U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549




Form
10-K/A


(Amendment
No. 1)




x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF
      1934




For the
fiscal year ended December 31, 2009




 ̈
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
transition period from ______________ to ________________





Commission
File Number: 001-32473




AMERICAN
DAIRY, INC.


(Exact
name of registrant as specified in its charter)




Utah
            90-0208758(State
      or other jurisdiction of Incorporation or
              organization)
            (I.R.S.
      Employer Identification No.)




Star
City International Building, 10 Jiuxianqiao Road, C-16th Floor


Chaoyang
District, Beijing, China 100016


(Address
of principal executive offices)




Registrant’s
telephone number, including area code: 86 (10) 6431-9357




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




Title
      of each class
            Name
      of each exchange on which registeredCommon
      Stock
            New
      York Stock Exchange, Inc.




Securities
registered under Section 12(g) of the Exchange Act:  None




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.    ̈  Yes  
x  No




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.    ̈  Yes   
x  No




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed pursuant to Section 13 or Section 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.     x  Yes   
 ̈ 
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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A or any amendment to
this Form 10-K/A.   ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition
of ”accelerated filer and large accelerated filer” in Rule 12b-2 of
the Exchange Act. (Check one):




Large
      accelerated filer  ̈
            Accelerated
      filer x
            Non-accelerated
      filer  ̈
            Smaller Reporting Company  ̈




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).    ̈  Yes  
x  No




The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant as of the last business day of the
registrant’s most recently completed second fiscal quarter, based upon the
closing sale price of the registrant’s common stock on June 30, 2009 as
reported on the NYSE, was approximately $267,000,000.




As of
April 26, 2010, there were 22,279,376 shares of the registrant’s
common stock outstanding.




DOCUMENTS
INCORPORATED BY REFERENCE




None









TABLE
OF CONTENTS




PART
      III
                    
                    3Item
      10.
                    
                    Directors,
      Executive Officers and Corporate Governance
                    
                    3Item
      11.
                    
                    Executive
      Compensation
                    
                    10Item
      12.
                    
                    Security
      Ownership of Certain Beneficial Owners and Management and Related
      Shareholder Matters
                    
                    16Item
      13.
                    
                    Certain
      Relationships and Related Transactions, and Director
      Independence
                    
                    18Item
      14.
                    
                    Principal
      Accountant Fees and Services
                    
                    18PART
      IV
                    
                    19Item
      15.
                    
                    Exhibits
      and Financial Statement Schedules
                    
                    19





In
this Annual Report on Form 10-K/A, references to “dollars” and “$” are to United
States dollars and, unless the context otherwise requires, references to
“American Dairy,” “we,” “us” and “our” refer to American Dairy, Inc. and its
consolidated subsidiaries.




2




EXPLANATORY
NOTE





We
are filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to our Annual
Report on Form 10-K for the year ended December 31, 2009, filed with the U.S.
Securities and Exchange Commission (the “SEC”) on March 16, 2010 (the “Original
Filing”), solely for the purpose of including the information required by Part
III of the Original Filing because we no longer intend to file our definitive
proxy statement within 120 days of the end of our fiscal year ended
December 31, 2009.  As required by Rule 12b-15 under the
Securities Exchange Act of 1934, as amended, new certifications by our Principal
Executive Officer and Principal Financial Officer are being filed as exhibits to
this Amendment under Item 15 of Part IV.  We are also making
conforming changes to the cover page and the Exhibit Index to this
Amendment.




Except
as described above, no other changes have been made to the Original Filing, and
all other Items of the Original Filing have been omitted from this
Amendment.  The Original Filing continues to speak as of the date of
the Original Filing, and we have not updated the disclosures contained therein
to reflect any events which occurred at a date subsequent to the filing of the
Original Filing other than as expressly indicated in this Amendment.
Accordingly, this Amendment should be read in conjunction with the Original
Filing and our other filings made with the SEC on or subsequent to March 16,
2010.




PART
III


Item
10.  Directors, Executive Officers and Corporate
Governance





Directors





The
following table sets forth the name and age of each member of our board of
directors, the positions and offices held by each director with us, and the
period during which the director has served as one of our
directors.  Directors serve until the election and qualification of
their successors.




Name
                    
                    Age
                    
                    Position
                    
                    Director SinceLeng You-Bin
                    
                    45
                    
                    Chairman, Chief Executive Officer, President, and General Manager
                    
                    2003Liu Hua
                    
                    37
                    
                    Vice Chairman, Secretary, Treasurer, and Director
                    
                    2003Liu Sheng-Hui
                    
                    39
                    
                    Vice President of Finance, Feihe Dairy, and Director
                    
                    2003Hui-Lan Lee,
      CPA
                    
                    60
                    
                    Director
                    
                    2003Kirk G. Downing, Esq.
                    
                    57
                    
                    Director
                    
                    2005James C. Lewis, Esq.
                    
                    57
                    
                    Director
                    
                    2006Neil
      N. Shen
                    
                    42
                    
                    Director
                    
                    2009





Leng
You-Bin has been our Chairman, Chief Executive Officer, President, and
General Manager since May 2003.  From January 2002 to May 2003, Mr.
Leng served as the Chief Executive Officer and President of American Flying
Crane Corporation. From 1997 to 2002, Mr. Leng served as the General Manager of
Heilongjiang Feihe Dairy Co., Limited, or Feihe Dairy, and he became the
Chairman and General Manager in 2000.  From 1989 to 1997, Mr. Leng
served as a technician, deputy director and director of Zhaoguang Dairy Plants,
the predecessor of Feihe Dairy.  Mr. Leng received a bachelor’s degree
in food engineering from Northeast Agriculture University, China and Shanghai
Light Industrial College and studied business administration at Beijing
University.  Mr. Leng has extensive executive experience with PRC
dairy companies and provides our board of directors with valuable insight
regarding our operations, the industry, and strategic vision.





Liu Hua
has been our Vice Chairman since April 2008, and he has also served as
Secretary, Treasurer, and a director since May 2003.  From May 2003 to
April 2008, Mr. Liu served as our Chief Financial Officer, Secretary, and
Treasurer.  From November 2000 to May 2003, Mr. Liu served as the
Financial Officer of Feihe Dairy.  From June 1998 to November 2000,
Mr. Liu served as the Chief Executive Officer of Shenzhen Cima Limited, a
financial consulting company.  From January 1996 to June 1998, Mr. Liu
served as Chief Executive Officer of Shensheng Jiajing Inc., a trading
company.  From September 1993 to January 1996, Mr. Liu served as the
Chief Executive Officer of Zhengzhou Huacheng Limited, a trading
company.  Mr. Liu received a bachelor’s degree in finance and
economics from Xian Jiaotong University and from Shenzhen
University.  Mr. Liu’s extensive finance, industry, and executive
experience provides our board of directors with a valuable resource in
understanding company operations and evaluating strategic
opportunities.




3




Liu
Sheng-Hui has been a director since May 2003, and he has also served as
Vice President of Finance of Feihe Dairy since August 2001.  From
January 2000 to May 2003, Mr. Liu served as Chief Financial Officer and a
director of American Flying Crane Corporation.  From September 1998 to
January 2000, Mr. Liu served as Chief Financial Officer at Feihe Dairy, where he
also served in a variety of business positions from July 1992 to September
1998.  Mr. Liu received a bachelor’s degree in economics from
Northeast Agriculture University, China, and an associate degree in accounting
from Country Cadre Institute under the Supervision of Ministry of Agriculture in
China.  Mr. Liu has extensive experience in the PRC dairy industry and
provides our board of directors with valuable insight regarding corporate
strategy and operations.





