Item 1A. | Risk Factors                                                      | 24
|Item 2.  | Unregistered Sales of Equity
      Securities and Use of Proceeds | 24
|Item 3.  | Defaults Upon Senior Securities                                   | 24
|Item 4.  | (Removed and Reserved)                                            | 24
|Item 5.  | Other Information                                                 | 24
|Item 6.  | Exhibits                                                          | 25

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PART IFINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

TSINGYUAN BREWERY LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED FINANCIAL STATEMENTSMARCH 31,
2011(UNAUDITED)

TABLE OF CONTENTS

|Unaudited Condensed Consolidated Balance
      Sheets As at March 31, 2011 and December 31, 2010                        | 1     
|----------------------------------------------------------------------------------------------------------------------- | ------
|Unaudited Condensed Consolidated Statements of Income For
      the three month periods ended March 31,2011and 2010     | 2     
|Unaudited Condensed Consolidated Statements
      of Cash Flows For the three month periods ended March 31,2011and 2010 | 3     
|Notes to Unaudited Condensed Consolidated Financial
      Statements                                                    | 4 - 14

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TSINGYUAN BREWERY LTD. AND SUBSIDIARIES(FORMERLY
KNOWN AS SABRE INDUSTRIAL, INC. AND SUBSIDIARIES)CONDENSED
CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                            |   | As of          | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------- | 
|                                                                                                                                                                            |   | March 31, 2011 | 
|                                                                                                                                                                            |   | (Unaudited)    | 
|ASSETS                                                                                                                                                                      |   |                | 
|Current Assets:                                                                                                                                                             |   |                | 
|Cash and cash
      equivalents                                                                                                                                             | $ | 75,051         | 
|Accounts receivable                                                                                                                                                         |   | 195,814        | 
|Inventories                                                                                                                                                                 |   | 7,872,690      | 
|Advances to suppliers                                                                                                                                                       |   | -              | 
|Other receivables                                                                                                                                                           |   | -              | 
|Total Current
      Assets                                                                                                                                                  |   | 8,143,555      | 
|                                                                                                                                                                            |   |                | 
|Plant and equipment, net of accumulated
      depreciation of $3,023,712 and $2,747,621 at March 31,2011 and December
      31, 2010, respectively                          |   | 17,345,977     | 
|                                                                                                                                                                            |   |                | 
|Intangible asset, net                                                                                                                                                       |   | 1,443,369      | 
|Advance for long term assets                                                                                                                                                |   | 5,351,063      | 
|                                                                                                                                                                            |   |                | 
|Total Assets                                                                                                                                                                | $ | 32,283,964     | 
|                                                                                                                                                                            |   |                | 
|LIABILITIES AND
      STOCKHOLDERS' EQUITY                                                                                                                                  |   |                | 
|                                                                                                                                                                            |   |                | 
|Current Liabilities:                                                                                                                                                        |   |                | 
|Accounts payable and accrued expense                                                                                                                                        | $ | 1,639,810      | 
|Advances from customers                                                                                                                                                     |   | 891,230        | 
|Taxes payable                                                                                                                                                               |   | 2,799,613      | 
|Due to related parties                                                                                                                                                      |   | -              | 
|Total Current Liabilities                                                                                                                                                   |   | 5,330,653      | 
|                                                                                                                                                                            |   |                | 
|Stockholders' Equity:                                                                                                                                                       |   |                | 
|Preferred stock, Series
      B - $0.001 par value, 1,000 authorized, no shares issued and outstanding)                                                                     |   | -              | 
|Common stock ($0.001 par value,
      300,000,000 shares authorized, 126,857,289 shares issued and outstanding
      as of March 31,2011 and December 31,2010 respectively) |   | 126,857        | 
|Additional paid in
      capital                                                                                                                                            |   | 14,065,434     | 
|Statutory surplus reserves                                                                                                                                                  |   | 832,981        | 
|Retained earnings                                                                                                                                                           |   | 9,739,553      | 
|Accumulated other comprehensive income                                                                                                                                      |   | 2,188,486      | 
|Total
      Stockholders' Equity                                                                                                                                            |   | 26,953,311     | 
|Total
      Liabilities and Stockholders' Equity                                                                                                                            | $ | 32,283,964     | 

See notes to unaudited condensed consolidated financial
statements

1

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TSINGYUAN BREWERY LTD. AND SUBSIDIARIES(FORMERLY
KNOWN AS SABRE INDUSTRIAL, INC. AND SUBSIDIARIES)CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE
INCOME(UNAUDITED)

|                                                             |   | For The Three Month Periods Ended March
      31, | 
|------------------------------------------------------------ | - | ------------------------------------------------- | 
|                                                             |   | 2011                                              | 
|                                                             |   |                                                   | 
|                                                             |   |                                                   | 
|Sales                                                        | $ | 21,077,475                                        | 
|Cost of goods sold                                           |   | 16,850,631                                        | 
|Gross profit                                                 |   | 4,226,844                                         | 
|                                                             |   |                                                   | 
|Operating expenses:                                          |   |                                                   | 
|General and
      administrative expenses                    |   | 494,109                                           | 
|Selling expenses                                             |   | 323,647                                           | 
|Total operating expenses                                     |   | 817,756                                           | 
|                                                             |   |                                                   | 
|Income from operations                                       |   | 3,409,088                                         | 
|                                                             |   |                                                   | 
|Other income (expense):                                      |   |                                                   | 
|Interest expense                                             |   | -                                                 | 
|Interest income                                              |   | 1,426                                             | 
|Other income (expense)                                       |   | 281,263                                           | 
|Total other income (expense)                                 |   | 282,689                                           | 
|                                                             |   |                                                   | 
|Income before income taxes                                   |   | 3,691,777                                         | 
|                                                             |   |                                                   | 
|Income taxes expense                                         |   | 1,108,176                                         | 
|                                                             |   |                                                   | 
|Net income                                                   |   | 2,583,601                                         | 
|                                                             |   |                                                   | 
|Other comprehensive income:                                  |   |                                                   | 
|Foreign currency translation
      adjustment                |   | 142,614                                           | 
|                                                             |   |                                                   | 
|Comprehensive income                                         | $ | 2,726,215                                         | 
|                                                             |   |                                                   | 
|Earnings per share - basic and diluted:                      |   |                                                   | 
|Weighted-average
      shares outstanding, basic and diluted |   | 126,857,289                                       | 
|Earnings per share, basic and
      diluted                  | $ | 0.02                                              | 

See notes to unaudited condensed consolidated financial
statements

2

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TSINGYUAN BREWERY LTD. AND SUBSIDIARIES(FORMERLY
KNOWN AS SABRE INDUSTRIAL, INC. AND SUBSIDIARIES)CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

|                                                                                        |   | For The Three Month Periods Ended March
      31, |  
|--------------------------------------------------------------------------------------- | - | ------------------------------------------------- | -
|                                                                                        |   | 2011                                              |  
|                                                                                        |   |                                                   |  
|                                                                                        |   |                                                   |  
|CASH FLOWS FROM OPERATING
      ACTIVITIES                                              |   |                                                   |  
|Net income                                                                              | $ | 2,583,601                                         |  
|Adjustments to
      reconcile net income to net cash provided by operating activities: |   |                                                   |  
|Depreciation and amortization                                                           |   | 265,981                                           |  
|Changes in
      operating assets and liabilities:                                      |   |                                                   |  
|Accounts
      receivable                                                               |   | 2,523,675                                         |  
|Advances to suppliers                                                                   |   | 63,138                                            |  
|Inventories                                                                             |   | (5,482,044                                        | )
|Other Receivables                                                                       |   | (4,050                                            | )
|Accounts payables
      and accrued expense                                             |   | 1,346,011                                         |  
|Taxes payable                                                                           |   | (196,983                                          | )
|Advances from
      customers                                                           |   | 564,444                                           |  
|Total adjustments                                                                       |   | (919,828                                          | )
|Net cash provided by operating activities                                               |   | 1,663,773                                         |  
|                                                                                        |   |                                                   |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                    |   |                                                   |  
|Advance for long term
      assets                                                      |   | (5,181,623                                        | )
|Purchase of plant
      and equipment                                                   |   | (33,479                                           | )
|Net cash used in investing activities                                                   |   | (5,215,102                                        | )
|                                                                                        |   |                                                   |  
|CASH FLOWS FROM FINANCING
      ACTIVITIES                                              |   |                                                   |  
|Repayments to
      short-term loans                                                    |   | -                                                 |  
|Collection of related parties                                                           |   | 2,524,157                                         |  
|Net cash provided
      by/(used in) financing activities                               |   | 2,524,157                                         |  
|                                                                                        |   |                                                   |  
|NET DECREASE IN CASH                                                                    |   | (1,027,172                                        | )
|                                                                                        |   |                                                   |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                 |   | (15,160                                           | )
|                                                                                        |   |                                                   |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF
      PERIOD                                    |   | 1,117,383                                         |  
|                                                                                        |   |                                                   |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                | $ | 75,051                                            |  
|                                                                                        |   |                                                   |  
|SUPPLEMENTAL DISCLOSURES:                                                               |   |                                                   |  
|Cash paid during the period for:                                                        |   |                                                   |  
|Interest paid                                                                           | $ | -                                                 |  
|Income tax paid                                                                         | $ | 1,215,233                                         |  
|Non-Cash Financing Activities:                                                          |   |                                                   |  
|Related Party Advance
    Contributed to Capital                                        | $ | 3,043,538                                         |  

See notes to unaudited condensed consolidated financial
statements

3

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TSINGYUAN BREWERY LTD. (FORMERLY KNOWN AS SABRE
INDUSTRIAL, INC.)NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION

The condensed consolidated financial statements include the
financial statements of Tsingyuan Brewery Ltd. (Tsingyuan) a corporation
incorporated under the laws of the State of Delaware, formerly known as Sabre
Industrial, Inc. (Sabre). Hereafter, Tsingyuan, its subsidiaries and companies
in which it has a controlling financial interest through contractual agreements,
are collectively referred to as the Company, unless specific reference is made
to a subsidiary, or to Sabre prior to it being renamed Tsingyuan.