Hui-Lan (“Tracy”)
Lee has been a director since June 2003.  From April 2006 to
November 2008, Ms. Lee served as Vice President of Financial Reporting of
Countrywide Home Loans, Inc., a residential mortgage company, where she also
served as Vice President and Director of Income Tax Compliance from April 2003
to April 2006.  From October 1996 to March 2003, Ms. Lee served as Tax
Manager at Watson Pharmaceuticals, Inc., a specialty pharmaceutical
company.  From 1979 to 1996, Ms. Lee held a variety of management
positions with companies such as The Flying Tiger Line Inc., a large air cargo
company, Quotron Systems, Inc., a large supplier of equity data to the financial
community, and Lear Siegler, Inc., a conglomerate company in aerospace,
automotive, agriculture and other industries.  Ms. Lee holds a
bachelor’s degree in Business Administration from National Cheng-Kung
University, Taiwan, a Master of Science degree in Taxation from Golden Gate
University, and a Master of Business Administration from Indiana
University.  Ms. Lee’s extensive accounting, finance and tax experience
provides our board of directors with a valuable resource for evaluating public
company accounting matters, assessing and managing risks and planning for
corporate strategy.




Kirk G.
Downing has been a director since February 2005.  From December
1980 to the present, he has been practicing law in Los Angeles, California. From
January 1989 to June 1997, Mr. Downing also engaged in ranching, farming,
logging and property development.  Mr. Downing received a
bachelor’s degree in liberal arts from Portland State University and a Juris
Doctorate degree from Loyola Law School.  He is fluent in
Chinese.  Mr. Downing’s extensive business and legal experience
provides our board of directors with a valuable resource for assessing and
managing legal risks and planning corporate strategy.





James C.
Lewis has been a director since December 2006.  From 2006 to
the present, Mr. Lewis has been a partner in the law firm of Lewis, Hansen,
Waldo & Pleshe, in Salt Lake City, Utah.  From July 2002 to
September 2006, Mr. Lewis was involved in a number of private business ventures
and practiced law under the name James C. Lewis, L.C. in Salt Lake City,
Utah.  From 2000 to June 2002, Mr. Lewis was a member of the firm of
Jones, Waldo, Holbrook & McDonough, Salt Lake City, Utah.  From
1997 to 2000, Mr. Lewis was a partner in the firm of Lewis Law
Offices.  From 1993 to 1997, Mr. Lewis was a partner in the firm of
Diumenti & Lewis. From 1987 to 1992, he was a partner in the firm of Lewis
& Lehman. From 1979 to 1985, Mr. Lewis was an attorney with Kruse, Landa
& Maycock.  Mr. Lewis received a bachelor’s degree in psychology
from the University of Utah and a Juris Doctorate from the University of San
Diego.  Mr. Lewis’s legal and business expertise provides our board of
directors with a valuable resource for strategic planning and evaluating legal
matters.




4




Neil N.
Shen has been a director since August 2009. Mr. Shen is a founding
 and managing partner of Sequoia Capital China. Mr. Shen co-founded
Ctrip.com  International Ltd., or Ctrip, a large travel consolidator in
China, and  served as its chief financial officer from 2000 to October 2005
and as its  president from August 2003 to October 2005. He also co-founded
Home Inns and  Hotels Management, or Home Inns, a leading economy hotel
chain in China. Prior  to founding Ctrip and Home Inns, Mr. Shen had worked
for more than eight years  in the investment banking industry in New York
and Hong Kong. Currently, Mr. Shen is a co-chairman of Home Inns, a director of
Ctrip and a director of  E-House (China) Holdings Ltd., a NYSE-listed
leading real estate service company in China. He is also an independent director
of Focus Media Holding Ltd., a NASDAQ-listed media advertising company based in
China, China Nuokang Bio-pharmaceutical Pty., a NASDAQ-listed pharmaceutical
company in China, China Real Estate Information Corporation, a NASDAQ-listed
real estate services and information company based in China, and  PEAK
Sport products Co., Ltd., a HKEX-listed sports retail company in China.  He
also sits on the board of several private companies in China.  Mr. Shen
received his bachelor’s degree from Shanghai Jiao Tong University in China and
his master’s degree from the School of  Management at Yale University.
  Mr. Shen’s extensive finance and public company experience provides our
board of directors with a valuable resource for evaluating public company
accounting, finance, risk management and strategic matters.




Director
Independence





Our board
of directors has determined that Hui-Lan Lee, Kirk G. Downing, James C. Lewis,
and Neil N. Shen are each an independent director as defined by the listing
standards of the NYSE and SEC rules.  In making these determinations,
our board of directors has concluded that none of those members has a
relationship that, in the opinion of our board of directors, would interfere
with the exercise of independent judgment in carrying out the responsibilities
of a director.  Leng You-Bin, Liu Hua and Liu Sheng-Hui are not
considered independent because each serves as one of our executive
officers.





Executive
Session




The
independent members of our board of directors meet in executive session (without
the participation of executive officers or other non-independent directors) at
least twice annually or more frequently as requested by any two
directors.  The presiding director at the executive sessions is
designated by the independent directors on an annual
basis.  Interested persons may contact our independent directors by
sending written comments directed to the “Presiding Director” or “Non-Employee
Directors,” care of the Corporate Secretary to our principal executive
offices.  Our Corporate Secretary will deliver the unopened materials
forthwith to the presiding director or non-employee directors, as
applicable.





Board
Leadership Structure





In
accordance with our bylaws, our board of directors elects our officers,
including our Chief Executive Officer, President, Chief Financial Officer, and
such other officers as our board of directors may appoint from time to
time.  Our board of directors has not currently separated the
positions of Chairman of the Board and Chief Executive Officer, and You-Bin Leng
currently serves as our Chairman, Chief Executive Officer, President, and
General Manager.  Our board of directors does not believe that
separating these positions is necessary at this time in light of the composition
of our board of directors, the management team and our overall leadership
structure, the experience of Mr. Leng in overseeing our day-to-day business
while overseeing management, and our current business strategy.  Our
senior management has many relatively new members who benefit from interacting
with Mr. Leng on a regular basis, and Mr. Leng has managed the competing demands
for his time to effectively lead our board of directors.  Our Bylaws
and corporate governance guidelines do not require that our Chairman and Chief
Executive Officer positions be separate.  Our board of directors
periodically considers whether changes to our overall leadership structure are
appropriate.





The
Chairman of the Board is responsible for chairing meetings of our board of
directors. In his absence, the Chair of the Audit Committee or the independent
director present who has the most seniority chairs the meetings of our board of
directors.  The Chairman of the Board is also responsible for chairing
meetings of shareholders.




5




Board’s
Role in Risk Oversight





Risk is
inherent with every business, and how well a business manages risk can
ultimately determine its success. We face a number of risks, including strategic
risks, enterprise risks, financial risks, regulatory risks, and others.
Management is responsible for the day-to-day management of risks the company
faces, while our board of directors, as a whole and through its committees, has
responsibility for the oversight of risk management. In its risk oversight role,
our board of directors has the responsibility to satisfy itself that the risk
management processes designed and implemented by management are adequate and
functioning as designed.





Our board
of directors believes that full and open communication between management and
our board of directors is essential for effective risk management and
oversight.  Our Chairman meets regularly with our Chief Financial
Officer, Treasurer, and other senior officers to discuss strategy and risks
facing our business.  Senior management attends board meetings and is
available to address any questions or concerns raised by our board of directors
on risk management-related and any other matters.  Our board of
directors receives presentations from senior management on strategic matters
involving our operations and holds strategic planning sessions with senior
management to discuss strategies, key challenges, and risks and opportunities
for our business.





While our
board of directors is ultimately responsible for risk oversight at our company,
our board committees assist our board of directors in fulfilling its oversight
responsibilities in certain areas of risk, as further set forth below.