On September 13, 2010, Dingyou Zhang, a citizen of the Peoples
Republic of China (the PRC), purchased 60,000,000 shares of common stock of
Sabre from Corporate Services International, Inc. (CSII) (the Zhang Stock
Purchase). The former Chief Executive Officer of CSII, in addition to being the
majority shareholder of CSII, was the former sole director of Sabre. The Zhang
Stock Purchase was for $408,000 in a private transaction whereby Sabre did not
issue any shares and did not receive any of the proceeds. Sabre, prior and
subsequent to the Zhang Stock Purchase (but prior to the Share Exchange, as
defined below), was a shell corporation seeking a merger, or business
combination, with an operating entity.

Prior to the Zhang Stock Purchase, Sabre had 100,758,543 shares
of common stock issued and outstanding. In addition to the 60,000,000 shares of
common stock sold by CSII to Dingyou Zhang, and as a condition of the Zhang
Stock Purchase, CSII was required to exchange an additional 40,150,641 shares of
common stock that it held, for 1,000 shares of Sabres newly authorized
non-voting Series B Preferred Stock (the Series B Exchange). The preferred
shares were convertible into 0.9% of the fully-diluted common stock of Sabre
within 30 days after Sabre filed a current report on Form 8-K stating that it
has ceased being a shell company. Subsequent to the Zhang Stock Purchase and the
Series B Exchange, Sabre had 607,902 shares of common stock not owned or
controlled by Dingyou Zhang or any of his affiliated entities.

On September 24, 2010, Sabre entered into a Share Exchange
Agreement (the Share Exchange) with Tsingyuan Holding, Inc., a holding company
organized under the laws of the State of Delaware (Tsingyuan Holding) that
controls operating entities in the PRC through its direct ownership of Beijing
Qingyuan (as defined below). Tsingyuan Holding was established on March 30, 2010
by Dingyou Zhang and another non-affiliate individual, with Mr. Zhang retaining
majority ownership and control of Tsingyuan Holding. In accordance with the
Share Exchange, Sabre issued 65,107,671 shares of its 300,000,000 authorized
shares of common stock for 100% of the equity of Tsingyuan Holding. As a result
of the Share Exchange, Tsingyuan Holding became Sabres wholly-owned subsidiary.
Tsingyuan Holding is a holding company for the operating entities, which are
producers of beer and malt in the PRC. Subsequent to the Share Exchange, Sabre
ceased being a shell company.

The Share Exchange was effectively a reorganization of the
entities for accounting purposes and was deemed to be a reverse acquisition.
Subsequent to the Share Exchange, the financial statements presented are those
of a combined Tsingyuan Holding and its subsidiaries, including the companies in
which it has a controlling financial interest through contractual agreements, as
if the Share Exchange had been in effect retroactively for all periods
presented. Accordingly, the 60,000,000 common shares from the Zhang Stock
Purchase and the 65,107,671 common shares from the Share Exchange, totaling
125,107,671 common shares, are presented as having been issued since inception.
The 607,902 shares of common stock not owned, or controlled by Dingyou Zhang,
subsequent to the Zhang Stock Purchase are shares issued as of September 24,
2010 as a result of the reverse merger, and are presented as if outstanding
commencing on September 24, 2010, the date of the Share Exchange. On September
28, 2010, the 1,000 shares of Series B Preferred Stock issued to CSII as a
condition of the Zhang Stock Purchase were converted into 1,141,716 shares of
common stock.

On January 18, 2011, the Company received an approval from the
Financial Industry Regulatory Authority (FINRA) clearing the Companys name
change from "Sabre Industrial, Inc." to "Tsingyuan Brewery
Ltd.” According to FINRA’s approval, the name change took effect on January 19, 2011. Concurrently with the name change, the Company’s trading symbol was changed from "SBRD" to "BEER".

4

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NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

On April 22, 2010, Tsingyuan Holding established its wholly-owned subsidiary, Tsingyuan Group (Hong Kong) Co., Limited (“Tsingyuan HK”), a Hong Kong limited liability company. Tsingyuan HK was established with 10,000 shares authorized,
with a par value of $1 Hong Kong Dollar per share (approximately $0.13 US dollar per share). On June 17, 2010, Tsingyuan HK established Beijing Qingyuan Hengchang Consulting, Co. Ltd. (“Beijing Qingyuan”), a wholly-owned Chinese
limited liability company. Beijing Qingyuan is a wholly foreign owned enterprise, or a WFOE. Through a series of entrusted management agreements entered into on June 26, 2010, Beijing Qingyuan controls the business of Linyi Hengchang Brewer’s
Malt Co., Ltd. (“Linyi Malt”), a PRC limited liability company established on March 3, 2004, and Shandong Qingyuan Beer Co., Ltd. (“Qingyuan Beer”), a PRC limited liability company established December 16, 2005. Qingyuan Beer
brews and distributes beer throughout northern and eastern China. The beers are commonly marketed under the trade names “QINGLIN,” “QINGYI,” and “QINGYUAN”. Linyi Malt is engaged in the production and distribution
of brewer’s malt. The three owners of Linyi Malt are Mr. Zhang, who is also the Chairman of the Board and Chief Executive Officer of our company (89.9%), Mr. Dingfu Zhang (6.2%) and Ms. Mingxia Yuan, who is also the Chief Financial Officer of
our company (3.9%) . Prior to January 6, 2011, the shareholders of Qingyuan Beer were Linyi Malt (66.8%), Mr. Dingyou Zhang (16.6%) and Ms. Mingxia Yuan (16.6%) . On January 6, 2011, Linyi Malt transferred all of its equity interest in Qingyuan Beer
to Mr. Dingyou Zhang and therefore after the equity transfer the current two shareholders of Qingyuan Beer are Mr. Dingyou Zhang (83.4%) and Ms. Mingxia Yuan (16.6%) . The controlling shareholder of Linyi Malt and Qingyuan Beer is Mr. Dingyou Zhang.

Subsequent to the Share Exchange, the “Company” is referred to as the entities of Tsingyuan, Tsingyuan Holding, Tsingyuan HK, Beijing Qingyuan, Linyi Malt and Qingyuan Beer on a consolidated basis, with Tsingyuan as the legal acquirer in
the Share Exchange and the parent company of the consolidated entity.

The Share Exchange acquisition has been accounted for as a “reverse acquisition” because, immediately following completion of the transaction, the shareholders of Tsingyuan Holding and it majority shareholder, Mr. Dingyou Zhang, had
effective control of Tsingyuan. For accounting purposes, Tsingyuan Holding will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of Tsingyuan, i.e., a capital
transaction involving the issuance of shares by Tsingyuan for the shares of Tsingyuan Holding. Accordingly, the combined assets, liabilities and results of operations of Tsingyuan Holding and its subsidiaries and companies in which it has a
controlling financial interest through contractual agreements became the historical financial statements of Tsingyuan at the closing of the Share Exchange, and Tsingyuan’s assets (primarily cash and cash equivalents), liabilities and results
of operations were consolidated with those of Tsingyuan Holding beginning on the Share Exchange date. No step-up in basis or intangible assets or goodwill has been recorded in this transaction. As this transaction has been accounted for as a reverse
merger, all direct costs of the transaction have been charged to additional paid-in capital. All professional fees and other costs associated with this transaction have been charged to additional paid-in-capital.

On January 11, 2011, the Company entered into a settlement agreement with a
consultant. The consultant was engaged to provide services relating to the
Company's reverse merger, which occurred in September 2010, however, there was a
dispute between the two parties regarding such services. The settlement
agreement provided that the consultant would keep approximately 8.2 million
shares of the Companys common stock and receive a cash payment of approximately
$227,000. The common stock was issued in September 2010 in connection with the
reverse merger. The value of the common stock was approximately $1.7 million.
The cash payment of $227,000 has been recorded in the March 31, 2011 condensed
consolidated statements of income.

Beijing Qingyuan’s control over Linyi Malt and Qingyuan Beer is generally identified as an “entrusted management” business arrangement that is a result of Linyi Malt and Qingyuan Beer, together with their shareholders, having
entered into a series of entrusted management agreements. The agreements provide that all economic benefits and risks arising from the operations of Linyi Malt and Qingyuan Beer shall be transferred to Beijing Qingyuan. Accordingly, Linyi Malt and
Qingyuan Beer are commonly referred to as companies in which it has a controlling financial interest through contractual agreements with respect to Beijing. Details of the contractual agreements are set out below under the caption “Entrusted
Management Agreements.”

Tsingyuan Holding, Tsingyuan HK and Beijing Qingyuan do not own any assets or any operations, except for services Beijing Qingyuan provides to Linyi Malt and Qingyuan Beer under the aforementioned series of entrusted management agreements. The
agreements are such that the operations and financial position of Linyi Malt and Qingyuan Beer, subsequent to the execution of the entrusted management agreements, were consolidated with those of Beijing Qingyuan, Tsingyuan HK and Tsingyuan Holding.