Board
Committees





Our board
of directors has established an Audit Committee, Compensation Committee, and
Nominating/Corporate Governance Committee, or our Governance
Committee.  Our Audit Committee, Compensation Committee and Governance
Committee each operate under a written charter adopted by our board of
directors, copies of which are available on our website at www.americandairyinc.com.  Our
board of directors and its committees set schedules to meet throughout the year
and also can hold special meetings and act by written consent from time to time,
as appropriate.  The committees report on their activities and actions
to our board of directors.





Committees
and Meeting Attendance





Our board
of directors held 11 regular meetings during the fiscal year ended
December 31, 2009, and acted 13 times by unanimous written
consent.





Our Audit
Committee, Compensation Committee and Governance Committee of our board of
directors held meetings and took action as follows:





·
            our Audit Committee held 13
      meetings and acted 5 times by unanimous written
      consent;





·
            our Compensation Committee held 0
      meetings and acted 2 times by unanimous written consent;
      and





·
            our Governance Committee held 0
      meetings and acted 2 times by unanimous written
      consent.





In 2009,
each director attended 75% or more of the meetings of our board of directors and
of the committees of our board of directors on which such director served during
the period for which he was a director or committee member.  Our
Bylaws provide that the Chairman of our board of directors shall preside at all
meetings of the shareholders.  Otherwise, we have no requirements for
our directors to attend our Annual Meeting.  Two members of our board
of directors attended our annual meeting of shareholders in 2009.





Committee
Composition


The
following table provides the current membership of our Audit Committee,
Compensation Committee and Governance Committee. Our board of directors has
determined that, with the exception of Leng You-Bin and Liu Hua, each member of
these committees is an independent director as defined by the listing standards
of the NYSE and SEC rules.




6




Audit
      Committee
                    
                    Compensation Committee
                    
                    Governance
      CommitteeKirk
      G. Downing
                    
                    Leng
      You-Bin
                    
                    Leng
      You-BinJames
      C. Lewis
                    
                    Hui-Lan
      Lee
                    
                    James
      C. LewisHui-Lan
      Lee
                    
                    James
      C. Lewis
                    
                    Kirk
      G. Downing





We were
formerly a “controlled company” in which more than 50% of the voting power for
the election of directors was held by an individual, a group or another
company.  Accordingly, we were not required under NYSE rules to have
committees composed entirely of independent directors.  We ceased to
be a controlled company in 2009 and plan to have committees composed entirely of
independent directors by June 2010.




Audit
Committee


Our Audit
Committee consists of Kirk G. Downing, James C. Lewis and Hui-Lan Lee, each of
whom is an independent director as defined by the listing standards of the NYSE
and SEC rules.  Our board of directors has determined that Ms. Lee is
an “Audit Committee Financial Expert,” as defined in Item 407(d)(5) of
Regulation S-K.  Our Audit Committee appoints, retains, compensates
and oversees our independent public accountants and reviews the scope and
results of the annual audits, receives reports from our independent public
accountants, and reports the committee’s findings to our board of
directors.  Our Audit Committee assists our board of directors in
fulfilling its oversight responsibilities with respect to risk management in the
areas of financial reporting, internal controls and compliance with legal and
regulatory requirements, and discusses policies with respect to risk assessment
and risk management.





Compensation
Committee


Our
Compensation Committee currently consists of Leng You-Bin, Hui-Lan Lee, and
James C. Lewis. The Compensation Committee administers our stock incentive plans
and makes recommendations concerning salaries and incentive compensation for our
executive officers and employees. The Compensation Committee assists our board
of directors in fulfilling its oversight responsibilities with respect to the
management of risks arising from our compensation policies and
programs





Nominating/Corporate
Governance Committee


Our Governance Committee consists of
Leng You-Bin, James C. Lewis and Kirk G. Downing.  Our Governance Committee makes
recommendations to our board of directors regarding the nomination of candidates
to stand for election or re-election as members of our board of directors,
evaluates our board of director’s performance, and provides oversight of
corporate governance and ethical standards.Our Governance Committee assists our
board of directors in fulfilling its oversight responsibilities with respect to
the management of risks associated with board organization, membership and
structure, succession planning for our directors and executive officers, and
corporate governance.





Compensation
Committee Interlocks and Insider Participation





Our
Compensation Committee currently consists of Leng You-Bin, Hui-Lan Lee, and
James C. Lewis. Except
for Leng You-Bin, our Chairman, Chief Executive Officer, President, and General
Manager, none of the members of our Compensation Committee is an officer or
employee of our company.  None of our executive officers serve, or in
the past year has served, as a member of our board of directors or Compensation
Committee of any entity that has one or more executive officers serving on our
board of directors or Compensation Committee.  See “Item 13. Certain Relationships and
Related Transactions, and Director Independence—Transactions with Related
Persons” below for a
summary of related party transactions involving Mr. Leng.





Director
Nomination





We have
adopted Corporate Governance Guidelines that address the composition of our
board of directors, criteria for membership on our board of directors and other
governance matters related to our board of directors. Our director nomination
process is also set forth in our Corporate Governance Guidelines. A copy of our
Corporate Governance Guidelines is available on the Investor Relations section
of our website at www.americandairyinc.com.




7




Our
Governance Committee reviews annually the results of the evaluation of our board
of directors and its committees, and the needs of our board of directors for
various skills, experience, expected contributions and other characteristics in
determining the director candidates to be nominated at the annual meeting. Our
Governance Committee evaluates candidates for directors proposed by directors,
shareholders or management in light of the Committee’s views of the current
needs of our board of directors for certain skills, experience or other
characteristics, the candidate’s background, skills, experience, other
characteristics and expected contributions, and the qualification standards
established from time to time by our Governance Committee.  While we
do not have a formal diversity policy, we seek to have directors representing a
range of experiences, qualifications, skills and backgrounds, consistent with
our Governance Committee’s goal of creating a board of directors that best
serves the needs of our company and the interest of our
shareholders.  In making the determinations regarding nominations of
directors, our Governance Committee may take into account the benefits of
diverse viewpoints as well as the benefits of a constructive working
relationship among directors.





Our
Governance Committee also considers candidates for membership on our board of
directors proposed by shareholders. Any such proposals should be made in writing
to American Dairy, Inc., Star City International Building, 10 Jiuxianqiao Road,
C-16th Floor, Chaoyang District, Beijing, China 100016, Attention: Legal
Department. All nominees will submit a completed form of directors’ and
officers’ questionnaire as part of the nominating process. The process may also
include interviews and additional background and reference checks for
non-incumbent nominees, at the discretion of our Governance
Committee.





Code
of Ethics





We have
adopted a Code of Ethics that applies to all of our officers, directors and
employees. The most recent version is available on the Investor Relations
section of our website at www.americandairyinc.com.
The information contained on our website is not incorporated by reference into
this Amendment. If we make any substantive amendments to the code or grant any
waiver from a provision of the code to any executive officer or director, we
will promptly disclose the nature of the amendment or waiver on our website, as
well as via any other means required by applicable law.





Communications
by Shareholders with Directors





Shareholders
may communicate with any and all of our directors by transmitting correspondence
by mail, facsimile or email, addressed as follows:





Chairman
of the Board


or Board
of Directors


c/o
Corporate Secretary


Star City
International Building, 10 Jiuxianqiao Road, C-16th Floor


Chaoyang
District, Beijing, China 100016


Email
Address: liuhua@feihe.com





Our
Corporate Secretary maintains a log of such communications and transmits as soon
as practicable such communications to the identified director addressee(s),
unless there are safety or security concerns that mitigate against further
transmission of the communications, as determined by the Corporate Secretary.
Our board of directors or individual directors so addressed are advised of any
communication withheld for safety or security reasons as soon as practicable.
The Corporate Secretary relays all communications to directors absent safety or
security issues.




8




Executive
Officers





The
following table sets forth the name and age of each of our executive officers,
the positions and offices held by each executive officer with us, and the period
during which the executive officers has served as one of our executive
officers.  All officers serve at the pleasure of our board of
directors.




Name
                          
                          Age
                          
                          Position
                          
                          Officer SinceLeng You-Bin
                          
                          45
                          
                          Chairman, Chief Executive Officer, President, and General Manager
                          
                          2003Liu Hua
                          
                          37
                          
                          Vice Chairman, Secretary, Treasurer, and Director
                          
                          2003Jonathan H. Chou
                          
                          45
                          
                          Chief Financial Officer
                          
                          2008Liu Sheng-Hui
                          
                          39
                          
                          Vice President of Finance, Feihe Dairy, and Director
                          
                          2003





Leng
You-Bin’s biographical summary is included under “—Directors”
above.





Liu Hua’s
biographical summary is included under “—Directors”
above.





Jonathan H.
Chou has been our Chief Financial Officer since April 2008.  From
February 2006 to June 2007, Mr. Chou served as the Asia Pacific Corporate Chief
Financial Officer and Vice President of Mergers & Acquisitions for Honeywell
International. From September 2003 to January 2006, Mr. Chou served as the Asia
Regional Chief Financial Officer of Tyco Fire & Security (ADT), a division
of Tyco International. From May 2000 to September 2003, Mr. Chou held several
senior finance positions at Lucent Technologies including the Asia Pacific Chief
Financial Officer of Lucent Technologies where he oversaw regional
Sarbanes-Oxley compliance and restructuring efforts during the downturn of the
telecommunication sector. Mr. Chou received a bachelor’s degree in arts from the
State University of New York at Buffalo and a Masters of Business Administration
degree from Fuqua School of Business at Duke University.





Liu
Sheng-Hui’s biographical summary is included under”—Directors”
above.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Exchange Act requires our executive officers and directors, and
persons who beneficially own more than 10% of our equity securities, to file
reports of ownership and changes in ownership with the
SEC.  Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish us with copies of all Section 16(a) forms
they file.  Based on our review of the copies of such forms we have
received, we believe that during the year ended December 31, 2009, filing
requirements applicable to our officers, directors and 10% owners of our common
stock were complied with, except that a Form 4 for Jonathan H. Chou was not
timely filed to report an option grant, and a Form 4 for Kirk Downing was not
timely filed to report a sale of shares of our common stock.




9




Item
11. Executive Compensation





Compensation
Discussion and Analysis





Our
Compensation Committee assists our board of directors in reviewing and approving
the compensation structure of our directors and executive officers, including
all forms of compensation to be provided to our directors and executive
officers.  With the responsibility of establishing, implementing and
monitoring our executive compensation program philosophy and practices, our
Compensation Committee seeks to ensure that the total compensation paid to our
directors and executive officers is fair and competitive.




Compensation
Philosophy and Objectives





Our
Compensation Committee’s goals regarding executive compensation are primarily to
recruit, hire, retain, motivate and reward.  In determining what
constitutes a fair and competitive compensation for each executive, our
Compensation Committee evaluates individual executive performance with a goal of
setting compensation at levels based on the executive’s general business and
industry knowledge and experience and comparable to executives in other
companies of similar size and stage of development, while taking into account
our relative performance and our strategic goals.





We
conduct an annual review of the aggregate level of our executive
compensation as part of the annual budget review and annual performance review
processes.  During our review of an individual executive’s
compensation, our Compensation Committee primarily considers individual
performance of that executive and internal review of the executive’s
compensation, both individually and relative to other executive
officers.  Our Compensation Committee also considers factors of
corporate performance including the stock prices, sales, revenue and the current
overall economic situation.  Adjustments to salary levels are
typically made annually as part of the company’s performance review process, as
well as upon a change in job responsibility.  Merit-based increases to
salaries are based on our Compensation Committee’s assessment of the
individual’s performance.   Our Compensation Committee also
monitors our compensation policies and practices to ensure they do not
incentivize excessive risk-taking or other unintended risks that are reasonably
likely to have a material adverse effect on us.





In May
2009, our board of directors approved our 2009 Stock Incentive Plan, or our 2009
Plan, which permits grants a variety of equity-based compensation, including
performance-based awards.  We believe performance-based equity
compensation arrangements can better align the interests of the key executives
with our shareholders.  Our Compensation Committee intends to continue
to ensure that, when appropriate, our executive officers have the opportunity to
earn equity compensation if certain performance goals are met, such as those
based on specified increases in cash flow, net profits, stock price, sales,
market shares or earnings per share.





Setting
Executive Compensation





Historically,
our executive compensation has consisted of base salary and equity
incentives:





Base Salary.  Our
Compensation Committee determines executive salaries based on job
responsibilities and individual experience, and also compares the amounts we pay
against comparable competitive market compensation for similar positions within
similar industries.  In making such a comparison, we review
compensation information made available to us through recruiting or investors
relations firms as well as public data of a peer group comprised of at least
twenty companies, which include Chinese dairy companies listed on stock
exchanges in countries other than China (including, for example, companies such
as China Mengniu Dairy Company Limited and Synutra International, Inc.), U.S.
listed companies with substantial if not all operations in China (including, for
example, companies such as American Oriental Bioengineering Inc. and New
Oriental Education and Technology Group Inc.), and American companies in the
food and/or dairy industries (including, for example, companies such as
Dean Foods Company and Kraft Foods, Inc.).  We expect to continue
to provide competitive salaries to our executive officers by reviewing the
salaries of our executives annually and, if appropriate, recommending increases
in salaries based on individual performance during the prior calendar year and
cost of living adjustments.




10




Equity Awards.  Our
Compensation Committee determines stock, options and other awards after
consulting with recruiting firms that provide market information concerning
equity awards to executives of similar positions in the peer group of companies
described above.  We have adopted a 401(k) plan and intend to adopt
formal programs for time off allocation and performance bonuses in the
future.




Monitoring
Executive Compensation Program





Our
Compensation Committee monitors our executive compensation program by routinely
comparing it to the compensation programs of similarly situated companies and
considering other factors such as performance, length of service, peer
evaluations, subjective and objective reviews.  As a result of its
examination in 2009, our Compensation Committee recommended, and our board of
directors approved, a cash compensation package of $200,000 for each of
Leng You-Bin, our Chairman, Chief Executive Officer, President, and General
Manager, and Liu Hua, who served as our Chief Financial Officer until April
15, 2008 and who continues to serve as our Vice Chairman, Secretary, Treasurer,
and a director, for services rendered in 2009.




Summary
Compensation Table




Name and Principal Position (1)
                                                                      
                                                                      Fiscal Year
                                                                      
                                                                      Bonus
                                                                        ($)
                                                                      
                                                                      Salary
                                                                        ($)
                                                                      
                                                                      Equity Awards(2)
                                                                        ($)
                                                                      
                                                                      
                                                                      Total
                                                                        ($)Leng
      You-Bin, Chairman, Chief Executive Officer,
                                                                      
                                                                      2007
                                                                      
                                                                      0
                                                                      
                                                                      200,000
                                                                      
                                                                      
                                                                      68,250
                                                                      (5)
                                                                      
                                                                      
                                                                      268,250President,
      and General Manager
                                                                      
                                                                      2008
                                                                      
                                                                      0
                                                                      
                                                                      200,000
                                                                      
                                                                      
                                                                      120,560
                                                                      (5)
                                                                      
                                                                      
                                                                      320,5602009
                                                                      
                                                                      0
                                                                      
                                                                      200,000
                                                                      
                                                                      
                                                                      1,599,435
                                                                      (6)
                                                                      
                                                                      
                                                                      1,799,435Liu
      Hua, Vice Chairman, Secretary, Treasurer, and
                                                                      
                                                                      2007
                                                                      
                                                                      0
                                                                      
                                                                      200,000
                                                                      
                                                                      
                                                                      68,250
                                                                      (5)
                                                                      
                                                                      
                                                                      268,250Director 
      (3)
                                                                      