5

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NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

Chinese laws and regulations currently do not prohibit or restrict foreign ownership in the alcohol brewery businesses. However, Chinese laws and regulations do prevent direct foreign investment in certain industries. To protect the Company’s
shareholders from possible future foreign ownership restrictions, on June 26, 2010, Linyi Malt and Qingyuan Beer entered into the entrusted management agreements with Beijing Qingyuan that provide that Beijing Qingyuan is entitled to the full
guarantee for the performance of such entrusted management agreement entered into by Linyi Malt and Qingyuan Beer. Beijing Qingyuan is also entitled to receive the residual return of Linyi Malt and Qingyuan Beer. As a result of the agreements,
Beijing Qingyuan will absorb 100% of the expected gains or losses of Linyi Malt and Qingyuan Beer.

Beijing Qingyuan also entered into share pledge agreements with the principal shareholders of Linyi Malt and Qingyuan Beer (the “Principal Shareholders”), who pledged all their equity interests in these entities to Beijing Qingyuan. In
the share pledge agreements, the Principal Shareholders pledged their equity interests in Linyi Malt and Qingyuan Beer as a guarantee for the entrustment payments under the entrusted management agreements.

In addition, Beijing Qingyuan entered into option agreements to acquire the Principal Shareholders’ equity interests in Linyi Malt and Qingyuan Beer if or when permitted by the PRC laws.

The following are brief descriptions of the entrusted management agreements entered by Beijing Qingyuan and each of Linyi Malt and Qingyuan Beer:

(1) Exclusive Technical Service and Business Consulting Agreement - The Exclusive Technical Service and Business Consulting Agreement provides that Beijing Qingyuan will be fully and exclusively responsible for the management of Linyi Malt
and Qingyuan Beer. As consideration for such services, Linyi Malt and Qingyuan Beer have agreed to pay Beijing Qingyuan a management fee during the term of this agreement in an amount equal to Linyi Malt’s and Qingyuan Beer’s estimated
earnings before income tax. In addition, Beijing Qingyuan will assume all operating risks related to Linyi Malt and Qingyuan Beer and will bear all losses of Linyi Malt and Qingyuan Beer. This agreement will terminate on the earliest of the
following: (1) the winding up of Linyi Malt and Qingyuan Beer, or (2) the termination date determined by the parties thereto, or (3) the date on which Beijing Qingyuan completes the acquisition of Linyi Malt and Qingyuan Beer.

(2) Exclusive Option Agreement – Each of Linyi Malt and Qingyuan Beer and their shareholders have entered into an Exclusive Option Agreement with Beijing Qingyuan, pursuant to which Beijing Qingyuan will be entitled to acquire all of
the equity shares of such companies from the current shareholders upon certain terms and conditions, or to purchase all or part of the assets and business of Linyi Malt and Qingyuan Beer, if such a purchase is or becomes allowable under PRC laws and
regulations. The Exclusive Option Agreement also prohibits Linyi Malt and Qingyuan Beer and their shareholders from transferring any portion of their equity interests, business or assets to anyone other than Beijing Qingyuan. Beijing Qingyuan has
not yet taken any corporate action to exercise this right of purchase, and there is no guarantee that it will do so, or will be permitted to do so, by applicable law at such times as it may wish to do so.

(3) Shareholders’ Voting Proxy Agreement - All the shareholders of Linyi Malt and Qingyuan Beer have executed a Shareholders’ Voting Proxy Agreement to irrevocably appoint the persons designated by Beijing Qingyuan as their
proxies with the exclusive right to exercise, on their behalf, all of their rights related to their equity interests in Linyi Malt and Qingyuan Beer under the Articles of Association of such companies or applicable law, including but not limited to
the right to sell or transfer all or any of their equity interests of Linyi Malt and Qingyuan Beer, and to elect the directors of Linyi Malt and Qingyuan Beer. This agreement may not be terminated prior to the completion of the acquisition by
Beijing Qingyuan of all of the equity interests in, or all of the assets or business of, Linyi Malt and Qingyuan Beer.

(4) Share Pledge Agreement - Beijing Qingyuan and the shareholders of Linyi Malt and Qingyuan Beer have entered into Share Pledge Agreement, pursuant to which all such shareholders pledged all of their shares (100%) of Linyi Malt and Qingyuan
Beer, as appropriate, to Beijing Qingyuan. If Linyi Malt and Qingyuan Beer or any of their respective shareholders breaches its contractual obligations in the
entrusted management agreements, Beijing Qingyuan as pledgee, will be entitled to certain rights to foreclose on the pledged equity interests. Such Linyi Malt and Qingyuan Beer shareholders cannot dispose of the pledged equity interests or take any
actions that would prejudice Beijing Qingyuan’s interest.

6

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NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

Because of the above arrangement, which assigned all of Linyi Malt and Qingyuan Beer equity owners' rights and obligations to Beijing Qingyuan resulting in the equity owners lacking the ability to make decisions that have a significant effect on
Linyi Malt and Qingyuan Beer’ operations and Beijing Qingyuan’s ability to extract the profits from the operation of Linyi Malt and Qingyuan Beer, and assume the Linyi Malt and Qingyuan Beer’ residual benefits. Because the Beijing
Qingyuan and its indirect parent are the sole interest holders of the Linyi Malt and Qingyuan Beer, Beijing Qingyuan consolidates Linyi Malt and Qingyuan Beer from its inception consistent with the provisions of FASB Accounting Standards
Codification ("ASC") 810-10.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Condensed Consolidated Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting
principles for interim financial reporting. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating
results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have
been omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K as
filed with the SEC on April 13, 2011. The results of the three month periods ended March 31, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Linyi Malt and Qingyuan Beer, as noted previously. All intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements include the Company and its wholly owned subsidiaries and companies in which it has a controlling financial interest through contractual agreements. All significant inter-company
accounts and transactions have been eliminated in the consolidation.

Segment Reporting

The Company consists of two operating segments. One segment includes the business operations of buying and selling brewer’s malts and the other segment includes the business operations of producing and selling beers. The Company’s
brands, which include “QINGLIN,” “QINGYI,” and “QINGYUAN,” are predominantly malt beverages, which are sold to the same type of customers in similar size quantities, at similar price points and through
substantially the same channels of distribution. The Company’s beverage products are manufactured using similar production processes and have comparable alcohol content and constitute a single group of similar products.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year
presentation.

7

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.  Significant estimates include collectibility of accounts receivable, accounts payable,
sales returns and recoverability of long-term assets.

Cash and Cash Equivalents

For financial reporting purposes, the Company considers all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains all of its bank accounts in China. Balances at financial
institutions or state-owned banks within the PRC are not covered by insurance. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential
recoverability. The Company has not recorded an allowance as of March 31, 2011 and December 31, 2010.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents and trade receivables. The Company places its cash equivalents with high-credit-quality financial institutions.

Concentration of Customer

For the period ended March 31, 2011, one customer individually accounted for 10% of the Company’s sales and three customers individually accounted for 42%, 32% and 23% of the Company’s account receivables, respectively. For the period
ended Mar 31, 2010, five customers individually accounted for 12%, 12%, 11%, 11% and 10% of the Company’s sales, respectively. For the year ended Dec 31, 2010, three customers individually accounted for 45%, 35% and 17% of the Company’s
account receivables, respectively.

Advances to Suppliers

The Company advances to certain vendors for purchase of its material.  The advances to suppliers are interest free and unsecured.

Financial Instruments and Fair Value of Financial Instruments

Financial Account Standards Board (FASB) Account Standards Codification (ASC) 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based
on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

- Level 1 - Quoted prices in active markets for identical assets or liabilities.
- Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. and
- Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

8

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company’s primary financial instruments consisted of cash equivalents, accounts receivable, advances to suppliers, accounts payable and accrued expense, other payables, advances from customers, taxes payable and due to related parties as
of March 31, 2011 and December 31, 2010. The carrying amounts of these financial instruments approximate their fair values due to the short-term nature of these instruments.

Cash and cash equivalents include money market securities and commercial paper that are considered to be highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities and are
therefore classified as Level 1 within the fair value hierarchy.

Inventories

Inventories consist of raw materials, work in process and finished goods. Raw materials, which principally consist of malt, other brewing materials and packaging, are stated at the lower of cost (moving average basis) or market. The cost elements of
finished goods inventory consist of raw materials, direct labor and manufacturing overhead. Packaging design costs are expensed as incurred.

The provisions for excess or expired inventory are based on management’s estimates of forecasted usage of inventories. A significant change in the timing or level of demand for certain products as compared to forecasted amounts may result in
recording additional provisions for excess or expired inventory in the future. Provisions for excess inventory are included in cost of goods sold.

The computation of the excess hops inventory requires management to make certain assumptions regarding future sales growth, product mix, cancellation costs, and supply, among others. The Company manages inventory levels in an effort to maximize
utilization of hops on hand. The Company’s accounting policy for hops inventory and purchase commitments is to recognize a loss by establishing a reserve to the extent inventory levels and commitments exceed forecasted needs as determined by
the Company’s brewmasters. The Company has not recorded any loss on purchase commitments during the three months ended March 31, 2011 and 2010.

Intangible Assets - Land Use Rights

According to PRC laws, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. The land use rights granted to the Company,
located in Shandong Province, are being amortized using the straight-line method over the lease term of fifty years.

Advances for long term assets

The Company advances to certain vendors for purchase of its equipment and advance for construction of PPE. The advances for long term assets are interest free and unsecured.