                                                                      2008
                                                                      
                                                                      0
                                                                      
                                                                      200,000
                                                                      
                                                                      
                                                                      120,560
                                                                      (5)
                                                                      
                                                                      
                                                                      320,5602009
                                                                      
                                                                      0
                                                                      
                                                                      200,000
                                                                      
                                                                      
                                                                      533,145
                                                                      (6)
                                                                      
                                                                      
                                                                      733,145Liu
      Sheng-Hui, Vice President of Finance,
                                                                      
                                                                      2007
                                                                      
                                                                      0
                                                                      
                                                                      26,014
                                                                      
                                                                      
                                                                      68,250
                                                                      (5)
                                                                      
                                                                      
                                                                      94,264and
      Director
                                                                      
                                                                      2008
                                                                      
                                                                      0
                                                                      
                                                                      27,926
                                                                      
                                                                      
                                                                      120,560
                                                                      (5)
                                                                      
                                                                      
                                                                      148,4862009
                                                                      
                                                                      0
                                                                      
                                                                      27,804
                                                                      
                                                                      
                                                                      533,145
                                                                      (6)
                                                                      
                                                                      
                                                                      560,949Jonathan
      H. Chou, Chief Financial Officer
                                                                      
                                                                      2007
                                                                      
                                                                      0
                                                                      
                                                                      0
                                                                      
                                                                      
                                                                      0
                                                                      
                                                                      
                                                                      
                                                                      02008
      (4)
                                                                      
                                                                      55,000
                                                                      
                                                                      116,667
                                                                      
                                                                      
                                                                      562,758
                                                                      (7)
                                                                      
                                                                      
                                                                      734,4252009
                                                                      
                                                                      0
                                                                      
                                                                      175,000
                                                                      
                                                                      
                                                                      1,103,400
                                                                      (7)
                                                                      
                                                                      
                                                                      1,278,400




(1)
              Identifies
      our principal executive and principal financial officers during the
      specified periods.
 
 (2)
              Represents the
      aggregate grant date fair value of equity awards granted during the fiscal
      yearwithout consideration of vesting periods or forfeitures, calculated in
      accordance with ASC Topic 718.See the notes to our financial
      statements contained in our Original Filing for an explanation of all
      assumptions made by us in determining the values of our equity awards
      under ASC Topic 718.
 
 (3)
              Liu
      Hua served as our Chief Financial Officer until April 15, 2008, and
      thereafter has continued to serve as our Vice Chairman, Secretary,
      Treasurer and a director. Amounts indicated include full year compensation
      Mr. Liu received.
 
 (4)
              Includes
      a cash signing bonus of approximately $55,000 and a proration of Mr.
      Chou’s annual salary of $175,000 based on an April 15, 2008 employment
      commencement date.
 
 (5)
                Represents the
      aggregate grant date fair valueof restricted stock awards granted
      during the fiscal year, calculated in accordance with ASC Topic 718, for service as a
      member of our board of
directors.
  11
  (6)
                Represents
      the aggregate grant date fair value of performance stock options granted
      during the fiscal year, based on the probable outcome of the performance
      conditions on the grant date.The performance
      stock options vest in two equal tranches on the fourth and fifth
      anniversaries of the date such options were granted, provided that
      the recipient has met the performance criteria established and continues
      to provide service to us.  As of December 31, 2009, the
      performance conditions for 2009 were not met and options to acquire 1/3 of
      the shares were forfeited, resulting in no compensation expense being
      recognized for the fiscal
period.
 
 (7)
                The
      awards were based upon a one-year vesting period from the grant date, with
      a four-year term. Compensation expense recognized for the awards was
      $658,074 and $140,689 for the years ended December 31, 2009 and 2008,
      respectively.


Employment
Agreements





On April
15, 2008, we entered into an employment agreement with Jonathan H. Chou, who
became our Chief Financial Officer on that date.  The agreement has a
four-year term and provides that Mr. Chou will receive a base salary of
$175,000, a signing bonus of approximately $55,000, and options to acquire up to
270,000 shares of our common stock in four tranches over 48-months, with each
tranche vesting on the twelve month anniversary of its respective grant
date.  Mr. Chou is also eligible to receive discretionary bonuses at
times and in amounts determined by our Compensation Committee and to participate
in medical, health, dental, disability, liability insurance and life insurance
benefits, and certain other fringe benefits available to executive
officers.  Mr. Chou is also entitled to certain severance benefits if
he is terminated without good cause or resigns for good reason, as described
below under “Severance and Change of Control Agreements.”  We plan to
enter into similar employment agreements with other executive officers in the
future.




Benefit
Plans





We do not
have any profit sharing plan or similar plans for the benefit of our officers,
directors or employees.  However, we may establish such plans in the
future.  Certain employees of our subsidiaries, including Leng
You-Bin, our Chairman, Chief Executive Officer, President, and General Manager,
have pension and healthcare benefits through plans offered by such subsidiaries,
as required by local Chinese laws.  We are required to make
contributions for the benefit of our employees to these social welfare plans,
which are administered by the Chinese government.





Stock
Incentive Plans





2009
Stock Incentive Plan





In May
2009, our board of directors approved our 2009 Plan, which was approved by our
shareholders at our 2009 annual meeting of shareholders.  Our 2009
Plan permits grants incentive stock options, nonqualified stock options,
restricted stock awards, performance stock awards and other equity-based
compensation, to our employees, directors, officers, consultants, agents,
advisors and independent contractors.  The total number of shares of
our common stock initially authorized for issuance under our 2009 Plan is
2,000,000 plus any authorized shares that, as of May 7, 2009, were available for
issuance under our 2003 Stock Incentive Plan, or our 2003 Plan.  Our
2009 Plan is administered by our Compensation Committee.





In May
2009, our Compensation Committee granted an aggregate of 2,073,190 performance
stock options to certain of our employees and officers under our 2009 Plan,
including 150,000 performance stock options to Leng You-Bin, our Chairman, Chief
Executive Officer, President and General Manager, and 50,000 performance stock
options to each of Liu Hua, Vice Chairman, Secretary and Treasurer, and Liu
Sheng-Hui, Vice President of Finance of our subsidiary Feihe
Dairy.  The performance stock options each have an exercise price of
$16.86, a contractual life of 6 years, and vest in two equal tranches on the
fourth and fifth anniversaries of the date such options were granted,
provided that the recipient has met the performance criteria established in
accordance with our 2009 Plan, including performance targets that must be met in
each of our 2009, 2010 and 2011 fiscal years, and the recipient continues to be
our employee at the time of the relevant vesting dates.  If the
performance criteria are not met, the options that would otherwise vest on the
vesting dates are forfeited and cancelled.




12




The
performance targets for the year ended December 31, 2009 were not met for any
option recipient.  In December 2009, the performance targets were
amended in order to limit the amount of shares that would otherwise be forfeited
and cancelled by all recipients of the performance stock options.  As
a result of this amendment, Messrs. Leng, Liu and Liu retained 100,000, 33,333
and 33,333 performance stock options that would otherwise have been forfeited
and cancelled.





2003
Stock Incentive Plan


In April
2003, we adopted and approved our 2003 Plan, which reserved 3,000,000
shares of our common stock for issuance under the 2003 Plan. The 2003 Plan
allowed us to issue awards of incentive or non-qualified stock options, stock
appreciation rights, and stock bonuses which may be subject to
restrictions.  Our 2003 Plan is administered by our Compensation
Committee.  No awards were made during 2009 under the 2003
Plan.  Effective May 7, 2009, all shares of our common stock that were
available for issuance under our 2003 Plan became part the shares reserved for
issuance under our 2009 Plan, and no shares remained available for issuance
under our 2003 Plan.