Long-lived Assets

Long-lived assets are recorded at cost and depreciated over their estimated useful lives. For purposes of determining whether there are any impairment losses, as further discussed below, management has historically examined the carrying value of the
Company’s identifiable long-lived assets, including their useful lives, when indicators of impairment are present. For all long-lived assets, if an impairment loss is identified based on the fair value of the asset, as compared to the carrying
value of the asset, such a loss would be charged to expense in the period the impairment is identified. Furthermore, if the review of the carrying values of the long-lived assets indicates impairment
of such assets, the Company may determine that shorter estimated useful lives
are more appropriate. In that event, the Company will be required to record
additional depreciation in future periods, which will reduce earnings.

9

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advances from Customers

Advances from customers consist of amounts paid to the Company
in advance for inventory purchase. The Company receives these amounts and
recognizes them as a current liability until the revenue can be recognized when
the product is shipped and the title has passed to the customer according to the
shipping terms. The balance of advances from customers was $891,230 and $322,943
as of March 31, 2011 and December 31, 2010, respectively.

Basic and Diluted Earnings per Share

The Company reports earnings per share in accordance with FASB
ASC 260 Earnings per share. The Companys basic earnings per share are
computed using the weighted average number of shares outstanding for the periods
presented. Diluted earnings per share are computed based on the assumption that
any dilutive options or warrants were converted or exercised. Dilution is
computed by applying the treasury stock method. Under this method, the Companys
outstanding stock warrants are assumed to be exercised, and funds thus obtained
were assumed to be used to purchase common stock at the average market price
during the period. There were no dilutive instruments outstanding during the
three months ended March 31, 2011 and 2010.

Comprehensive Income

Comprehensive income is defined as the change in equity during
the year from transactions and other events, excluding the changes resulting
from investments by owners and distributions to owners, and is not included in
the computation of income tax expense or benefit. Accumulated other
comprehensive income consists of cumulative foreign currency translation
adjustments.

Economic and Political Risks

The Companys operations are conducted in the PRC. Accordingly,
the Companys business, financial condition and results of operations may be
influenced by the political, economic and legal environment in the PRC, and by
the general state of the PRC economy.

The Companys operations in the PRC are subject to special
considerations and significant risks not typically associated with companies in
North America and Western Europe. These include risks associated with, among
others, the political, economic and legal environment and foreign currency
exchange. The Companys results may be adversely affected by changes in the
political and social conditions in the PRC, and by changes in governmental
policies with respect to laws and regulations, anti-inflationary measures,
currency conversion, remittances abroad, and rates and methods of taxation,
among other things.

Exchange Risk

The Company cannot guarantee that the current exchange rate
will remain steady. Therefore, there is a possibility that the Company could
post the same amount of profit for two comparable periods and because of a
fluctuating exchange rate actually post higher or lower profit depending on the
exchange rate of RMB converted to U.S. dollars on the date. The exchange rate
could fluctuate depending on changes in the political and economic environments
without notice.

Recent Accounting Pronouncements

The following is a list of recent accounting pronouncements
summarized below:

|- | In April 2010, the FASB issued Accounting
      Standards Update 2010-13 (ASU 2010-13), "CompensationStock Compensation (Topic 718)."
      This Update provides amendments to Topic 718 to clarify that an employee
      share-based payment award with an exercise price denominated in the
      currency of a market in which a substantial portion of the entitys equity
      securities trades should not be considered to contain a condition that is
      not a market, performance,or service condition.
      Therefore, an entity would not classify such an award as a liability if it
      otherwise qualifies as equity. The amendments in ASU 2010-13 are effective
      for fiscal years, and interim periods within those fiscal years, beginning
      on or after December 15, 2010. The provisions of ASU 2010-13 are not
      expected to have a material effect on the Companys consolidated financial
      statements.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

|- | In March 2010, the FASB issued Accounting
      Standards Update 2010-11 (ASU 2010-11), "Derivative and Hedging (Topic
      815)." All entities that enter into contracts containing an embedded
      credit derivative feature related to the transfer of credit risk that is
      not only in the form of subordination of one financial instrument to
      another will be affected by the amendments in this Update because the
      amendments clarify that the embedded credit derivative scope exception in
      paragraph 815-15-15-8 through 15-9 does not apply to such contracts. ASU
      2010-11 became effective at the beginning of the reporting entity's first
      fiscal quarter beginning after June 15, 2010. The provisions of ASU
      2010-11 did not have a material effect on the Companys consolidated
      financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|- | In February 2010, the FASB issued Accounting
      Standards Update 2010-10 (ASU 2010-10), "Consolidation (Topic 810)." The
      amendments to the consolidation requirements of Topic 810 resulting from
      the issuance of Statement 167 are deferred for a reporting entity's
      interest in an entity (1) that has all the attributes of an investment
      company or (2) for which it is industry practice to apply measurement
      principles for financial reporting purposes that are consistent with those
      followed by investment companies. An entity that qualifies for the
      deferral will continue to be assessed under the overall guidance on the
      consolidation of variable interest entities in Subtopic 810-10 (before the
      Statement 167 amendments) or other applicable consolidation guidance, such
      as the guidance for the consolidation of partnerships in Subtopic 810-20.
      The deferral is primarily the result of differing consolidation
      conclusions reached by the International Accounting Standards Board
      ("IASB") for certain investment funds when compared with the conclusions
      reached under Statement 167. The deferral is effective as of the beginning
      of a reporting entity's first annual period that begins after November 15,
      2009, and for interim periods within that first annual reporting period,
      which coincides with the effective date of Statement 167. Early
      application is not permitted. The provisions of ASU 2010-10 became
      effective for the Company beginning in 2010. The adoption of ASU 2010-10
      did not have a material impact on the Companys consolidated financial
      statements.

A variety of proposed or otherwise potential accounting
standards are currently under study by standard-setting organizations and
various regulatory agencies. Due to the tentative and preliminary nature of
those proposed standards, management has not determined whether implementation
of such proposed standards would be material to the consolidated statements.

NOTE 3  INVENTORIES

As of March 31, 2011 and December 31, 2010, inventories
consisted of the following:

|                |   | March 31,2011 |  |   | December 31,2010 | 
|--------------- | - | ------------- |  | - | ---------------- | 
|                |   | (Unaudited)   |  |   |                  | 
|Raw Materials   | $ | 5,128,315     |  | $ | 561,765          | 
|Work in process |   | 1,625,418     |  |   | -                | 
|Finished Goods  |   | 1,118,957     |  |   | 1,796,413        | 
|Total           | $ | 7,872,690     |  | $ | 2,358,178        | 

11

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NOTE 4  TAXES

As of March 31, 2011 and December 31, 2010, taxes payable was
comprised of the following:

|                                   |   | March 31,2011 |  |   | December 31,2010 | 
|---------------------------------- | - | ------------- |  | - | ---------------- | 
|                                   |   | (Unaudited)   |  |   |                  | 
|VAT and consumption taxes payable  | $ | 1,472,818     |  | $ | 1,559,370        | 
|Income taxes payable               |   | 1,179,417     |  |   | 1,278,835        | 
|Local and municipal taxes and fees |   | 147,378       |  |   | 140,430          | 
|                                   | $ | 2,799,613     |  | $ | 2,978,635        | 

(a) Corporation Income Tax (CIT)

The Company adopted ASC Topic 740 Income taxes and use
liability method to accounts for income taxes.

The Company is registered in the State of Delaware and has
operations in primarily two tax jurisdictions; the PRC and the United States.
For certain operations in the U.S., the Company has incurred net accumulated
operating losses for income tax purposes. The Company believes that it is more
likely than not that these net accumulated operating losses will not be utilized
in the future. Therefore, the Company has provided full valuation allowance for
the deferred tax assets arising from the losses at these locations as of March
31, 2011. Accordingly, the Company has no net deferred tax assets.

The provision for income taxes from continuing operations on
income consists of the following for the three month periods ended March 31,
2011 and 2010:

|                               |   | Three months ended March 31, | 
|------------------------------ | - | ---------------------------- | 
|                               |   | 2011                         | 
|                               |   | (Unaudited)                  | 
|Current income tax expense     |   |                              | 
|US Federal                     | $ | -                            | 
|US State                       |   | -                            | 
|PRC current income tax expense |   | 1,108,176                    | 
|Total Provision for Income Tax | $ | 1,108,176                    | 

On March 16, 2007, the National Peoples Congress of China
approved the new Corporate Income Tax Law of the Peoples Republic of China (the
New CIT Law), which was effective from January 1, 2008.

In accordance with the New CIT Law, enterprises established
under the laws of foreign countries or regions and for which the place of
effective management is located within the PRC territory are considered PRC
resident enterprises and subject to the PRC income tax at the rate of 25% on
worldwide income. The definition of place of effective management" refers to an
establishment that exercises, in substance, overall management and control over
the production and business, personnel, accounting and properties of an
enterprise. As of March 31, 2011, no detailed interpretation or guidance had
been issued to define place of effective management. Furthermore, as of March
31, 2011, the administrative practice associated with
interpreting and applying the concept of “place of effective management” was unclear. If the Company’s non-PRC incorporated entities are deemed PRC tax residents, such entities would be subject to PRC tax under the New CIT Law. The
Company has analyzed the applicability of this law, as of March 31, 2011 and December 31, 2010, the Company has not accrued for PRC tax on such basis. The Company will continue to monitor changes in the interpretation or guidance of this law.