Grants of Plan-Based Awards





The
following table sets forth information regarding our 2009 Plan awards granted
during 2009:





Name and Principal Position
                      
                      Grant Date
                      
                      Estimated Future
                        Payouts
                        (Maximum) (#) (1)
                      
                      
                      Exercise Price
                        of Option
                        Awards
                        ($/Sh)
                      
                      
                      Grant Date
                        Fair Value of
                        Stock and
                        Option Awards
                        ($) (2)Leng
      You-Bin, Chairman, Chief Executive Officer, President and General
      Manager
                      
                      May 7, 2009
                      
                      
                      150,000
                      (3)
                      
                      
                      16.86
                      
                      
                      
                      1,599,435Liu
      Hua, Vice Chairman, Secretary, Treasurer, and Director
                      
                      May 7, 2009
                      
                      
                      50,000
                      (3)
                      
                      
                      16.86
                      
                      
                      
                      533,145Liu
      Sheng-Hui, Vice President of Finance and Director
                      
                      May 7, 2009
                      
                      
                      50,000
                      (3)
                      
                      
                      16.86
                      
                      
                      
                      533,145Jonathan H. Chou, Chief Financial
      Officer
                      
                      October 15, 2009
                      
                      
                      50,000
                      (4)
                      
                      
                      16.00
                      
                      
                      
                      1,103,400








(1)
            Unless
      otherwise specified, all awards are performance stock option
      grants.  The performance stock options vest in two equal
      tranches on the fourth and fifth anniversaries of the date such
      options were granted, provided that the recipient has met the
      performance criteria established in accordance with our 2009 Plan,
      including performance targets that must be met in each of our 2009, 2010
      and 2011 fiscal years, and the recipient continues to be our employee at
      the time of the relevant vesting dates.  If the performance
      criteria are not met, the options that would otherwise vest on the vesting
      dates are forfeited and cancelled.




(2)
            Represents theaggregate grant date fair value of the awards granted calculated in
      accordance with ASC Topic 718.  See the notes to our financial
      statements contained in our Original Filing for an explanation of all
      assumptions made by us in determining the values of our equity awards
      under ASC Topic 718.




13




(3)
              Messrs.
      Leng, Liu and Liu were originally granted 150,000, 50,000 and 50,000
      performance stock options, respectively.  In December 2009, the
      performance targets were amended in order to limit the amount of shares
      that would otherwise be forfeited and cancelled by all recipients of the
      performance stock options.  As a result of this amendment,
      Messrs. Leng, Liu and Liu retained 100,000, 33,333 and 33,333 performance
      stock options that would otherwise have been forfeited and
      cancelled.




(4)
              Represents
      options to acquire shares of our common stock pursuant to Mr. Chou’s
      employment agreement with us.  The options vest on the twelve
      month anniversary of the grant
date.




Outstanding
Equity Awards at Fiscal Year-End





The
following table sets forth information regarding outstanding equity awards
granted to our named executive officers as of December 31, 2009.  The
options issued to Leng You-Bin, Liu Hua
andLiu
Sheng-Hui are subject to performance and time-based vesting conditions set forth
under the heading “2009 Stock Incentive Plan” above.The
options issued Jonathan H. Chou vest on the 12-month anniversary of their
respective grant dates.





Name and Principal Position
                                                    
                                                    Grant Date
                                                    
                                                    Shares
                                                      Underlying
                                                      Exercisable
                                                      Options
                                                    
                                                    Shares
                                                      Underlying
                                                      Unexercisable
                                                      Options
                                                    
                                                    Exercise
                                                      Price Per
                                                      Share
                                                    
                                                    Expiration DateLeng
      You-Bin, Chairman, Chief Executive Officer, President and General
      Manager
                                                    
                                                    May 7, 2009
                                                    
                                                    0
                                                    
                                                    100,000
                                                    (1)
                                                    $
                                                    16.86
                                                    
                                                    May
      7, 2015Liu
      Hua, Vice Chairman, Secretary, Treasurer, and Director
                                                    
                                                    May 7, 2009
                                                    
                                                    0
                                                    
                                                    33,333
                                                    (1)
                                                    $
                                                    16.86
                                                    
                                                    May
      7, 2015Liu
      Sheng-Hui, Vice President of Finance and Director
                                                    
                                                    May 7, 2009
                                                    
                                                    0
                                                    
                                                    33,333
                                                    (1)
                                                    $
                                                    16.86
                                                    
                                                    May
      7, 2015Jonathan H. Chou, Chief Financial Officer
                                                    
                                                    October 15, 2008
                                                    
                                                    80,000
                                                    (2)
                                                    0
                                                    
                                                    $
                                                    12.00
                                                    
                                                    October 15, 2012October
      15, 2009
                                                    
                                                    0
                                                    
                                                    50,000
                                                    (3)
                                                    $
                                                    16.00
                                                    
                                                    October
      15, 2013


(1)
              Messrs.
      Leng, Liu and Liu were originally granted 150,000, 50,000 and 50,000
      performance stock options, respectively.  The performance stock
      options each vest in two equal tranches on the fourth and fifth
      anniversaries of the date such options were granted, provided that
      the recipient has met the performance criteria established in accordance
      with our 2009 Plan, including performance targets that must be met in each
      of our 2009, 2010 and 2011 fiscal years, and the recipient continues to be
      our employee at the time of the relevant vesting dates.  In
      December 2009, the performance targets were amended in order to limit the
      amount of shares that would otherwise be forfeited and cancelled by all
      recipients of the performance stock options.  As a result of
      this amendment, Messrs. Leng, Liu and Liu retained 100,000, 33,333 and
      33,333 performance stock options that would otherwise have been forfeited
      and cancelled.





(2)
              The
      options vested on
October 15, 2009.





(3)
              The
      options vest on
October 15, 2010.




14




Board Compensation





There
were no awards granted during 2009 to our directors. In March 2010, all
directors received an award of 4,000 restricted shares of our common stock for
their 2009 board service, with an additional 1,000 shares for such year issued
to the chairperson of our Audit Committee, Hui-Lan Lee.





Severance
and Change of Control Agreements





As of
December 31, 2009, we had no agreements or arrangements providing for payments
to a named executive officer in connection with any termination, except that our
employment agreement with Jonathan H. Chou provides that, if he is terminated by
us without “good cause” or resigns for “good reason,” he will be entitled to
receive as severance his base salary and reimbursement of expenses, and all of
his options granted but not yet vested pursuant to his employment agreement
immediately vest and become exercisable.  For purposes of the
employment agreement, “good cause” means the commission of a felony, a crime
involving moral turpitude, an act or omission involving dishonesty, disloyalty,
or fraud with respect to us, conduct tending to bring us into substantial public
disgrace or disrepute, substantial and repeated failure to perform duties as
reasonably directed by our board of directors, gross negligence or willful
misconduct with respect to us, or any uncured material misrepresentation by Mr.
Chou under the employment agreement.  For purposes of the employment
agreement, “good reason” means the assignment of any duties inconsistent in any
material respect with Mr. Chou’s position, any uncured material breach by us of
one or more provisions of the employment agreement, requiring Mr. Chou to be
based at any location more than 30 miles from our Beijing headquarters or from
the centerpoint of Shanghai, any purported termination by us of Mr. Chou’s
employment otherwise than as expressly permitted by the employment agreement, or
any change in control whereby a person becomes the beneficial owner of 51% or
more of the combined voting power of our outstanding securities, we consummate a
merger in which we are not the surviving entity, we sell all or substantially
all of our assets, or our shareholders approve the dissolution or liquidation of
us.





Limited
Liability and Indemnification





Section
16-10a-840 of the Utah Revised Business Corporation Act, or the URBC, requires
directors and officers to perform their duties in good faith and with the care
that an ordinary person would exercise under similar circumstances in a manner
reasonably believed to be in the best interest of the corporation. A director or
officer of a corporation is not liable to the corporation, its shareholders or
others for any action taken or any failure to act as an officer or director
unless he has breached or failed or failed to perform his duties as described
above and the breach or failure to perform constitutes gross negligence, willful
misconduct, or intentional infliction of harm on the corporation or its
shareholders.





Section
16-10a-841 of the URBC provides that the articles of incorporation of a Utah
corporation may eliminate or limit the liability of a director to the
corporation or its shareholders for monetary damages, except for (i) a financial
benefit to which is not entitled; (ii) an intentional infliction of harm; (iii)
unlawful distributions of the corporation constituting a violation of Section
16-10a-842 of the URBC; or (iv) an intentional violation of criminal
law.





Section
16-10a-902 of the URBC permits a Utah corporation to indemnify directors made a
party to a proceeding because he is or was a director if (i) his conduct was in,
or not opposed to, the corporation’s best interest; and (ii) he reasonably
believed his conduct was in, or not opposed to, the corporation’s best
interests; and (iii) in the case of a criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. However, a Utah corporation may not
indemnify a director if he was adjudged liable to the corporation, or if he was
adjudged liable on the basis that he derived an improper personal benefit; and
such indemnification in any action brought by the corporation is limited to
reasonable expenses incurred in connection with the proceedings.




15




Article
VI of our Articles of Incorporation and Article VIII of our Bylaws provide for
the indemnification of our directors and officers. Indemnification is mandatory
regarding reasonable expenses incurred in connection with proceedings or claims
with respect to which the director or officer has been successful. Officers,
employees, fiduciaries and agents of a Utah corporation may be entitled to
indemnification to a greater extent, if not inconsistent with public policy or
if provided for in a company’s articles of incorporation, bylaws, general or
specific action of its board of directors or contract.





Consultants





We may
retain compensation consultants to the extent we deem it necessary and
appropriate.  We will not delegate our authority and responsibility to
make management decisions to consultants or any other persons, nor shall any
consultant have any discretionary authority or the authority to bind us in any
material respect.





Compensation
Committee Report





We, the
Compensation Committee of the board of directors of American Dairy, Inc., have
reviewed and discussed the Compensation Discussion and Analysis contained herein
with management.  Based on such review and discussion, we have
recommended to the board of directors that the Compensation Discussion and
Analysis be included in this Annual Report on Form 10-K/A for the fiscal year
ended December 31, 2009.




Compensation
      CommitteeLeng
      You-BinJames
      C. LewisHui-Lan
      Lee





Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters





The
following table sets forth, as of April 26, 2010, information concerning the
beneficial ownership of shares of our common stock held by our directors, our
executive officers, our directors and executive officers as a group, and each
person known by us to be a beneficial owner of 5% or more of our outstanding
common stock.





Beneficial
ownership is determined according to the rules of the SEC.  Beneficial
ownership means that a person has or shares voting or investment power of a
security and includes any securities that person has the right to acquire within
60 days after the measurement date, such as pursuant to options, warrants or
convertible notes.  Except as otherwise indicated, we believe that
each of the beneficial owners of our common stock listed below, based on
information each of them has given to us, has sole investment and voting power
with respect to such beneficial owner’s shares, except where community property
or similar laws may apply.  For purposes of the column for shares
underlying convertible securities, in accordance with rules of the SEC, shares
of our common stock underlying securities that a person has the right to acquire
within 60 days of April 26, 2010 are deemed to be beneficially owned by such
person for the purpose of computing the percentage ownership of that person, but
we do not treat them as outstanding for the purpose of computing the ownership
percentage of any other person.




16




Common Stock Beneficially OwnedName and Address of Beneficial Owner
                                                                        
                                                                        Total
                                                                          Outstanding
                                                                        
                                                                        
                                                                        Shares
                                                                          Underlying
                                                                          Convertible
                                                                          Securities (1)
                                                                        
                                                                        
                                                                        Total
                                                                        
                                                                        
                                                                        Percent (2)Directors
      and Executive OfficersLeng
      You-Bin (3)
                                                                        
                                                                        
                                                                        8,952,025
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        8,952,025
                                                                        
                                                                        
                                                                        
                                                                        40.2
                                                                        %Liu
      Hua (3)
                                                                        
                                                                        
                                                                        31,200
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        31,200
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        *Jonathan
      H. Chou (3)
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        72,000
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        *Liu
      Sheng-Hui (3)
                                                                        
                                                                        
                                                                        271,774
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        271,774
                                                                        
                                                                        
                                                                        
                                                                        1.2
                                                                        %Hui-Lan
      Lee (3)
                                                                        
                                                                        
                                                                        44,500
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        44,500
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        *Kirk
      Downing (3)
                                                                        
                                                                        
                                                                        12,000
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        12,000
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        *James
      C. Lewis (3)(4)
                                                                        
                                                                        
                                                                        39,000
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        39,000
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        *Neil
      N. Shen (5)
                                                                        
                                                                        
                                                                        4,000
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        4,000
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        *Directors
      and executive officers as a group (8 persons)
                                                                        
                                                                        
                                                                        9,354,499
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        9,354,499
                                                                        
                                                                        
                                                                        
                                                                        42.0
                                                                        %5%
      Beneficial OwnersSequoia
      Capital Partners (5)
                                                                        
                                                                        
                                                                        2,716,700
                                                                        
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        2,716,700
                                                                        
                                                                        
                                                                        
                                                                        12.2
                                                                        %




*Less
than 1%




(1)
              Includes
      shares of our common stock issuable upon exercise of options or upon
      conversion of warrants or convertible notes, if the person has the right
      to acquire such shares within 60 days of March 31,
  2009.


(2)
              Based
      on 22,279,376 shares of our common stock outstanding as of April 26,
      2009.


(3)
              The
      address for this beneficial owner is c/o American Dairy, Star City
      International Building, 10 Jiuxianqiao Road, C-16th
      Floor, Chaoyang District, Beijing, China
100016.





(4)
              James
      C. Lewis holds such shares jointly with his
  spouse.


(5)
                  The
      address for this beneficial owner is Suite 2215, Two Pacific Place, 88
      Queensway, Hong Kong, PRC.  Consists of 98,450 shares of our
      common stock held by Sequoia Capital China I, L.P. (“SCC I”), 11,312
      shares of our common stock held by Sequoia Capital China Partners
      Fund I, L.P. (“SCC PTRS I”), 15,238 shares of our common stock held
      by Sequoia Capital China Principals Fund I, L.P. (“SCC PRIN I”),
      1,533,647 shares of our common stock held by Sequoia Capital
      China Growth Fund I, L.P. (SCCGF I”), 36,574 shares of our common stock
      held by Sequoia Capital China Growth Partners Fund I, L.P. (SCCGF PTRS
      I”), and 188,145 shares of our common stock held by Sequoia Capital China
      GF Principals Fund I, L.P. (SCCGF PRIN I”).  Sequoia
      Capital China Management I, L.P. (“SCC MGMT I”) is a general partner of
      SCC I, SCC PTRS I and SCC PRIN I.  Sequoia Capital China Growth
      Fund Management I, L.P. (“SCCGF MGMT I”) is a general partner of SCCGF I,
      SCCGF PTRS I and SCCGF PRIN I.  SC China Holding Limited
      (“SCC HOLD”) is a general partner of SCC MGMT I and SCCGF MGMT
      I.  Neil N. Shen is a Managing Director of SCC HOLD and, in such
      capacity, has voting and dispositive power over such
      shares.  Mr. Shen disclaims beneficial ownership of all such
      shares except to the extent of his individual pecuniary interest
      therein.