12

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NOTE 4  TAXES (CONTINUED)

Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a “more likely than not” threshold. Otherwise, these tax benefits are recorded when a tax position has
been effectively settled, which means that the statute of limitation has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains open. Interest and penalties related to uncertain tax
positions are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized.

The Company has not provided deferred taxes on unremitted earnings attributable
to international companies that have been considered to be reinvested
indefinitely. These earnings relate to ongoing operations. Because of the
availability of U.S. foreign tax credits, it is not practicable to determine the
income tax liability that would be payable if such earnings were not
indefinitely reinvested.

The New CIT Law also imposes a 10% withholding income tax, subject to reduction based on tax treaties where applicable, for dividends distributed by a foreign-invested enterprise to its immediate holding company outside China. Such dividends were
exempted from PRC tax under the previous income tax law and regulations. Foreign-invested enterprises became subject to the withholding tax starting January 1, 2008. There were no dividends distributed by any subsidiaries of the Company during the
three month periods ended March 31, 2011 and 2010.

(b) Value Added Tax (“VAT”)

Enterprises or individuals who sell commodities, engage in repair and maintenance or engage in the import or export of goods in the PRC are subject to a value-added tax in accordance with Chinese laws. The VAT standard rate is 17% of the gross sale
price. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished products can be used to offset the VAT due on the sales of the finished products.

The VAT payable balances of $1,286,701 and $1,028,441 at March 31, 2011 and December 31, 2010, respectively, were included in taxes payable in the accompanying condensed consolidated balance sheets.

NOTE 5 – RELATED PARTY TRANSACTION

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered
to be related if they are subject to common control or common significant influence. The due from/to related parties represented the advances from or to the Company’s shareholders. Such advances are non-interest bearing, unsecured and due upon
demand. As of March 31, 2011 and December 31, 2010, the Company had amounts due to related party of $0 and $519,381, respectively.

NOTE 6 – SEGMENT REPORTING

The Company follows FASB ASC Topic 280, Segment Reporting, which requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and evaluating their performance. Reportable operating
segments include components of an entity about which separate financial information is available and which operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be
allocated to the segment and assess each operating segment’s performance. The Company has determined that it has two segments. The Company’s principal businesses are buying and selling brewer’s malts, and the production and
distribution of beers. Based on its various operating activities, the Company’s reportable segments were as follows:

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NOTE 6  SEGMENT REPORTING (CONTINUED)

|                                  |   | As of and for the three month periods ended March 31, 2011
      (Unaudited) | 
|--------------------------------- | - | ---------------------------------------------------------------------------- | 
|                                  |   | Malt                                                                         | 
|Revenues                          | $ | 16,451,979                                                                   | 
|Depreciation and amortization     |   | 122,263                                                                      | 
|Interest income                   |   | 1,426                                                                        | 
|Interest expense                  |   | -                                                                            | 
|Income tax expense                |   | 825,555                                                                      | 
|Segment net income/(loss)         |   | 1,802,734                                                                    | 
|Segment assets                    |   | 14,163,671                                                                   | 
|Expenditure for segment plant and |   |                                                                              | 
|equipment and intangible assets   | $ | -                                                                            | 

|                                                                        |   | As of and for the three month periods ended March 31,
      2010(Unaudited) | 
|----------------------------------------------------------------------- | - | --------------------------------------------------------------------------- | 
|                                                                        |   | Malt                                                                        | 
|Revenues                                                                | $ | 2,992,241                                                                   | 
|Depreciation and amortization                                           |   | 117,817                                                                     | 
|Interest income                                                         |   | 9,424                                                                       | 
|Interest expense                                                        |   | 57,379                                                                      | 
|Income tax expense                                                      |   | 46,070                                                                      | 
|Segment net income/(loss)                                               |   | 380,382                                                                     | 
|Segment assets                                                          |   | 11,940,440                                                                  | 
|Expenditure for segment plant and equipment and intangible
      assets | $ | -                                                                           | 

NOTE 7  OPERATING RISK

Country risk

Currently, the Companys revenues are mainly derived from sales
in the PRC. The Company hopes to expand its operations in the PRC, however,
there are no assurances that the Company will be able to achieve such an
expansion successfully. Therefore, a downturn or stagnation in the economic
environment of the PRC could have a material adverse effect on the Companys
financial condition.

Products risk

The Company competes with larger companies that have greater
funds available for expansion, marketing, research and development and the
ability to attract more qualified personnel. There can be no assurance that the
Company will remain competitive with larger competitors.

Exchange risk

The Company cannot guarantee that the current exchange rate
will remain steady, therefore there is a possibility that the Company could post
the same amount of profit for two comparable periods and because of a
fluctuating exchange rate actually post higher or lower profit depending on the
exchange rate of PRC Renminbi (RMB) converted to U.S. Dollars on that date. The
exchange rate could fluctuate depending on changes in the political and economic
environments without notice.

Political risk

Currently, the PRC is in a period of growth and is openly
promoting business development in order to bring more business into the PRC.
Additionally, the PRC allows a PRC corporation to be owned by a United
States corporation. If the laws or regulations are changed by the PRC government, the Company’s ability to operate in the PRC could be affected.

Key personnel risk

The Company’s future success depends on the continued services of the Company’s executive management in China. The loss of any of their services would be detrimental to the Company and could have an adverse effect on business
development. The Company does not currently maintain key-man insurance on their lives. Future success is also dependent on the ability to identify, hire, train and retain other qualified managerial and other employees. Competition for these
individuals is intense and increasing.

NOTE 8 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events for purposes of recognition or disclosure up through the date the financial statements were issued, and has determined that there were no significant subsequent events to recognize or disclose in these
consolidated financial statements.

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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------------

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. We use words such as believe, expect, anticipate, project,
target, plan, optimistic, intend, aim, will or similar expressions
which are intended to identify forward-looking statements. Such statements
include, among others, those concerning market and industry segment growth and
demand and acceptance of new and existing products; any projections of sales,
earnings, revenue, margins or other financial items; any statements of the
plans, strategies and objectives of management for future operations; any
statements regarding future economic conditions or performance; as well as all
assumptions, expectations, predictions, intentions or beliefs about future
events. You are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, as well as
assumptions, which, if they were to ever materialize or prove incorrect, could
cause the results of the Company to differ materially from those expressed or
implied by such forward-looking statements.

Readers are urged to carefully review and consider the various
disclosures made by us in this report and our other filings with the SEC. These
reports attempt to advise interested parties of the risks and factors that may
affect our business, financial condition and results of operations and
prospects. The forward-looking statements made in this report speak only as of
the date hereof and we disclaim any obligation, except as required by law, to
provide updates, revisions or amendments to any forward-looking statements to
reflect changes in our expectations or future events.

During the period from our formation in 1996 to 2004, we were
in an unrelated business that was discontinued in 2004. From 2004 to September
24, 2010, we did not generate any significant revenue, and accumulated no
significant assets, as we explored various business opportunities. On September
24, 2010, in exchange for a controlling interest in our publicly-held shell
corporation, we acquired all of the issued and outstanding capital stock of
Tsingyuan Holding. This transaction is commonly referred to as a reverse
acquisition. For financial reporting purposes, Tsingyuan Holding was considered
the acquirer in such transaction. As a result, our historical financial
statements for all periods prior to September 24, 2010 included in this report
are those of Tsingyuan Holding, its subsidiaries and companies in which it has a
controlling financial interest through contractual agreements, Linyi Malt and
Qingyuan Beer. Effective as of September 30, 2010, our board of directors
resolved to change our fiscal year end from March 31 to December 31.

Use of Terms

Except where the context otherwise requires and for the
purposes of this report only:

- the Company, we, us, and our refer to the combined business of
  Tsingyuan Brewery Ltd., a Delaware corporation, and its consolidated
  subsidiaries;
- Linyi Malt refers to Linyi Hengchang Brewers Malt Co., Ltd., a PRC
  limited company;
- Qingyuan Beer refers to Shandong Qingyuan Beer Co., Ltd., a PRC limited
  company;
- Tsingyuan Holding refers to Tsingyuan Holding, Inc., a Delaware
  corporation;
- Hong Kong refers to the Hong Kong Special Administrative Region of the
  Peoples Republic of China;
- PRC and China refer to the Peoples Republic of China;
- SEC refers to the Securities and Exchange Commission;
- Exchange Act refers the Securities Exchange Act of 1934, as amended;
- Securities Act refers to the Securities Act of 1933, as amended;
- Renminbi and RMB refer to the legal currency of China; and
- U.S. dollars, dollars and $ refer to the legal currency of the
  United States.

15

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Overview of our Business

We are principally engaged in the production and distribution of brewer’s malt and beer products in the PRC. Currently, we manufacture various types of malt products from a wide variety of domestic and imported barleys. Our malts are either
used in the production of our own beer products or are sold on a wholesale basis to other breweries through our direct sales force. Most of our third-party malt sales involve malts that are made to meet our customers’ specifications on a
custom basis. At December 31, 2010, our beer line included eight full-flavored, affordably priced beers that are marketed under the “Qinglin,” “Qingyi” or “Qingyuan” trade names to middle-class consumers in
second- and third-tier cities throughout northern and eastern China. Our malt and beer production facilities, which are located in Shandong Province in the PRC, have an aggregate annual malt processing capacity of approximately 120,000 metric tons,
based upon two 8-hour shifts each working day, and an aggregate annual beer processing capacity of approximately 200,000 metric tons, based upon 20 hours each working day.

We started our malt business in 2004, one year prior to the commencement of our beer business. Since the beer market has been robust in China, malt demand has increased in recent years. Shandong, the province in which our two companies in which we
have a controlling financial interest through contractual agreements are located, is the largest beer production province in the PRC. We believe most of middle- and small-sized breweries in China prefer to use the products of local malt
manufacturers due to the lower transportation costs associated with such purchases. After several years of our marketing and sales efforts, we believe we have established strong relationships with many of our malt customers and have established a
solid distribution network for our malt products. We intend to support and grow the existing market for our malt products through increased marketing and sales efforts in the provinces in which we currently sell such products and by commencing our
marketing and sales efforts in neighboring provinces. We also intend to add new malt products to our malt product catalog to help our customers meet the rapidly-growing demand for alternative types of beers in the PRC and to give us a competitive
advantage in the marketplace by offering alternative malt products that are not available from competitive malt suppliers. As we add new malt products, we may adjust our product offerings to reduce our investment in certain lower-profit malt
products. We also intend to focus on improving our malt production processes in an effort to continue to improve our production quality controls and to reduce production costs.

Our plan for growth of our beer segment targets the most underserved portion of the rapidly-growing Chinese middle class. While the newer high-end entrants to the beer market in the PRC and the importers focus on the largest cities in China, we are
focused on the second and third-tier cities, as well as small towns that are within the Chinese industrial and technology zone and so are sharing in the growing prosperity of China. We believe the middle-class population of the smaller cities has
recently been shifting their consumption pattern from drinking low-priced beer to affordably priced but higher-quality beer as a result of the recent increases in their disposable income. In many of these areas, our beers are among the few available
beers that are crafted from top-quality raw materials using advanced brewing technology, while remaining priced at a level affordable for everyday consumption. We believe our wholesalers and distributors are generally pleased by our
“alternative market” focus, as their marketing efforts can be more effective in areas in which they do not face the intense marketing pressure common in Beijing, Guangzhou and other major metropolitan areas.

While we started our beer business in 2005, it took us approximately two years to build up our branding in the market and, as a result, our production in commercial quantities only started in early 2007. Since we started producing beer in 2007, our
beer production capacity has exceeded our bottling capacity, which has had an adverse impact on our ability to maximize our beer sales. As we mentioned above, our beer production facilities have been designed for a maximum production capacity of
200,000 metric tons per year, based upon 20 hours each working day and a seven-day work week. Our first bottling line commenced operation in February 2007 with an annual bottling capacity of 37,000 metric tons, assuming 10 working months per year, a
5-day work week and two 8-hour shifts per day. In January 2010, we added a second bottling line, which increased our annual bottling capacity to 83,000 metric tons and in October 2010, we added our first canning line, which increased our bottling
capacity to 98,000 metric tons. Based upon the anticipated increase in our beer sales and product mix, we intend to continue to expand our bottling and canning capacity, and in 2011, we intend to add an additional beer bottling line to increase our
bottling capacity to 160,000 metric tons.

Our revenue has increased significantly in recent years, from $8.0 million in 2008 to $52.3 million in 2010, which represented a compound annual revenue growth rate of 339% during 2010 and cumulative growth of 554% from 2008 to 2010. In
2010, sales of our malt products represented 65% and our beer products represented 35% of our net revenues compared to 75% and 25%, respectively, in 2009. In 2010, we produced 74,843 metric tons of malt products and 74,736 metric tons of beer
products compared to 18,214 metric tons and 13,122 metric tons, respectively, in 2009. Over the next few years, we expect our revenue growth to be driven primarily by increases in sales of our beer products and that sales of our beer products will
represent an increasing percentage of our net revenues during such periods. To increase our beer sales, we intend to expand our beer bottling and canning
facilities and to consider acquisition opportunities in the beer industry to
increase our beer production capacity and our annual yield to meet what we
believe will be increasing customer demand for our products.

16

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Recent Developments

None

First Quarter Financial Performance Highlights

We experienced strong growth in revenues, gross profit, and net
income, primarily as a result of the rapid growth in our production and sales
volume. The following summarizes certain key financial information for the first
quarter of 2011:

- Revenue: Revenue was $21.1 million for the three months
  ended March 31, 2011, an increase of $17.2 million, or 441%, from $3.9 million
  for the same period last year.
- Gross Profit and Margin: Gross profit was $4.2 million for
  the three months ended March 31, 2011, an increase of $3.5 million, or 500%,
  from $0.7 million for the same period last year. Gross margin was 20% for the
  three months ended March 31, 2011 as compared to 17% for the same period last
  year, a 3% increase.
- Net Income:Net income was $2.6 million for the three months
  ended March 31, 2011, an increase of $2.1 million, or 420%, from $0.5 million
  for the same period of last year.
- Fully diluted net income per share: Fully diluted net income
  per share for the three months ended March 31, 2011 was $0.02, as compared to
  $0.00 for the same period last year.

Results of Operations

Comparison of Three Months Ended March 31, 2011 and March
31, 2010

The following table shows key components of our results of
operations during the three months ended March 31, 2011 and 2010, in both
dollars and as a percentage of our total sales.

|                                             |   | Three Months Ended |  |  | Three Months Ended | 
|-------------------------------------------- | - | ------------------ |  |  | ------------------ | 
|                                             |   | March 31, 2011     |  |  | March 31, 2010     | 
|                                             |   |                    |  |  | Percent of         | 
|                                             |   | Dollars            |  |  | Revenues           | 
|Revenues                                     | $ | 21,077,475         |  |  | 100%               | 
|Cost of goods sold                           |   | 16,850,631         |  |  | 80%                | 
|Gross profit                                 |   | 4,226,844          |  |  | 20%                | 
|Selling and marketing expenses               |   | 323,647            |  |  | 2%                 | 
|General and administrative expenses          |   | 494,109            |  |  | 2%                 | 
|Net income from operations                   |   | 3,409,088          |  |  | 16%                | 
|Other income (expenses)                      |   |                    |  |  |                    | 
|Interest expense                             |   | -                  |  |  | 0%                 | 
|Interest income                              |   | 1,426              |  |  | 0%                 | 
|Other income(expenses)                       |   | 281,263            |  |  | 1%                 | 
|Net other income (expenses)                  |   | 282,689            |  |  | 1%                 | 
|Net income before provision for income taxes |   | 3,691,777          |  |  | 17%                | 
|Provision for income taxes                   |   | 1,108,176          |  |  | 5%                 | 
|Net income                                   |   | 2,583,601          |  |  | 12%                | 
|Foreign currency translation adjustment      |   | 142,614            |  |  | 1%                 | 
|Comprehensive income                         | $ | 2,726,215          |  |  | 13%                | 

Revenues. Our revenues are mainly generated from
sales of our malt products. Our revenues increased $17.2 million, or 441%, to
$21.1 million for the three months ended March 31, 2011 from $3.9 million during
the same period in 2010.

17

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1) Revenue from sales of malt:

The increase in revenues was primarily due to increased sales volume of our malt products. The pricing of our malt products is based primarily on the pricing of its principal raw material, barley. Since our malt is manufactured based on our
customers’ specifications, our customers may adjust their selection of barley in the event they see fluctuations in the prices of certain types of barley or the prices of barley grown in certain locations. It is also because: 1) The volume of
malt we sold in the first quarter of 2011 increased significantly from 7,006 tons in the first quarter of 2010 to that of 28,006 tons in the first quarter of 2011. 2) The sales unit price increased: The company R&D team develops some new type
of
malt with higher sales unit price so that it increased the total average unit price and the total sales. 
For the three months ended March 31, 2011, the sales of the new malt accounted
for 19.76% of the total malt sales.

2) Revenue from sales of beer:

We also experienced increases in sales of our beer products resulting from the effects of our increased bottling capacity. As discussed above, in January 2010, we added our second complete bottling line, which increased our maximum bottling capacity
from 37,000 metric tons to 83,000 metric tons per annum, and in October 2010, we added our first complete canning line, which further increased our bottling capacity to 98,000 metric tons. The increase in our bottling capacity has allowed us to
increase both the number of beer distributors to which we sell our beer products and the geographical reach of our target market for that segment. It is also because: 1) The volume of beer we sold in the first quarter of 2011 increased significantly
from 3,600 tons in the first quarter of 2010 to that of 15,267 tons in the first quarter of 2011. 2). our beer revenues also increased in the first quarter of 2011 due to increased sales of higher priced beer products.

Cost of goods sold. Our cost of goods sold includes the direct costs of our raw materials as well as the cost of labor and overhead. Our cost of goods sold increased $13.7 million, or 428%, to $16.9 million in the three months
ended March 31, 2011, from $3.2 million for the three months ended March 31, 2010. The cost of malt sales increased $11 million, or 451%, to $13.5 million for the three months ended March 31, 2011, from $2.5 million for the three
months ended March 31, 2010. The cost of beer sales increased $2.6 million, or 337%, to $3.4 million for the three months ended March 31, 2011, from $0.8 million for the three months ended March 31, 2010. The increase in cost of goods
sold was generally in line with our increased sales volume and revenues. As a percentage of revenues, our cost of goods sold decreased from 83% in the three months ended March 31, 2010 to 80% in the three months ended March 31, 2011.