The
following table sets forth information regarding issuances of securities
pursuant to equity compensation plans as of December 31, 2009:




Plan Category
                    
                    Number of
                      securities issued
                      and to be issued
                      upon exercise of
                      outstanding
                      options, warrants
                      and rights
                    
                    
                    Weighted-average
                      exercise price of
                      outstanding options,
                      warrants and rights
                    
                    
                    Number of
                      securities
                      remaining
                      available for
                      future issuanceEquity compensation plans approved by security holders
                    
                    
                    454,020
                    
                    
                    $
                    20.30
                    
                    
                    
                    2,545,980Total
                    
                    
                    454,020
                    
                    
                    $
                    20.30
                    
                    
                    
                    2,545,980




17




Item
13. Certain Relationships and Related Transactions, and Director
Independence





Transactions
with Related Persons




Leng
You-Bin, our Chairman, Chief Executive Officer, President, and General Manager,
is also the founder of a Heilongjiang Feihe Dairy Educational Charitable
Foundation, or HFDECF, charitable organization for under-privileged children in
the Heilongjiang Province of the PRC.  We have an outstanding loan
payable to HFDECF, which is unsecured, accrues interest at an annual rate of
5.85%, and is payable on demand.  In 2008 and 2009, the largest amount
of the indebtedness outstanding, including accrued interest, was approximately
$256,000 and $254,000, respectively.





Sequoia
Capital China Growth Fund I, L.P., and certain of its affiliates, or
collectively Sequoia, beneficially owned in excess of 10% of our issued and
outstanding common stock as of October 1, 2009.  Additionally, Neil N.
Shen, one of our directors, is the founding Managing Partner of one of the
Sequoia entities.  Sequoia is a party to a subscription agreement
pursuant to which we issued 2,100,000 shares of our common stock for an
aggregate purchase price of $63.0 million, including $47.0 million in cash and
the conversion of a $16.0 million bridge loan we previously received from
Sequoia in July 2009. Pursuant to a performance adjustment feature in the
subscription agreement, we issued 525,000 shares of our common stock to Sequoia
because we failed to meet certain earnings per share targets for
2009.





Pursuant
to the subscription agreement, we agreed, for a period of three years following
the closing date under the subscription agreement, of the Closing Date, not to
issue new shares of our common stock at a price below $30.00 per share without
the prior written consent of a majority in interest of Sequoia, subject to
certain exceptions.  In addition, we agreed to grant each of the
Sequoia entities a participation right to purchase up to such person’s pro rata
share of any new securities we may, from time to time, propose to issue after
the Closing Date, subject to certain exceptions.   If the average of
closing prices of our common stock for the fifteen trading days commencing on
the third anniversary of the Closing Date is less than $39.00, Sequoia will have
the right to cause us to repurchase all (but not less than all) of the
securities acquired by Sequoia in connection with the subscription
agreement.  The repurchase price would be 130% of the initial purchase
price.





In
connection with the subscription agreement, we also entered into a registration
rights agreement with Sequoia, or the Registration Rights
Agreement.  The Registration Rights Agreement requires us to file
within 15 days after the Closing Date a registration statement covering the
resale of the securities issued or issuable pursuant to the Subscription
Agreement.  The Registration Rights Agreement also grants demand and
piggyback registration rights.





Review,
Approval or Ratification of Transactions with Related Persons





Although
we have not adopted formal procedures for the review, approval or ratification
of transactions with related persons, we adhere to a general policy that such
transactions should only be entered into if they are on terms that, on the
whole, are no more favorable, or no less favorable, than those available from
unaffiliated third parties and their approval is in accordance with applicable
law.  Such transactions require the approval of our board of
directors.





Corporate
Governance





Our board
of directors has determined that Hui-Lan Lee, Kirk Downing and James C. Lewis,
are each an independent director under the general guidelines for determining
director independence of the NYSE and the rules of the SEC.




Item
14. Principal Accountant Fees and Services





The
following table sets forth the professional service aggregate fees of our
principal accountants for the services and periods indicated:





Name
                    
                    Audit Fees (1)Grant
      Thornton, for fiscal year ended:December
      31, 2008
                    
                    
                    608,786December
      31, 2009
                    
                    
                    1,207,241
                    (2)




18




(1)
            This
      category includes the audit of our annual financial statements, the audit
      of our internal control over financial reporting, review of unaudited
      quarterly financial statements included in our Form 10-Q quarterly
      reports, and services that are normally provided by the independent
      registered public accounting firm in connection with regulatory filings or
      engagements, for those fiscal years.  This category also
      includes advice on accounting matters that arose during, or as a result
      of, the audit or the review of interim financial statements. These fees
      represent all fees paid to our principle accountants for the periods
      indicated.





(2)
            Represents
      invoiced amounts to date.




Our Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by our independent registered public accounting
firm.  These services may include audit services, audit-related
services, tax services and other services.  Pre-approval is generally
provided for up to one year and any pre-approval is detailed as to the
particular service or category of services.  The independent
registered public accounting firm and management are required to periodically
report to our Audit Committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with this
pre-approval.  None of the services related to Audit-Related Fees, Tax
Fees or All Other Fees described above were approved by our Audit Committee
pursuant to a waiver of pre-approval provisions set forth in applicable rules of
the SEC.




PART IV




Item
15. Exhibits and Financial Statement Schedules





Exhibits


The
following exhibits are filed as a part of this Amendment:




Incorporated by ReferenceExhibit No.
                                                              
                                                              Exhibit Title
                                                              
                                                              Filed
                                                                Herewith
                                                              
                                                              
                                                              Form
                                                              
                                                              
                                                              Exhibit
                                                                No.
                                                              
                                                              
                                                              File No.
                                                              
                                                              
                                                              Filing Date31.1
                                                              
                                                              Certification
      of Principal
                                                                Executive
      Officer pursuant to
                                                                Rules
      13a-14 and 15d-14(a), as
                                                                adopted
      pursuant to Section 302 of
                                                                the
      Sarbanes-Oxley Act of 2002
                                                              
                                                              X31.2
                                                              
                                                              Certification
      of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
                                                              
                                                              X32.1
                                                              
                                                              Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      18 U.S.C. § 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002
                                                              
                                                              X




19





SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




April
      30, 2010
            AMERICAN
      DAIRY, INC.By:
            /s/ Leng You-BinLeng
      You-Bin, Chief Executive Officerand
      President (Principal Executive Officer)By:
            /s/ Jonathan H. ChouJonathan
      H. Chou, Chief Financial Officer(Principal
      Accounting and Financial Officer)




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.




/s/
      Leng You-Bin
                            
                            April
      30, 2010Leng
      You-Bin, Director, Chief Executive Officerand
      President (Principal Executive Officer)/s/
      Liu Hua
                            
                            April
      30, 2010Liu
      Hua, Director, Vice Chairman, Secretary and Treasurer/s/
      Liu Sheng-Hui
                            
                            April
      30, 2010Liu
      Sheng-Hui, Director/s/
      Hui-Lan Lee
                            
                            April
      30, 2010Hui-Lan
      Lee, Director/s/
      Kirk Downing *
                            
                            April
      30, 2010Kirk
      Downing, Director/s/
      James Lewis *
                            
                            April
      30, 2010James
      Lewis, Director/s/
      Neil Shen *
                            
                            April
      30, 2010Neil
      Shen, Director





*
      By:
                  /s/
      Leng You-Bin
                  
                  April
      30, 2010Leng
      You-Bin, Attorney-In-Fact




20





EXHIBIT
INDEX




Incorporated by ReferenceExhibit No.
                                                                  
                                                                  Exhibit Title
                                                                  
                                                                  Filed
                                                                    Herewith
                                                                  
                                                                  
                                                                  Form
                                                                  
                                                                  
                                                                  Exhibit
                                                                    No.
                                                                  
                                                                  
                                                                  File No.
                                                                  
                                                                  
                                                                  Filing Date31.1
                                                                  
                                                                  Certification
      of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
                                                                  
                                                                  X31.2
                                                                  
                                                                  Certification
      of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
                                                                  
                                                                  X32.1
                                                                  
                                                                  Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      18 U.S.C. § 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002
                                                                  
                                                                  X




21