Gross profit. Our gross profit is equal to the difference between
our revenue and our cost of goods sold. Our gross profit increased $3.6 million,
or 529%, to $4.2 million in the three months ended March 31, 2011, from $0.67
million for the three months ended March 31, 2010. The gross profit of malt
sales increased $2.4 million, or 446%, to $3 million for the three months ended
March 31, 2011, from $0.5 million for the three months ended March 31, 2010. The
gross profit of beer sales increased $1.14 million, or 873%, to $1.27 million
for the three months ended March 31, 2011, from $0.13 million for the three
months ended March 31, 2010. The total gross margin increased 3%, to 20% for the
three months ended March 31, 2011, from 17% for the three months ended March 31,
2010. This increase gross margin was because the increased total revenue of malt
sales and beer sales combined with a increase in the gross margin of beer sales
to 27% for the three months ended March 31, 2011, from 15% for the three
months ended March 31, 2010 while the gross margin of malt sales remained the
same as 18% for the three months ended March 31, 2011 and 2010. Such increase
was generally in line with our increased sales volume and revenues. Gross profit
as a percentage of revenue was 20% and 17% for three months ended March 31, 2011
and 2010, respectively.

Selling and marketing expenses. Our selling and marketing expenses consist primarily of compensation and benefits to our sales and marketing staff, sales commission, cost of advertising, promotion, business travel, after-sale support,
transportation costs and other sales related costs. Our selling and marketing expenses increased $0.32 million, or 4206%, to $0.32 million in the three months ended March 31, 2011, from $7,608 during the same period in 2010. Such
increase was largely attributable to 1): the continuation of our new marketing strategy of providing free beer tastings and complimentary beers in conjunction with our beer sales efforts in order to assist our distributors in obtaining greater
market share. 2) Moreover, the addition of 20 sales persons to our beer segment in the first quarter of 2011 and the development of more distributors in the provinces adjoining Shandong province in 2010 continued to increase our salary, travel and
social networking expenses. 3) The advertisement expense of beer products increased significantly because the company start to promote products in nationwide media much more actively in the first quarter of 2011 than that of 2010. 4). In the first
quarter of 2011, the company start promotion to deliver malt products to customers who are close to the company so that the freight cost and dispatching fees increased $158,023 and $11,760 respectively in first quarter of 2011 than that of
first quarter of 2010.

General and administrative expenses. General and administrative expenses consist primarily of compensation and benefits to our general management, finance and administrative staff, professional advisor fees, bad debts reserve and other
expenses incurred in connection with general operations. Our general and administrative expenses increased $0.48 million, or 3855%, to $0.49 million in the three months ended March 31,
2011, from $12,451 during the same period in 2010. Such increase was
attributable to the number of management personnel increased significantly due
to our business expansion.

18

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Interest expense.Interest expense
decreased $57,379, or 100%, to $nil for the three months ended March 31, 2011,
from $57,379 during the same period in 2010. The difference in interest expense
was primarily due to the repayments of short-term bank loans in the first
quarters of 2011.

Other Income and Expense.Other income and
expense increased $326,879, to $281,263 for the three months ended March 31,
2011, from negative $45,634 during the same period in 2010. The difference in
other income and expense was primarily due to the increased sales of the
by-product.

Income before Income Taxes. Our income before
income taxes increased $3.1 million, or 554%, to $3.7 million in the three
months ended March 31, 2011, from $0.56 million during the same period in 2010,
as a result of the factors described above.

Income Taxes. Our income tax provisions increased
$1.06 million, or 2305%, to $1.1 million in the three months ended March 31,
2011, from $46,070 during the same period in 2010 due to our increase in
revenues.

Net Income. As a result of the factors described
above, we generated a net income of $2.58 million in the three months ended
March 31, 2011, an increase of $2.07 million, or 404%, from $0.51 million during
the same period in 2010.

Segment Information

We operate in two business segments: malt products and beer
products.

Our malt products segment is involved primarily in the
production of malt from domestic barleys grown in the PRC and imported barleys
from Australia, Canada and France. Our malt products segment markets its
products domestically to brewers located in Hebei, Guangdong and Shandong
provinces in the PRC. It also sells its products to Qingyuan Beer, a brewer that
we control.

Our beer product segment is involved primarily in the
production of full-flavored, medium-priced beer. Our beer products are marketed
under the Qinglin, Qingyi or Qingyuan trade names to middle-class
consumers in second- and third-tier cities throughout northern and eastern
China.

The following tables set forth our revenues, sales in metric
tons, operating income and production in metric tons by segment for the fiscal
years ended March 31, 2011 and 2010 and the percentage increases for each
segment between fiscal periods.

|              |   | **Sales by
      Segment**     | 
|------------- | - | ------------------------------ | 
|              |   | **(U.S. dollars in millions)** | 
|              |   | Three month Ended              | 
|              |   | March 31,                      | 
|              |   | 2011                           | 
|Malt Products | $ | 16.5                           | 
|Beer Products |   | 4.6                            | 
|Total         | $ | 21.1                           | 

|              |  | Sales by Segment  | 
|------------- |  | ----------------- | 
|              |  | (in metric tons)  | 
|              |  | Three month Ended | 
|              |  | March 31,         | 
|              |  | 2011              | 
|Malt Products |  | 28,006            | 
|Beer Products |  | 15,267            | 
|Total         |  | 43,273            | 

19

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Operating Income by Segment(U.S. dollars in millions)Operating MarginThree month Ended
    
    
    
    
    
    Three month EndedMarch 31,
    
    
    Change
    
    
    March 31,2011
    
    
    **2010**
    
    
    
    
    
    2011
    
    
    2010Malt Products
    $
    2.4
    
    $
    0.5
    
    $
    1.9
    
    
    16%
    
    
    16%Beer Products
    
    1.1
    
    
    0.1
    
    
    1.0
    
    
    24%
    
    
    15%Total
    $
    3.5
    
    $
    0.6
    
    $
    2.9
    
    
    18%
    
    
    16%


|              |  | Production by Segment | 
|------------- |  | --------------------- | 
|              |  | (in metric tons)      | 
|              |  | Three month Ended     | 
|              |  | March 31,             | 
|              |  | 2011                  | 
|Malt Products |  | 30,018                | 
|Beer Products |  | 16,036                | 
|Total         |  | 46,054                | 

Liquidity and Capital Resources

As of March 31, 2011, we had cash and cash equivalents of
approximately $75,051, The following table provides a summary of our net cash
flows from operating, investing, and financing activities.

|Cash Flow                                                
|---------------------------------------------------------
|                                                         
|                                                         
|                                                         
|Net cash provided by operating activities                
|Net cash used in investing activities                    
|Net cash provided by (used in) financing
      activities
|Effects of exchange rate change in cash                  
|Net decrease in cash and cash equivalents                
|Cash and cash equivalents at beginning of the period     
|Cash and cash equivalent at end of the
      period      

Operating Activities

Net cash provided by operating activities was $1.66 million for
the three months ended March 31, 2011, as compared to $1.9 million net cash
provided by operating activities for the same period in 2010, a decrease of
$0.24 million. The decrease in net cash provided by operating activities was
primarily attributable to  a
$5.48 million increase in inventory, and a $0.20 million decrease in taxes payable
in 2011 as compared to 2010.

Investing Activities

Net cash used in investing activities for the three months
ended March 31, 2011 was $5.22 million, as compared to $nil million net cash
used in investing activities during the same period in 2010. The increase in net
cash used in investing activities was mainly attributable to the $5.22 million
purchase and advances for plant and equipment.

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Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2011 was $2.52 million, as compared to $4.96 million net cash used in financing activities during the same period in 2010. The increase in net cash provided by
financing activities was mainly attributable to the $2.52 million increase of due from a shareholder.

Capital Expenditures

Our principal sources of liquidity include cash from operations and, in prior fiscal years, borrowings from local commercial banks. We believe that we have sufficient cash on hand and positive projected cash flow from operations to support our
operating requirements and anticipated capital expenditures over the next 12 months, other than the construction of our new bottling line. To expand our operations, including our planned construction of an additional bottling line, we may seek
additional financing, which may include additional equity financings. There can be no assurance that any additional financing will be available on acceptable terms, if at all. Any equity financing may result in dilution to existing stockholders and
any debt financing may include restrictive covenants.

To date, we have financed our operations primarily through cash flows from operations, augmented in prior fiscal years by short-term bank loans. We believe that our cash on hand and cash flow from operations is sufficient to support our working
capital requirements and anticipated capital expenditures over the next 12 months, other than the construction of our new bottling line. To expand our operations, including our planned construction of an additional bottling line, or in the event of
changed business conditions, an implementation of our strategy to expand our marketing efforts and increase brand awareness, or acquisitions we may decide to pursue, we may require additional cash resources in the future. If our own financial
resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders.
The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable
to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

Capital Expenditure Commitments

The Company’s contractual obligations as of March 31, 2011 are US$ 4,094,319 for purchase and construction of a second package line. The package line will be completed by the end of June 2011 when most of the amount will be settled.

Inflation

Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price
changes in the Chinese economy and our industry and continually maintain effective cost controls in operations.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital
expenditures, or capital resources that are material to an investment in our securities.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. Our consolidated
financial statements include the financial statements of our company and our subsidiaries. All transactions and balances among our company and our subsidiaries have been eliminated upon consolidation. Certain amounts included in or affecting our
consolidated financial statements and related disclosures must be estimated, requiring us to make certain assumptions with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. These
estimates and assumptions affect the amounts we report for assets and liabilities and our disclosure of contingent assets and liabilities at the date of our financial statements. We routinely evaluate these estimates, utilizing historical
experience, consulting with experts and other methods we consider reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates. Any effects on our business, financial position or results of
operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

21

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Critical accounting policies are defined as those that are
reflective of significant judgments, estimates and uncertainties, and
potentially result in materially different results under different assumptions
and conditions. We believe the following are our critical accounting policies:

Principles of Consolidation

Pursuant to Accounting Standards Codification Topic 810,
Consolidation, Linyi Malt and Qingyuan Beer, as companies in which we have a
controlling financial interest through contractual agreements, have been
consolidated in our financial statements. Linyi Malt and Qingyuan Beers sales
are included in our total sales, their income from operations is consolidated
with ours, and our net income includes all of Linyi Malt and Qingyuan Beers net
income.

Based on the various contractual arrangements described in Item
1. Business  Our History and Corporate Structure  Relationships with
Tsingyuan Group and its Owners of our Annual Report on Form 10-K for the year
ended December 31, 2010 and our Quarterly Report on Form 10-Q for the three
months ended March 31, 2011, we are able to exercise control over the companies
in which we have a controlling financial interest through contractual agreements
and to obtain in full the economic benefits.

Estimate of the useful lives of property and equipment 
We must estimate the useful lives and residual values of our property and
equipment. We must also review property and equipment for possible impairment
whenever events and circumstances indicate that the carrying value of those
assets may not be recovered from the estimated future cash flows expected to
result from their use and eventual disposition. We recognized no impairments in
quarters ended March 31, 2011 and 2010.

Inventory  We value inventories at the lower of cost or
market value. We determine the cost of inventories using the weighted average
cost method and include any related production overhead costs incurred in
bringing the inventories to their present location and condition. We must
determine whether we have any excessive, slow moving, obsolete or impaired
inventory. We perform this review quarterly, which requires management to
estimate the future demand of our products and market conditions. We make
provisions on the value of inventories at period end equal to the difference
between the cost and the estimated market value. If actual market conditions
change, additional provisions may be required. In addition, we may write off
some provisions if we later sell some of the subject inventory.

Revenue recognition  Revenue from the sale of goods is
recognized on the transfer of risks and rewards of ownership, which generally
coincides with the time when the goods are shipped to customers and the title
has passed. We offer neither sales returns nor rebates to our customers, and our
revenue reflects our actual sales.

See Note 2. Summary of Significant Accounting Policies in
Part I. Item 1. Notes to Unaudited Condensed Consolidated Financial Statements
herein for a more complete discussion of the critical accounting policies and
estimates adopted in this report.

Recent Accounting Pronouncements

The following is a list of recent accounting pronouncements
summarized below:

|- | In April 2010, the FASB issued Accounting
      Standards Update 2010-13 (ASU 2010-13), "CompensationStock Compensation
      (Topic 718)." This Update provides amendments to Topic 718 to clarify that
      an employee share- based payment award with an exercise price denominated
      in the currency of a market in which a substantial portion of the entitys
      equity securities trades should not be considered to contain a condition
      that is not a market, performance,or service condition.
      Therefore, an entity would not classify such an award as a liability if it
      otherwise qualifies as equity. The amendments in ASU 2010-13 are effective
      for fiscal years, and interim periods within those fiscal years, beginning
      on or after December 15, 2010. We have implemented ASU 2010-13 and there
      was no material effect on the Companys condensed consolidated financial
      statements.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- | In March 2010, the FASB issued Accounting Standards
      Update 2010-11 (ASU 2010-11), "Derivative and Hedging (Topic 815)." All
      entities that enter into contracts containing an embedded credit
      derivative feature related to the transfer of credit risk that is not only
      in the form of subordination of one financial instrument to another will
      be affected by the amendments in this Update because the amendments
      clarify that the embedded credit derivative scope exception in paragraph
      815-15-15-8 through 15-9 does not apply to such contracts. ASU 2010-11
      became effective at the beginning of the reporting
      entity's first fiscal quarter beginning after June 15, 2010. We have
      implemented ASU 2010-11 and there was no material effect on the Companys
      condensed consolidated financial statements.                                                                     

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|- | In February 2010, the FASB issued Accounting
      Standards Update 2010-10 (ASU 2010-10), "Consolidation (Topic 810)." The
      amendments to the consolidation requirements of Topic 810 resulting from
      the issuance of Statement 167 are deferred for a reporting entity's
      interest in an entity (1) that has all the attributes of an investment
      company or (2) for which it is industry practice to apply measurement
      principles for financial reporting purposes that are consistent with those
      followed by investment companies. An entity that qualifies for the
      deferral will continue to be assessed under the overall guidance on the
      consolidation of variable interest entities in Subtopic 810-10 (before the
      Statement 167 amendments) or other applicable consolidation guidance, such
      as the guidance for the consolidation of partnerships in Subtopic 810-20.
      The deferral is primarily the result of differing consolidation
      conclusions reached by the International Accounting Standards Board
      ("IASB") for certain investment funds when compared with the conclusions
      reached under Statement 167. The deferral is effective as of the beginning
      of a reporting entity's first annual period that begins after November 15,
      2009, and for interim periods within that first annual reporting period,
      which coincides with the effective date of Statement 167. Early
      application is not permitted. We have implemented ASU 2010-10 beginning in
      2010. The adoption of ASU 2010-10 did not have a material impact on the
      Companys consolidated financial statements.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A variety of proposed or otherwise potential accounting
standards are currently under study by standard-setting organizations and
various regulatory agencies. Due to the tentative and preliminary nature of
those proposed standards, management has not determined whether implementation
of such proposed standards would be material to the consolidated statements.

ITEM 3.      QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4.      CONTROLS AND
PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act) that are designed to ensure that
information required to be disclosed in Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the SEC, and that such information is accumulated and
communicated to our management, including to our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.

As required by Rule 13a-15(e) under the Exchange Act, our
management has carried out an evaluation, with the participation and under the
supervision of our Chief Executive Officer, Mr. Dingyou Zhang, and Chief
Financial Officer, Mr. Mingxia Yuan, of the effectiveness of the design and
operation of our disclosure controls and procedures as of March 31, 2011. Based
upon, and as of the date of this evaluation, Messrs. Zhang and Yuan, determined
that, because of the material weaknesses described in Item 9A Controls and
Procedures of our Annual Report on Form 10-K for the year ended December 31,
2010,  which we are still in the process of remediating as of March 31, 2011,
our disclosure controls and procedures were not effective. Investors are
directed to Item 9A of our Annual Report on Form 10-K for the year ended
December 31, 2010 for the description of these weaknesses.

Changes in Internal Control over Financial Reporting

Remediation Plan for Material Weaknesses in Internal Control
over Financial Reporting

Based on the control deficiencies identified above, we have
designed and plan to implement, or in some cases have already implemented, the
specific remediation initiatives described below. Many of these measures are
entity-level in nature and we believe that the organizational and process
changes we have and intend to adopt will improve our internal controls and
governance environment. Management recognizes that many of these enhancements
require continual monitoring and evaluation for effectiveness that we are in the
process of doing and committed to continuing. The development of these actions
is an iterative process and will evolve as we continue to evaluate and improve
our internal controls over financial reporting.

23

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- We are evaluating the roles of our existing accounting personnel in an
  effort to realign the reporting structure of our internal auditing staff in
  China that will test and monitor the implementation of our accounting and
  internal control procedures.
- We will begin implementation of an initiative and training in China to
  ensure that the importance of internal controls and compliance with
  established policies and procedures is fully understood throughout the
  organization and will provide additional U.S. GAAP training to all employees
  involved with the performance of or compliance with those procedures and
  policies.
- We will increase our accounting and financing personnel resources by
  retaining more U.S. GAAP knowledgeable financial professionals.

These remediation efforts are designed to address the material
weaknesses identified above and to improve and strengthen our overall control
environment. We believe these actions will substantially decrease the
possibility of the occurrence of errors in our financial statements and minimize
the chances that the material weaknesses will reoccur. Our management, including
our Chief Executive Officer and Chief Financial Officer, does not expect that
disclosure controls or internal controls over financial reporting will prevent
all errors, even as the aforementioned remediation measures are implemented and
further improved to address any potential future deficiencies. The design of any
system of controls is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.

The implementation of our remediation plan will require
substantial expenditures, could take a significant period of time to complete,
and could distract our officers and employees from the operation of our
business.  Based on the above, as of March 31, 2011, the Company's internal
controls over financial reporting are not effective.

PART IIOTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits
and legal proceedings, which arise, in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these,
or other matters, may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will
have a material adverse affect on our business, financial condition or operating
results.

ITEM 1A.      RISK FACTORS.

Not Applicable.

ITEM 2.      UNREGISTERED SALES OF
EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.      DEFAULTS UPON SENIOR
SECURITIES.

None.

ITEM 4.      (REMOVED AND
RESERVED).

ITEM 5.      OTHER INFORMATION.

We have no information to disclose that was required to be in a
report on Form 8-K during the period covered by this report, but was not
reported. There have been no material changes to the procedures by which
security holders may recommend nominees to our board of directors.

24

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ITEM 6.      EXHIBITS.

The following exhibits are filed as part of this report or
incorporated by reference:

|Exhibit No. |  | Description                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                              
|31.1        |  | Certifications of Principal
      Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.                                                   
|31.2        |  | Certifications of Principal Financial Officer
      filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                         
|32.1        |  | Certifications of Principal
      Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|32.2        |  | Certifications of Principal Financial Officer
      furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.

25

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|Date: May 23, 2011 | TSINGYUAN BREWERY LTD.
|------------------ | ----------------------
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|                   | By:                   
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|                   | By:                   
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